TIDMZEN
RNS Number : 9878C
Zenith Energy Ltd
14 February 2020
February 14, 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon
publication of this announcement via a regulatory information
service ("RIS"), the inside information contained in this document
is now considered to be in the public domain.
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Institutional investment in Zenith
Zenith Energy Ltd., ("Zenith" or the "Company"), (LSE: ZEN;
TSX.V: ZEE; OSE: ZENA-ME), the international oil & gas
production company, is pleased to announce that it has completed an
offering in the United Kingdom with a significant existing
institutional shareholder, as well as a selection of high net-worth
private investors. ("UK Financing")
Following the UK Financing, the Company has issued 9,000,000 new
common shares in the capital of the company ("UK Financing Shares")
to raise gross proceeds of GBP135,000 (approximately
CAD$232,000).
The issue price of the UK Financing is GBP0.015, representing a
premium of 5.26% over the closing mid-market price of Zenith's
common shares admitted to trading on the London Stock Exchange on
February 13, 2020.
An application will be made for the UK Financing Shares to be
listed on the standard segment of the FCA Official List and to be
admitted for trading on the London Stock Exchange Main Market for
listed securities ("Admission").
It is expected that Admission will become effective and that
unconditional dealings in the UK Financing Shares will commence on
or around 8.00 a.m. (BST) on February 19, 2020.
UK Financing Use of Proceeds
The proceeds of the UK Financing will be used to provide
additional funding for the development of Zenith's production
portfolio, the identification and acquisition of new oil & gas
production assets, as well as for general working capital
purposes.
Equity Sharing Agreement
Zenith is pleased to announce that it has entered into an equity
sharing agreement ("ESA") with a consortium of institutional
investors ("Investors") for a total amount of NOK 9,700,000
(approximately GBP810,000 or US$1,051,000)
Highlights
-- Subscription for 50,000,000 new common shares in the Company
(the "ESA Shares") by the Investors at an issue price of NOK 0.194
per ESA Share (the "Issue Price") to raise gross proceeds of NOK
9,700,000 , representing approximately 9.86% of the Company's
enlarged issued share capital (the "ESA").
-- The NOK 9,700,000 gross proceeds of the ESA will be pledged
by the Company pursuant to the ESA with the Investors. The ESA,
details of which are set out below, entitles the Company to receive
back those proceeds on a pro rata monthly basis over a period of 12
months, structured to commence one month following the subscription
of the ESA, subject to adjustment upwards or downwards each month
depending on the Company's share price at the time.
-- The ESA provides the opportunity for the Company to benefit
from positive future share price performance.
US$2.5 million Convertible Loan Facility
The Company can confirm that its current total outstanding
liability in relation to the US$2.5 Convertible Loan Facility (the
"Facility") currently stands at US$1.05 million.
Use of ESA Proceeds
The Company plans to use a proportion of ESA proceeds to
progressively close its liability in relation to the aforementioned
Facility.
Andrea Cattaneo, Chief Executive Officer, commented:
"It is encouraging to see continued support from large, existing
UK institutional shareholders as well as renewed investment from
our institutional lenders.
We expect the proceeds of the ESA to provide additional funding
for our activities into 2021, as well as help us to reduce our
convertible debt exposure. The innovative mechanics of the ESA are
expected to enable Zenith to potentially benefit significantly from
future share price appreciation.
I look forward to making further announcements in the near
future concerning our exciting progress."
Introduction
The Investors have conditionally agreed to subscribe for
50,000,000 ESA Shares at the issue price of NOK 0.194 for gross
proceeds of NOK 9,700,000 . The ESA proceeds will be pledged to the
Investors under the ESA pursuant to which the Company is entitled
to receive back those proceeds on a pro rata monthly basis over a
period of 12 months, subject to adjustment upwards or downwards
each month depending on the Company's share price at the time. As a
result of entering into the ESA, the aggregate amount received by
the Company under the ESA may be more or less than NOK 9,700,000 ,
as further explained below.
A significant factor in Zenith's decision to enter into the ESA
is that it provides the opportunity for the Company to benefit from
positive future share price performance. There is no upper limit
placed on the additional proceeds receivable by the Company as part
of the monthly settlements and the amount available in subsequent
months is not affected. At the same time, the Company notes the
corresponding risk that a fall in Zenith's share price could reduce
the amount of proceeds received by the Company. Zenith expects its
development activities and operational progress to achieve
considerable positive advancements over the 12 month term of the
ESA. If these advancements are successful, and if the success of
these advancements is reflected in Zenith's share price, the
Company expects the proceeds to be received back from the Investors
to exceed the amount pledged under the ESA.
Further information on the Equity Sharing Agreement
Pursuant to the ESA between the Company and the Investors,
50,000,000 ESA Shares will be issued to the Investors at NOK 0.194
per ESA Share for an aggregate subscription of NOK 9,700,000 before
expenses.
