22nd Jan 2015 08:53
LONDON (Alliance News) - Sound Oil PLC saw its shares rise early Thursday after it said it had paid an introduction fee for a recent lending facility it agreed to help fund the drilling of a well in shares at a significant premium to its share price.
In a statement, the oil and gas company said it had issued Continental Investment Partners SA with just over 3.9 million shares at 16 pence each, an 80.3% premium to its closing mid-market price in Wednesday. Greenberry SA, with provided Sound Oil with a reserve-based lending facility last November, had agreed at that time that the introduction fee connected with the facility would be paid at 16 pence each.
Continental Investment Partners is now directly and indirectly interested in a total of nearly 68.2 million Sound Oil shares, a 16.27% stake. Sound Oil Director Marco Fumagalli is managing partner and 25% shareholder in Continental. Greenberry, meanwhile, is an affiliate of Continental.
These connections mean that the deal is known as a related party transaction. Sound Oil said last November the deal had been signed off by its independent directors who took advice from its nominated advisor, as being at fair and reasonable terms as far as Sound Oil shareholders are concerned.
The company's reserve-based lending facility with Greenberry is a EUR7 million, 24-month bullet loan issued at par with a 5% coupon. The loan is secured on the company's Carita permit, which holds the Nervesa discovery. Sound Oil said when it arranged the loan that it would ringfence 50% of the free cash flows from Rapagano and Nervesa for the 24 month period of the loan and use the cash pool for paying it off.
As part of the loan, Greenberry was granted a 4% royalty on gross revenues from the Nervesa discovery as well as the introduction fee and a EUR612,000 cash commitment fee.
"The Nervesa RBL was the second major investment by our cornerstone investor and fully funds the next Nervesa well, where we expect site operations to commence shortly," Sound Oil Chief Executive James Parsons said in the company's statement Thursday. "Sound Oil is on the cusp of a very exciting operational period with various permits expected imminently, a busy 2015 drill programme and first gas at Nervesa."
Sound Oil shares were up 5.8% at 9.39 pence early Thursday.
By Steve McGrath; [email protected]; @stevemcgrath1
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