Providence in ‘urgent need for additional working capital’

Due to delays by its Chinese partner APEC with sending a promised loan, Irish Providence Resources is working to raise about $3.76 million amid an urgent need for additional working capital. 

Providence said on Thursday it had conditionally raised approximately $3.76 million (before expenses) through the proposed issue of 59,765,890 new ordinary shares in the company to institutional and other investors at a price of £0.051 ($0.063) per placing share.

The placing price represents a discount of approximately 7.3 percent to the closing price of £0.055 per existing ordinary share on September 10, 2019.

According to the company, the need for the placing arises from the ongoing delays to the receipt of the $9 million loan advance due to the company from APEC Energy Enterprises under the updated farm-out agreement between the two companies.

On June 5, 2019, the company announced that it had agreed on certain amendments to the updated farm-out with APEC and Lansdowne, including a revised backstop date for receipt of the APEC loan amount to June 14, 2019, which was subsequently extended through various announced extensions to September 30, 2019.

As at the close of business on September 11, 2019, the APEC loan amount had not been received by the company.

Meanwhile, the survey over Providence-operated Barryroe license has already started, and the first location has already been completed with the second one in progress.

As a result of the non-receipt of the APEC loan and in light of the company’s working capital position, the funding required for the Barryroe site survey and the company’s business re-engineering program, the company has an urgent need for additional working capital, Providence noted.

The placing is conditional upon, among other things, the passing of the resolution by shareholders at the extraordinary general meeting of the company to be held on September 30, 2019.

 

A going concern compromised without placing

 

If the company does not receive the proceeds of the placing, the company’s ability to continue as a going concern will be compromised.

As a result, the company is likely to be unable to complete the Barryroe site survey, implement the business re-engineering programme, fulfil any of its exploration, appraisal and development programs or meet its work commitments under existing licenses. Failure to do so could result in the premature termination, suspension or withdrawal of the company’s licenses.

The company would in such circumstances have to attempt to seek alternative forms of finance and undertake other activities such as delaying or reducing capital expenditure as a matter of urgency.

There is a substantial risk that the company would be unable to secure alternative forms of finance at all or on commercially acceptable terms. If the company was unable to secure alternative forms of finance at all or on commercially acceptable terms, this would have a material adverse effect on the company’s ability to operate on a going concern basis.

The proceeds of the placing will be used principally to fund the costs associated with the re-engineering of the company’s business model; to fund the balance of the costs associated with the acquisition of the site survey at Barryroe; and to fund general working capital to cover general, administrative and license operating costs for the period to the beginning of February 2020, including expenses incurred by the company in connection with the placing.

The proceeds of the placing will only provide working capital in respect of general, administrative, and license operating costs for the period to the beginning of February 2020. Accordingly, the board is currently undertaking a strategic review of the options available to the company on future financing alternatives to finance future working capital obligations beyond that date.

The placing shares represent approximately 10 percent of the number of ordinary shares of the company.


Spotted a typo? Have something more to add to the story? Maybe a nice photo? Contact our editorial team via email.

Also, if you’re interested in showcasing your company, product or technology on Offshore Energy Today, please contact us via our advertising form where you can also see our media kit.;

Share this article

Follow Offshore Energy Today

Events>

<< Sep 2019 >>
MTWTFSS
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

Offshore Energy Exhibition and Conference (OEEC)

The three-day event features an exhibition where over 600 companies will showcase their products and services…

read more >

Argentina Oil and Gas Expo 2019

The Argentine Oil and Gas Institute (IAPG) organizes the Argentina Oil & Gas Expo bringing together the most…

read more >

OEE Conference & Exhibition 2019

OEE2019 is organised by Ocean Energy Europe, the industry association representing ocean energy in Europe.

read more >

Africa Oil & Power 2019

The Africa Oil & Power conference will bring together an elite class of ministers and senior-level government…

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply