TIDMCAB
RNS Number : 8014K
Cabot Energy PLC
02 September 2019
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014. With the publication of this announcement, this
information is now considered to be in the public domain.
2 September 2019
Cabot Energy Plc
("Cabot", the "Group" or the "Company")
Term Sheet for Canada Loan Facility of up to C$5.0 million
Subscription to raise US$0.3 million from H2P
Company to commence Open Offer in October 2019 with H2P
committed participation of a minimum additional US$0.7 million
Cabot Energy Plc (AIM: CAB), the AIM quoted oil and gas company
focussed on creating predictable production growth in Canada, is
pleased to provide an update on its financial position.
Highlights
-- Cabot Energy Inc. has entered into a non-binding term sheet
for an asset-level loan facility of up to C$5.0 million with a
private energy lender to fund a winter work programme (the "Winter
Work Programme")
-- Subscription Agreement signed with High Power Petroleum LLC
("H2P") to subscribe for US$0.3 million to fund the commencement of
a late summer work programme (the "Summer Work Programme")
-- Open Offer to be launched in October 2019; H2P have committed
to participate in the Open Offer for a minimum amount of US$0.7
million
Cabot's wholly-owned Canadian subsidiary, Cabot Energy Inc.
("Cabot Inc"), has entered into a non-binding term sheet for an
asset-level loan facility of up to C$5.0 million (the "Loan
Facility") with a Calgary-based private energy lender (the
"Lender") which provides financial support to junior oil and gas
producers. Once executed, the Loan Facility will enable Cabot to
commence a Winter Work Programme, which is expected to commence in
Q4 2019.
The Company has also secured a total equity commitment of a
minimum of US$1.0 million from H2P to fund a Summer Work Programme
in September and October 2019. This will be raised via a
subscription of US$0.3 million, as set out in more detail below,
followed by a committed participation of a minimum US$0.7 million
in an Open Offer, which is to be launched in October 2019.
C$5.0 Million Asset-Based Term Loan Facility
The terms of the proposed Loan Facility to Cabot Energy Inc.
include provisions for the funds to be made available in tranches.
It is anticipated that the first advance of C$2.5 million will be
drawn down on or about 30 November 2019 and a second advance of
C$2.5 million is likely to be drawn down in early 2020. Both
advances are subject to the satisfaction of customary conditions
precedent, including the completion of the Lender's due diligence,
Lender security, a demonstrably successful Summer Work Programme
and certain minimum production levels immediately prior to the
drawdown dates.
The loan is non-recourse to Cabot Energy plc and the loan
advances will mature on 30 September 2021. The proposed costs
associated with the Loan Facility are: interest chargeable at 11.5%
per annum, payable monthly in arrears; commitment fees totalling
C$75,000; and a 2% participatory interest in gross revenue growth
achieved in excess of pre-agreed base revenue over the term of the
loan.
The Winter Work Programme
Once completed, the Loan Facility will be utilised to fund the
Winter Work Programme consisting primarily of four new horizontal
development wells to produce existing proven reserves.
US$0.3 Million Subscription by H2P and The Summer Work
Programme
Cabot has entered into an agreement with H2P to raise US$300,000
gross, before expenses, by way of a subscription for 8,130,066
ordinary shares of 1 pence each ("Ordinary Shares") at 3 pence per
ordinary share (the "Issue Price") (the "Subscription Shares") (the
"Subscription").
The Issue Price is equal to a 14.3 per cent discount to the
closing price of 3.5p on 30 August 2019, being the last trading day
prior to this announcement. Following the completion of the
Subscription, H2P will be interested in 33,103,569 Ordinary Shares,
representing approximately 72.2 per cent of the Company's enlarged
issued share capital.
The net proceeds of the Subscription will be used to provide
sufficient working capital to commit to the commencement of the
Summer Work Programme which will consist of nine workovers, a
critical maintenance programme and simulations in proven reserve
wells in September and October at a total budgeted cost of US$1
million. Following the Subscription, the Company will have
sufficient funds until October 2019.
Open Offer and H2P Commitment
In October 2019, the Company intends to launch an Open Offer to
all shareholders on the proposed open offer price of 3p. This is
intended to provide the balance of working capital funding needed
to complete the Summer Work Programme. As part of the Open Offer,
H2P has committed to the Company that it will invest a minimum of
US$0.7 million, bringing up its total equity commitment in the
current round of fundraising to at least US$1.0 million.
Related Party Transaction
H2P is a substantial shareholder in the Company and therefore
the Subscription constitutes a related party transaction in
accordance with AIM Rule 13. James Dewar, Rachel Maguire and Paul
Lafferty, who are independent Directors for these purposes, having
consulted with the Company's Nominated Adviser, consider the terms
of the Subscription by H2P, as a related party, to be fair and
reasonable insofar as all of Cabot's shareholders are
concerned.
James Dewar, Interim Non-Executive Chairman, commented: "We are
pleased to have entered into a term sheet to debt-fund the Winter
Work Programme and secure equity funding from our supportive
majority shareholder, H2P, to fund the Summer Work Programme. On
behalf of the Board, I would like to thank H2P for their continued
support at this crucial time. We are always mindful of our other
shareholders and look forward to providing them with the
opportunity to participate in an equity fundraising, via an Open
Offer on the same terms, in October. I would like to thank the
management team who have worked hard to access non-equity finance
in order to minimise further shareholder dilution, which is an
endorsement of the quality of both the Company's management team
and the assets' potential. In late 2019, we intend to further
strengthen our capital structure for the remainder of 2019 and the
entirety of 2020 once the Summer Work Programme has been
successfully executed."
Scott Aitken, Chief Executive Officer of Cabot, said: "Signing a
term sheet for a significant amount of credit with a specialist
lender in Calgary is an important building block in our plans to
execute our growth strategy. With the H2P funding we can commence a
Summer Work Programme of nine well workovers and stimulations which
will, subject to the satisfaction of the Loan Facility conditions
precedent, enable access to the debt facility, then undertake a
Winter Work Programme of drilling four new horizontal development
wells totalling a minimum US$7.0 million investment. Following this
investment, management believe the Winter Work Programme will have
a positive impact on operations and overall production levels."
Admission of the Subscription Shares and Total Voting Rights
Application will be made to the London Stock Exchange for the
8,130,066 Subscription Shares to be admitted to trading on AIM
("Admission"). These shares will rank pari passu with existing
Ordinary Shares in all respects. It is expected that Admission will
occur and that dealings in the Subscription Shares will commence at
8.00 a.m. on 6 September 2019.
Following the issue of the Subscription Shares, the Company will
have 45,845,122 Ordinary Shares in issue and no shares are held in
treasury. Accordingly, this figure will be the total number of
voting rights in the Company and may be used by shareholders as the
denominator for the calculations by which they determine whether
they are required to notify their interest in, or change to their
interest in, the Company under the FCA's Disclosure Guidance and
Transparency Rules.
-Ends-
Enquiries:
Cabot Energy Plc +44 (0)20 7469 2900
Scott Aitken, CEO
Petro Mychalkiw, CFO
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Broker
David Hignell, Richard Hail, Richard
Redmayne
Luther Pendragon +44 (0)20 7618 9100
Financial PR
Harry Chathli, Alexis Gore, Joe Quinlan
Note to Editors:
Cabot Energy Plc (AIM: CAB) is an oil and gas company focussed
on creating predictable production growth in Canada. Comprehensive
information on Cabot and its oil and gas operations, including
press releases, annual reports and interim reports are available
from Cabot's website: www.cabot-energy.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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