21st Dec 2007 14:46
Victoria Oil & Gas PLC21 December 2007 Victoria Oil & Gas Plc 21 December 2007 Victoria Oil & Gas agrees £20 million funding • Agreement to raise approximately £20 million through an equity placing of new ordinary shares and issue of convertible loan notes• Retirement of existing £18.75 million secured guaranteed convertible bond through £8 million cash redemption and conversion of the remaining bonds• Four new directors to be appointed following successful completion of the proposed transactions• Technical assistance to be provided by international oil and gas consultancy Blackwatch Petroleum Services Limited and GeoDynamics Research The Board of Victoria Oil & Gas Plc ("Victoria" or "the Company")(AIM:VOG), theAIM-quoted oil and gas company focused in the Former Soviet Union todayannounces that, in consultation with its financial advisors Renaissance Capital,it has entered into agreements for a fundraising of approximately £20 million byway of an equity placing of new ordinary shares of 0.5 pence each in the Company("Ordinary Shares") and $10 million convertible loan notes in the Company due2012 ("Notes"). The Company has also agreed terms for the repayment andconversion of its outstanding £18.75 million secured convertible bonds in theCompany due 2009 ("Bonds"), (together the "Transactions"). The completion of the Transactions is subject to certain conditions being metand the passing of the necessary resolutions at an Extraordinary General Meeting("EGM"), which is to be held at 11 a.m. on 14 January 2008. The letter givingnotice of the EGM has been posted to shareholders and is available from theCompany's website at www.victoriaoilandgas.com. Subject to shareholder approval and conditional on admission and other terms,the Company will raise £15.25 million through the issue of 101,666,667 OrdinaryShares to private investors (the "Placing") at a subscription price of 15 penceper share. This represents a 28% premium to the market price as at close ofbusiness on the day before this announcement. One of the largest subscriptionsfor Ordinary Shares will come from a special purpose vehicle (the "SPV") backedby a consortium of investors led by Falcon Petroleum Limited ("Falcon") andmanaged by Noor Capital PSC & Associates, ("Noor Capital") an investment housebased in the United Arab Emirates ("UAE"). Another investor in the Placing will be HJ Resources Ltd, which will subscribefor 6,666,667 Ordinary Shares to be held on behalf of a discretionary trust ofwhich Kevin Foo is a possible beneficiary. This investment is thereforeconsidered a related party transaction under the AIM Rules for Companies. TheDirectors of Victoria, excluding Mr Foo, having consulted with JefferiesInternational Limited, the Company's Nominated Advisor, consider the terms ofthe transaction to be fair and reasonable insofar as its Shareholders areconcerned. In conjunction with and conditional on the Placing, the Company will issue theNotes to the SPV. Under the Notes, the SPV will subscribe for $2 million oncompletion of the Transactions and a further $8 million on ratification of theextension of the West Medvezhye licence. The Notes will carry a fixed rate of interest of 2.5% per annum payable half-yearly and are capable of being converted into Ordinary Shares at any time at aconversion price of 16.5 pence per share. The conversion price on the Notesrepresents a 40% premium to the market price as at close of business on the daybefore this announcement. The Notes can be redeemed in all or in part by the SPV on 31 December 2010,converted at any time or redeemed at maturity on 31 December 2012. If the Notesare redeemed at maturity the interest rate is adjusted to a fixed rate ofinterest of 6.5% per annum on a compound basis. The proceeds of the Placing and the Notes will be used to finance the Company'scurrent working capital requirement, its on-going development operations at itsWest Medvezhye gas and gas condensate exploration project in Russia and theKemerkol oil field in Kazakhstan and partly to redeem part of the existingBonds. Victoria will redeem £8 million of the Bonds at par, with the remaining £10.75million Bonds to be converted into 43,604,651 Ordinary Shares of the Company ata conversion price of 25 pence per share. This will represent a holding of16.18% of the enlarged issued share capital of the Company following completionof all the