The ESA proceeds of NOK 9,700,000 will be pledged to the
Investors under the ESA under which the Investors will then make,
subject to the terms and conditions of the ESA, monthly settlements
(subject to adjustment upwards or downwards) to the Company over 12
months, as detailed below. As a result of entering into the ESA,
the aggregate amount received by the Company under the ESA may be
more or less than NOK 9,700,000 , as further explained below.
The Equity Sharing Agreement
In accordance with the terms of the ESA, the Company will enter
into the ESA, pursuant to which Zenith will return the NOK
9,700,000 proceeds of the ESA to the Investors. The ESA will enable
the Company to benefit from any share price appreciation over the
Benchmark Price of NOK 0.2231 (as defined below). However, if the
Company's share price is less than the Benchmark Price then the
amount received by the Company under the ESA will be less than the
gross proceeds of the ESA which were pledged by the Company to the
Investors at the outset.
The ESA provides that the Company will receive 12 equal monthly
settlement amounts as measured against a benchmark share price of
NOK 0.2231 per ESA Share (the "Benchmark Price"). The monthly
settlement amounts for the Sharing Agreement are structured to
commence one month following the signature of the Sharing
agreement.
If the measured share price (the "Measured Price"), calculated
as the average of the 10 lowest daily VWAP of the Company's
ordinary shares for the calendar month of each settlement date,
exceeds the Benchmark Price, the Company will receive more than 100
per cent. of that monthly settlement due on a pro rata basis
according to the excess of the Measured Price over the Benchmark
Price. There is no upper limit placed on the additional proceeds
receivable by the Company as part of the monthly settlements and
the amount available in subsequent months is not affected. Should
the Measured Price be below the Benchmark Price, the Company will
receive less than 100 per cent. of the monthly settlement
calculated on a pro rata basis and the Company will not be entitled
to receive the shortfall at any later date.
In no event will fluctuations in the Company's share price
result in any increase in the number of ESA Shares issued by the
Company or received by the Investors. A decline in the Company's
share price would not result in any advantage accruing to the
Investors and the ESA allows both the Investors and the Company to
benefit from future share price appreciation.
Total Voting Rights
The Company wishes to announce, in accordance with the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules, the
following information following the aforementioned
transactions.
Class of share Total number of Number of Total number of
shares voting rights voting rights
per share per class of share
Common Shares in
issue and admitted
to trading on the
Main Market of
the London Stock
Exchange 286,403,856 1 286,403,856
---------------- --------------- --------------------
Common Shares in
issue and admitted
to trading on the
TSXV 566,072,921 1 566,072,921
---------------- --------------- --------------------
Common Shares in
issue and admitted
to trading on the
Merkur Market of
the Oslo Børs 566,072,921 1 566,072,921
---------------- --------------- --------------------
No Common Shares are held in treasury. The above figure for
total number of Common Shares may be used by shareholders in the
Company as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a
change to their interest in, the Company under the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules.
Further Information:
Zenith Energy Ltd
Andrea Cattaneo, Chief Executive Tel: +1 (587) 315 9031
Officer
-----------------------------
E-mail: info@zenithenergy.ca
-----------------------------
Novum Securities Limited - Broker Tel: + 44 (0) 207 399
9400
-----------------------------
Charlie Brook-Partridge
-----------------------------
Hugh McAlister
-----------------------------
Notes to Editors :
Zenith Energy Ltd. is an international oil and gas production
company, listed on the TSX Venture Exchange (TSX.V:ZEE) and London
Stock Exchange (LSE:ZEN). In addition, the Company's common share
capital was admitted to trading on the Merkur Market of the Oslo
Børs (ZENA:ME) on November 8, 2018. The Merkur Market is a
multilateral trading facility owned and operated by the Oslo
Børs.
The Company was assigned a medium to long-term issuer credit
rating of "B+ with Positive Outlook" on October 9, 2019 by Arc
Ratings, S.A. On November 18, 2019, the Company was assigned a "B+"
with Stable Outlook debt issuer credit rating by Rating-Agentur
Expert RA.
The Company operates the largest onshore oilfield in Azerbaijan
by cumulative acreage following the signing of a 25-year REDPSA,
(Rehabilitation, Exploration, Development and Production Sharing
Agreement), with SOCAR, State Oil Company of the Republic of
Azerbaijan, in 2016. Zenith also operates, or has working interests
in, a number of natural gas production concessions in Italy. The
Company's Italian operations produce natural gas, condensate and
electricity.
Zenith's development strategy is to identify and rapidly seize
value-accretive hydrocarbon production opportunities in the onshore
oil & gas sector. The Company's Board of Directors and senior
management team have the experience and technical expertise to
develop the Company successfully.
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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