Horizon Oil Limited confirms underwriting agreements for new capital raising
Posted: 9 December 2004
The Board of Directors of Horizon Oil Limited advised on 6 December 2004 that the Company was undertaking a capital raising by way of a Share Purchase Plan (SPP), with the intention of having the SPP partly underwritten.
The SPP will provide all shareholders registered on 2 December 2004 with an address in Australia or New Zealand the opportunity to subscribe for up to $5,000 worth of ordinary shares at a price of 12 cents per share.
Documentation has been despatched to all shareholders eligible to participate in the SPP offer, which closes on Wednesday 22 December 2004.
The Board is now pleased to confirm that Horizon Oil has entered into an agreement with ABN AMRO Morgans Corporate Limited to underwrite $8 million worth of new shares, over and above the amount subscribed by shareholders under the SPP.
The amount of $8 million is equivalent to 15 per cent of issued share capital at the SPP issue price and, under ASX Listing Rules, is the maximum amount that can be placed in this underwriting.
The underwritten amount is subject to being scaled back to limit the total amount raised to 30 per cent of current share capital, being $16 million.
Horizon Oil has agreed to pay a Stamping Fee of 2 per cent to brokers whose clients’ applications are properly stamped.
The Board took the decision to initiate the capital raising at this time based on a number of factors, with the overarching objective of positioning Horizon Oil to develop with confidence the Company’s portfolio of business opportunities:
Firstly, although the Board had previously flagged a capital raising in the first half of 2005, the desirability of certainty of funding coupled with the opportunity offered by current market conditions encouraged the Board to bring this forward.
Additionally, an underwritten SPP provides a quick and low cost means of raising a significant amount of capital.
Secondly, the underwriting arrangements provide a means of introducing several new investors to the shareholder register.
In this regard, the underwriter has advised the Company that the sub-underwriters to the SPP include a number of international investors and private equity funds specialising in oil and gas investments.
The participation of these experienced investors is an endorsement of the quality of Horizon Oil’s assets and its management team.
Their involvement will add strength to the shareholder base and should benefit all shareholders as the Company grows.
Thirdly, proceeds from the capital raising – expected to be at least $10 million - when added to existing cash reserves of over $4 million largely remove the equity funding risk as the Company progresses with its field development programme.
The capital raised will provide capacity to deal with adverse cost over-runs or delays, which are part and parcel of the oil business, should they occur.
It will allow flexibility in identifying and acquiring new investment projects.
And, most importantly, the funds will finance initial design and construction of the Maari ( New Zealand) and 12-8 West ( China) projects, should their development be approved.
This will put Horizon Oil in a very strong position indeed to arrange debt financing for the development projects on favourable terms.
For more information see http://www.horizonoil.com.au
Posted by Richard Price,
Editor EnergyME.com
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