Independent Oil & Gas is hoping to raise £16.6 million from the AIM stockmarket in order to develop its North Sea gas wells while deferring repayment of the £38.6 million it owes to London Capital & Finance.
As part of a debt restructure, £7.1m of debt due to one of LCF’s underlying borrowers, London Oil & Gas, will be rescheduled. A further £1.64m of debt will be converted into ordinary shares, and the maturity of existing warrants will also be extended by 12 months.
The hope for LCF investors is that IOG will succeed in developing its gas wells and be able to sell part of its interest in the wells to a bigger energy firm, allowing IOG to repay the loan and causing the shares to jump in value, allowing the administrators to recover more than the £40 million that RockRose Energy recently offered to buy the debt.
IOG shares plunged on the news of the restructuring from 17p to 11p. At time of writing they have recovered to around 14p.
Broker Arden Partners described the deal as “good news for IOG”. Whether it is good news for LCF investors remains to be seen. RockRose Energy has withdrawn its offer to buy the debt and said that it “failed to understand” how the rejection of its offers were in the best interest of IOG shareholders.