21st Jan 2015 12:53
LONDON (Alliance News) - TXO PLC saw its shares fall early Wednesday after it said it will conduct a share placing to raise GBP100,000, and had drawn down more from its convertible loan note facility, although it won't take the full amount of the facility as the lender has now done a direct finance deal with Grand Bahama Group Ltd, in which TXO is invested in.
It also announced other financing deals, including another convertible loan note facility with a second Bahamian investor and an additional finance deal to try and expand companies TXO is invested in.
In a statement, the energy and clean technology investment company said it has made a further GBP50,000 drawdown on its GBP1 million zero-coupon convertible loan note facility, meaning that it has drawn a total of GBP500,000.
However, TXO has decided not to draw the other half of facility after the facility provider advanced GBP500,000 directly to Grand Bahama Group Ltd and entered talks with GBG about a further GBP500,00 facility. TXO has a 35.67% stake in GBG.
The facility was arranged last October with an investor in the Bahamas, who was introduced to TXO by directors of GBG in a complex, related-party transaction. Under the terms of the original deal, GBG was to be issued with 15 million new TXO shares as an introduction fee, while TXO was set to give a charge over 254 GBG shares when it drew down the full GBP1 million facility.
TXO said Wednesday that GBG will now only be issued with 7.5 million new TXO shares as an "introducer's fee", a proportionate scale down of the earlier amount, and the charge for drawdown will now be 127 GBG shares.
TXO also announced details of other loans. It said GBG has agreed to convert its entire GBP50,000 holdings of the 2015 convertible loan note into 25 million new shares. Combined with the fee shares, it will then have 134.6 million TXO shares, or a 15.13% stake.
Separately, the company said it has issued a further GBP75,000 2015 convertible loan note to a second Bahamas-based investor that has also been introduced by GBG.
In total, TXO now has GBP55,000 of residual 2014 convertible loan notes that are expected to be repaid by the end of January, GBP309,357 October convertible loan notes, a GBP200,000 loan note due on October 31, a GBP209,900 loan note from Bergen that's due to be repaid in February 2016, and the GBP500,000 loan note that's due October 31, 2016.
In a separate statement Wednesday, TXO said it is in discussions with a UK-based clean technology investment management fund and a large international bank that specialises in asset finance of large plant and equipment, with a view to expanding its existing and future investee companies.
"With all investee companies in negotiations regarding additional investment and/or new contracts we expect to be a position to make further announcements shortly," said TXO Chairman and Chief Executive Tim Baldwin.
Two of the companies that TXO is invested are wholly owned subsidiaries of GBG, namely Morgan Oil Marine Bahamas Ltd and Morgan Oil USA LLC.
Morgan Oil has been forwarded an agreement for lease for its new site in Freeport Harbour in the Bahamas. Morgan has now moved into the site, but will need to prepare an environmental impact assessment and environmental management plan before it can commence construction of the company's planned hydrocarbon recovery plant, said TXO.
Morgan Oil is also set to receive around USD1 million under a contract it signed in December to reprocess 125,000 barrels of contaminated water and mixed crudes from "one of the world's largest commodity brokers," which should be completed in the second half of 2015, said TXO.
Oil Recovery Services Ltd, one of GBG's partners that TXO is invested in, has been approached by an unnamed Canadian investor who wishes to invest CAD1 million in ORS. ORS has informed TXO, and if the deal is approved, TXO will sell its entire stake in the company to the private investor for around CAD400,000 cash, in addition to a royalty on certain future projects, said the company.
TXO also holds a 30% stake in Oil Tech Royalties Inc, which has informed TXO that a third party investor has indicated it will make a EUR300,000 investment to obtain a 3% stake in the company. OTR is set to use the funds to further sales and marketing of its products, said TXO.
Shareholders of Tasmania Oil and Gas have also approached TXO to show interest in acquiring TXO's 25% share in the company. TXO said discussions were ongoing and has previously described its investment in TOG as "non-core".
"TXO is greatly encouraged by the fact that GBG and all other investee companies continue to make excellent progress. We remain confident that with the further investment being offered to the investee companies as detailed above, TXO will meet its targets for the financial year," added Baldwin.
"TXO has had to revise its expectations for when it may expect dividends to be returned from GBG to later this year. However, the "size of the prize" gets bigger," said Baldwin.
TXO shares were down 10.3% at 0.130 pence Wednesday morning.
By Steve McGrath and Joshua Warner; [email protected]; @stevemcgrath1; [email protected]; @JoshAlliance
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