“The final step required to place the company back on a firm financial footing was a recapitalisation,” said chief executive Eytan Uliel.
The company will issue new shares priced at 0.1p to raise £5mln, £4.3mln in a ‘firm’ placing and a further £700,000 in a conditional share issue. A further £2mln could be raised through an open offer of shares to qualifying existing shareholders.
Proceeds will allow the company to make its remaining payments to complete its agreed refinancing – in December it announced that through discounted settlement agreements some US$23mln of balance sheet payables, debts and potential liabilities would be reduced to approximately US$2.5mln.
“The final step required to place the company back on a firm financial footing was a recapitalisation, which we will now embark on via the proposed fundraising,” said chief executive Eytan Uliel.
“The new funds raised will enable final agreed creditor settlement payments to be made, significantly reducing the company’s financial liabilities.
“Even more importantly however, the new funds will allow the company to pursue an identified, production accretive work programme in 2022 and 2023 across the company’s asset portfolio.”
A new production growth programme is planned for Trinidad and Tobago over the course of 2022 and 2023, with the aim of raising production to around 1,000 barrels oil per day from current levels of around 400 bopd. The programmes are planned to comprise low-risk well recompletions and workovers, drilling of new infill production wells and the implementation of enhanced oil recovery
In Suriname, the company said it plans to carry out an extended well test on the Weg Naar Zee asset with the aim of demonstrating commerciality. Success would allow that project to move into the development stage and subsequently add production for additional near term cashflows.
Alongside the funding, Challenger is enacting a number of boardroom changes.
William Schrader will step down from his role as chairperson with Iain McKendrick joining to take over the role.
Deputy chairperson James Smith is also stepping down and Simon Potter has indicated the he intends to step down as non-executive director in three months following the fundraise.
Tim Eastmond will be appointed as chief financial officer and will join the board as an executive director and Gagan Khurana, the company’s existing commercial manager will become chief operating officer. Other members of the current executive team either has or will soon cease employment with the company.
Eytan Uliel commented: “I welcome Tim Eastmond as CFO designate, and I very much look forward to working closely with him and our new Chairman designate, Iain McKendrick.
“Together with the rest of the Challenger Energy team, we are single-mindedly focused on the task at hand: growing production, growing cash flow, and restoring shareholder value.”
An extraordinary general meeting of shareholders is to be convened on or around February 28.
** updated to include placing price and close
Read More: Challenger Energy Group Plc raises £5mln in share placing to seal restructuring