Lamprell PLC (LSE:LAM, OTC:LMPRF) has received a bid approach from major shareholder Blofeld Investment Management as it seeks to meet funding requirements of US$75mln over the next two months.
Blofeld, which owns 25.06% of the oilfield services provider, has indicated it is willing to make an offer to acquire the rest of the cash-strapped company, albeit at a very significant discount to the prevailing share price.
Negotiations between the two parties are continuing.
Shares in Lamprell crashed 80% to 4.5p in early trading.
In a separate announcement, Lamprell said it continues to explore several potential financing and strategic options, including asset monetisation, project-specific financing, hybrid facilities and/or additional equity, as it seeks to meet the US$75mln funding requirements.
The group’s lenders have indicated that a US$45mln facility the company has been seeking will only be provided if the company gets away a significant equity issue, which has left Lamprell facing severe liquidity constraints.
Blofeld and Lamprell’s other significant shareholder Lamprell Holdings, who together own roughly 54% of Lamprell PLC (LSE:LAM, OTC:LMPRF), have been asked to support a potential fundraising of up to US$150mln and/or provide some form of interim financing arrangement.
Lamprell has also sounded out other institutional shareholders but thus far has not been able to secure an agreement on the terms of an equity issue.
On 29 March 2022, the group announced that it had received an early-stage proposal for a potential sale of a majority stake in its Oil & Gas business but discussions ultimately led nowhere.
As for current trading, the oil & gas sector is going through a vibrant period and since the beginning of the year, Lamprell’s bid pipeline has grown to US$9.4 billion, with US$5.1 billion attributable to renewables and US$4.3 billion attributable to oil & gas. Engagement with prospective clients remains encouraging with circa US$1.4 billion of potential renewables contracts scheduled for award in 2022, Lamprell resolved.
Despite the encouraging signs, Lamprell’s performance continues to be affected by the delivery of legacy, low margin projects and insufficient revenue levels as the group emerges from a prolonged period of low market activity due to the low energy prices and more latterly, the impact of Covid-19, the company said in a trading statement.
New awards for Lamprell in all of the group's end markets over the past two years were below expectations, affected by Covid-19 and due in part to client concerns regarding the liquidity constraints the group faces and balance sheet strength in order to support large-scale projects.
As a result of the recent reservation agreement and anticipated contract awards, the group expects 2022 revenue to be in the range of US$400mln-US$500mln, with US$340mln secured for 2022. The consensus forecast for revenue in the current financial year is US$456.7mln.