Canadian Overseas Petroleum Limited Announces £1,300,000 Placing & Successful Shares for Debt Proposal

Source Company Press Release
Company Canadian Overseas Petroleum Limited
Tags Corporate: Corporate Results, Overview/Strategy, Country: Nigeria
Date July 20, 2020

Canadian Overseas Petroleum Limited ("COPL" or the "Company") (XOP: CSE) & (COPL: LSE), an international oil and gas exploration and development company focused on sub-Sahara Africa, today announces that:

COPL has entered into agreements with two institutional investors and two high net worth private investors to raise gross proceeds of £1,300,000 in a non-brokered private placement (the “Placing”) at a price of 0.3 pence per common share (the “Placing Price”); and,

The Company has successfully agreed with creditors for the previously announced Debt Exchange which will result in COPL repaying approximately US$1.6m of historic debt.

The net proceeds from the Placing will be used for ongoing general and administrative costs of the Company and the costs of professional advisers and service providers that are not eligible for the Debt Exchange. Completion of these transactions will improve the Company’s working capital position as it works to conclude definitive agreements for the Company’s Nigerian OPL 226 project as disclosed on July 10, 2020.

The Placing and Debt Exchange are conditional on admission of trading on the London Stock Exchange of: (i) 433,333,334 common shares to be issued pursuant to the Placing; and, (ii) up to 188,570,475 common shares to be issued pursuant to the Debt Exchange. Application has been made to the United Kingdom's Financial Conduct Authority (the "FCA") for up to 621,903,809 common shares of nil par value (the "New Shares") at 0.3 Pence per common share (the "Placing Price") to be admitted to the standard listing segment of the Official List maintained by the FCA, and to the London Stock Exchange plc (the "London Stock Exchange") for such New Shares to be admitted to trading on the London Stock Exchange's main market for listed securities ("Admission"). It is expected that Admission will be become effective and that unconditional dealings in the New Shares will commence on or around July 23, 2020.

The common shares to be issued pursuant to the Debt Exchange were outlined in the Company's Prospectus approved by the FCA on 26 June 2020. The Company reserved a total of 411,326,189 common shares in the capital of the Company (of which 252,512,157 common shares were issued on July 15, 2020) to be allocated for the settlement of debts to its unsecured creditors, accrued unpaid wages to its employees, and the secured Promissory Note due to its CEO at the Placing Price (the “Debt Exchange”).

There are no fees or commissions payable pursuant to the Debt Exchange which enables the Company to successfully settle approximately US$1.6m of debt. COPL will pay a finder’s fee of 7.5% cash and 32,500,000 common share purchase warrants in relation to the Placing. The finder’s warrants are exercisable into one common share of the Company at a price of 0.39p per share for a period of twelve months from Admission.

The Prospectus approved by the FCA on June 26, 2020, can be viewed under the Company's name at or on the Company's website at The Debt Exchange shares to be issued that were not cleared under the prospectus will be issued pursuant to the public offer exemption set out in PRR 1.2.3 Article 1(4)(b) and the Regulated Market Exemption set out in PRR 1.2.4 Article 1(5)(h).

Pursuant to the Debt Exchange, and as described in the Prospectus dated 26 June 2020, Mr. Millholland also has the option to convert a further CAD$200,000 owed to him pursuant to Promissory Note into common shares of the Company at the Placing Price of 0.3p per share until December 31, 2020.

Arthur Millholland, President and CEO, commented: "We are pleased with the outcome of this Placing and these new shareholders who are well known investors in the Oil and Gas E&P space, some of whom I have known more than 20 years. Following the Placing, Debt Exchange, and our recently announced financings, the Company is on firmer financial footing going forward. We continue to work with Essar to complete the legal documentation required to effect the OPL226 transaction as outlined in the agreement in principal announced in June 2020, and we anticipate concluding that documentation shortly. We thank our new shareholders for their support and confidence in the COPL Executive Team. The participants in the Debt Exchange are largely long-term employees and long-standing advisers and service providers to COPL.”

Ryan Gaffney, CFO, added: “The Placing has been arranged with high net worth and institutional investors that have good and long standing relationships with the COPL Executive Team. The Placing provides COPL with new financing and working capital that will allow us to progress our efforts on OPL226 and to evaluate new opportunities in line with COPL’s strategy. The completion of the Debt Exchange has the same effect as raising new financing at a very low cost. COPL will emerge with an improved balance sheet now that it has eliminated these payables and, with new shareholders that we believe will be supportive as we grow.”

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