The company said it has entered into a six-month loan facility with Shard Merchant Capital for US$500,000. At the same time, it has extended its existing US$750,000 loan facility with Pegasus Petroleum by six months.
The firm also confirmed a share subscription, agreed on August 28, 2020, to raise gross proceeds of US$ 200,000 through the issue of approximately 38,407,989 new ordinary shares at a subscription price of 0.393p each to clients of Shard. The subscription price represents a discount of 9.7% to the midpoint price of the company's shares at the close of trading on August 28.
"We are pleased to have agreed this loan facility with Shard, which will provide us with working capital while we complete our asset-level financing for our Cameroon development, and to have made this small placing of shares,” Jeremy Asher, the chief executive of Tower Resources said in a statement.
“The new loan facility, and the extension of the existing one, will allow us to avoid issuing more than a small number of shares, and most of those new shares will also reduce our existing debt. Although the loans require us to issue some warrants, these are at a significant premium to the current share price, and my company Pegasus is also pleased to be supporting the company by converting existing obligations into shares at the same terms as the subscription."
Asher added: “Our intention is that both loan facilities will be repaid when we conclude our asset-level financing for Cameroon, which we are working on at present. "
Share warrants have been issued in relation to the Shard facility and also the Pegasus extension.