Transactions, at which time the Bonds will be cancelled and allsecurity held over the shares and assets of Company, its subsidiaries and itssubsidiary undertakings will be released. If the agreement relating to the Placing becomes unconditional in all respects,following the Placing and the conversion of the Bonds (but not the Notes) theaggregate issued share capital of the Company will be 269,507,991 OrdinaryShares, of which the SPV will hold a total of 29.74% and HJ Resources Ltd willhold 3.68%. Falcon is a private upstream-focused oil and gas company, which (with theinvestment management of Noor Capital) is leading the SPV and intends to makethe investment Victoria in recognition of the potential of its assets in theFormer Soviet Union. Falcon also intends to assist the Company in the on-goingdevelopment of these assets by strengthening its technical resources throughFalcon Petroleum's associations with oil and gas consultants BlackwatchPetroleum Services Limited ("Blackwatch") and GeoDynamics Research s.r.l("GeoDynamics") a leader in passive seismic technology. As part of the conditions attached to its investment in the Company, Falcon willnominate two Directors to the Board of Victoria subsequent to the completion ofthe Transactions. It has been proposed that, subject to approval, these will beMr. Rashed Al Suwaidi and Mr Philip Rand. Mr. Al Suwaidi is a petroleum engineer and the former Exploration and ProductionDirector for the Abu Dhabi National Oil Company ("ADNOC"). He has held boardmemberships of most of ADNOC's subsidiaries and directorships in some of thelargest investment companies in the UAE. Mr Rand is currently chief executive and chief financial officer of EquatorExploration Limited ("Equator"), an AIM-quoted oil and gas exploration andproduction company with assets in West Africa. Mr. Rand has over thirty years offinancial experience, seventeen of which in the upstream energy sector and priorto joining Equator was chief financial officer of Burren Energy. In addition two other directors have been invited to join the Board, Mr. GeorgeDonne, currently General Manager of the Company and Mr. Mukhtar Tuyakbayev, aKazakhstan based businessman with interests in mining, property, oil and gasexploration. Blackwatch is an international petroleum engineers and geo-science consultancyadvising clients across the industry on exploration and appraisal, fielddevelopment, reservoir management, well operations and asset evaluation. WhileGeoDynamics is a leader of research and development of low frequency acousticspectroscopy or 'passive seismic' and the developer of Geospectra IPDS currentlyone of the most effective tools for hydrocarbon monitoring. Blackwatch and GeoDynamics will advise the Company on its development strategiesfor its West Medvezhye and Kemerkol assets and on of the effectiveimplementation of those strategies. While Victoria finalises the appointment ofa new Chief Executive Officer, Blackwatch will also be providing technicaloversight of the Company's operations. Commenting on the proposed Transactions, Chairman Kevin Foo said, "In my letterto shareholders in our 2007 annual report, I highlighted that 2008 would be acritical 'turnaround' year for the Company. These transactions are thefoundation of that turnaround. The proposed investment from Falcon and itsconsortium reflects a strong belief in the opportunity that Victoria representsand several key issues have been solved simultaneously. "We have eliminated an overbearing financing structure, provided £12 million networking capital and secured powerful technical support from Blackwatch andobtained what we believe to be an outstanding technological edge in ourassociation with Geodynamics. Blackwatch and GeoDynamics are to undertake a fullreview of West Medvezhye and Kemerkol with our technical team and I look forwardto updating shareholders further in the future. "Finally, with the proposed addition of the new Directors to the Board we cananticipate a considerable enhancement of our corporate, managerial and technicalstrengths." Kevin Foo / George Donne Jonathan Charles / Ed PortmanVictoria Oil & Gas Plc Conduit PR+44 (0)207 921 8820 +44 (0)207 429 6607 +44 (0)7733 363 501 Toby Hayward / Oliver Griffiths Andrew Hayes / Vladimir Rusinov Jefferies International Renaissance Capital+44 (0)207 029 8000 +44 (0)207 367 7777 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
VOG.L