The group said the facility will now be due for repayment on or before August 15, 2020, and the terms of the extension include the issue of 4.5mln of five-year warrants with a strike price of 0.35p, a premium of 11.1% to the closing share price on June 30, 2020.
READ: Tower Resources updates on progress for Thali production-sharing contract farm-out in Cameroon
Tower noted that the reason for the extension is the delay to the completion of the farm-out to OilLR, revealed on Tuesday, and the timing reflects the company's expectation in respect of the first payment into escrow. The facility also contains a grace period of 21 working days in the event of any further modest delay.
A previous restructuring of the facility was announced on October 15, 2019, resulting in Pegasus Petroleum holding 100% of the facility. Pegasus is a company owned and controlled by Tower's chairman and CEO, Jeremy Asher.
The facility was originally established as a bridging loan by Pegasus in April 2019 and was joined by a number of third parties in May 2019. At the end of July 2019, when the facility was already overdue for repayment, an extension to the end of August was agreed with all the parties to the facility, in return for the issue of 3 million five year warrants with a strike price slightly above the then-prevailing share price.
The company said it has looked to this transaction as a guide to a reasonable basis for agreeing with Pegasus an extension of the facility for a further month and 15 days at this juncture in return for the issue of the 4.5 million five-year warrants.
House broker SP Angel said: "The short extension makes a lot of sense for both sides of the Facility ahead of the much-anticipated farm-out of the Thali licence, Cameroon. Shareholders will be encouraged that both parties remain committed to completing the transaction in our view.
"The Thali licence offers attractive project economics in what is potentially a prolific hydrocarbon province."