Solo Oil Plc
US$5 million Convertible Loan Facility
RNS Number : 3809W
Solo Oil Plc
14 November 2017
SOLO OIL PLC
("Solo" or the "Company")
Solo Oil plc (SOLO: AIM) is pleased to announce that the
Company has today entered into a Convertible Loan Agreement
("Agreement") with institutional investors arranged by RiverFort
Global Capital Limited ("RiverFort Investors") for a total maximum
commitment of US$5 million. The Company has also drawn a first tranche of
US$1.5 million ("First Tranche"), with subsequent drawings against
the facility to be at the Company's sole election.
The First Tranche will be used to fund the Company's
share of forecasted activities within the Company's investment portfolio,
specifically:
· the final reconciled expenses
for the Ntorya-2 well and flow testing in Tanzania, in which Solo holds a 25%
working interest,
· screening engineering studies
for the planned Ntorya early production scheme and full field development,
· a Competent Persons Report for
the estimated gross 1.34 trillion cubic feet ("tcf") gas in place
Ntorya accumulation,
· additional studies at the
Kiliwani North producing gas field, where Solo holds a 7.55% interest,
· upcoming long term well testing
at the Horse Hill-1 oil discovery in the UK, in which Solo has a 10%
participating interest in Horse Hill Development Limited,
· pre-drill technical work within
the Helium One Limited investment in which Solo holds a 10% interest by means
of shares, and; general investment working capital needs over the next 6
months.
Neil Ritson, Executive Chairman, commented:
"Solo is approaching a period of considerable
activity which will require expenditure across all of the mature investments
within our diverse portfolio. We anticipate that this expenditure will
enhance the core underlying value of our portfolio through a range of exciting
operational milestones."
"Having undertaken a thorough review of the funding
options available to Solo we have determined that this convertible loan
facility is by far the most effective and least dilutive option for the Company
and its shareholders. The facility conversion price is set at a 45%
premium to the closing share price and the First Tranche provides us with the
ability to cover our share of anticipated costs associated with the multiple
activities that we forecast in the near future. As previously
indicated, should we seek to raise significant operational funds, for example
to drill additional wells in Ruvuma, we will open that funding round to
existing shareholders to participate.
Terms of the Loan
Each tranche ("Advance") will have a 12 month
term with and initial 3 month repayment holiday and will bear an 8 percent per
annum interest rate. During the term of the Agreement the Company may
elect to make repayments of principal and accrued interest in shares or in
cash. Shares used to pay principal and interest will be issued at the
lower of (a) 145% of the closing share price of the Company on the date of the
drawdown ("Fixed Conversion Price"), or (b) 95% of the lowest daily
VWAP over the 10 trading days immediately prior to a notice of conversion.
Should the Company elect to make a repayment of principal and interest in cash,
a redemption fee of 5% is also payable.
The Company can elect to extend the term of each Advance
by 6 months by giving 30 days notice before the end of the 12 month term and
paying an extension fee of 5%.
During the term of the Agreement the RiverFort Investors
covenant that they and their affiliates and insiders will hold no net short
position in the Company. The Company will issue warrants to the RiverFort
Investors over 15% of each tranche at the Fixed Conversion Price of each
tranche with a three year term.
The information contained in this announcement is deemed
by the Company to constitute inside information for the purposes of the EU
Market Abuse Regulation No. 596/2014.
