TIDMHAWK
RNS Number : 2306P
Nighthawk Energy plc
30 August 2017
30 August 2017
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Amendment of Loan Notes
Nighthawk, the US focused oil development and production company
(AIM: HAWK and OTCQX: NHEGY), announces that it has executed
amendments to two existing unsecured facility agreements and an
existing loan note to defer the payment of cash interest and
royalty payments as required by the eighth amendment to the
facility agreement between the Company and the Commonwealth Bank of
Australia ("CBA"), announced on 3 July 2017.
On 30 June 2017, the Company executed a new amendment to the
existing facility agreement with CBA that renewed $21,250,000
million of the principal amount of the financing (inclusive of a
required $1,750,000 principal reduction payment). The amended
facility agreement required the Company to meet two conditions.
Firstly, existing unsecured note holders were required, by 31
August 2017, to agree to defer all cash interest and royalty
payments due to them until 31 March 2018, and secondly, to meet
minimum production volumes of 425 bbls per day from the 3 producing
wells in the Southern water flood pilot project for the month ended
30 September 2017 (together, the "Amended Agreement").
The Company is pleased to announce that it has now satisfied the
modification of existing loan note agreements condition.
As outlined below, the arrangements involve Johan Claesson, a
Director and the largest shareholder of the Company, and one of his
related companies who, among others, are deemed to be members of a
Concert Party in relation to the Company, as defined in the
Company's circular sent to shareholders on 15 March 2017.
Amendment of Facility Agreements and Unsecured Notes
The Company has amended the terms of certain of its existing
unsecured facility agreements and loan notes on which interest will
now be deferred until 30 June 2018.
The deferral applies to interest and royalty payments on the
following loan notes and facility agreements currently in issue
("Existing Loans"):
- Interest on the GBP3,800,000 9% convertible unsecured loan notes.
- Interest and royalties pursuant to the Facility Agreement
dated 23 July 2013, as amended, between the Company and
Fastighetsaktiebolaget Korpralen, a Company controlled by Johan
Claesson, a director of the Company.
- Continuing royalty payments of 10% on profit sharing pursuant
to the Facility Agreement dated 23 March 2013, as amended, between
the Company and Kattrumpan Fastighets AB.
In return for accepting the interest and royalty deferral, the
noteholders/lenders will be given the option, exercisable at their
discretion but subject to the conditions below, to elect to receive
the deferred sums owed to them through either of two routes:
Cash Payment: payment in cash on 1 September 2018 of the
deferred sums together with interest on those deferred sums applied
at a rate equivalent to 15% per annum.
Share Payment: subject to the approval of a waiver of the
obligations of Rule 9 of the UK Takeover Code by independent
shareholders and the disapplication of statutory pre-emption
rights, payment through the issue of new ordinary shares in the
Company of 0.25 pence each ("New Ordinary Shares"), with the
deferred sums converted at 0.8 pence per New Ordinary Share. No
interest shall be applied to the deferred sums if the Share Payment
option is exercised.
If the noteholders/lenders all elect to receive the deferred
sums in ordinary shares, at the conversion rate of 0.8 pence per
share, this would equate to the issue of approximately 617 million
New Ordinary Shares, or c.39% of the issued share capital as
enlarged through the new share issue (using a minimum exchange rate
of $1 to GBP1, as specified in the terms of the Existing Loans (the
"Minimum Exchange Rate")).
For information purposes only, using the current exchange rate
of $1.3 to GBP1, at the same conversion rate of 0.8 pence per
share, this would equate to the issue of approximately 529 million
new Ordinary Shares, or c.35% of the issued share capital as
enlarged through the new share issue.
The relevant members of the Company's Concert Party have agreed
to the above amendments to Existing Loans held by them. Election by
them for the payment of the deferred interest and royalty to be
satisfied via the Share Payment will require a waiver of the
obligations under Rule 9 of the Takeover Code (the "Waiver"). The
election of the Share Payment option would increase the Concert
Party's interest, and Mr Claesson's interest individually, in the
equity capital of the Company from less than 30% to more than 30%
(but under 50%) (using the Minimum Exchange Rate), assuming that no
other ordinary Nighthawk shares are issued until the exercise of
the Share Payment option.
If the Waiver is not approved by the independent shareholders
then the Share Payment option will not continue to exist, and the
Company will be required to make an aggregate cash payment of
approximately GBP5.6 million (using the Minimum Exchange Rate) to
the holders of the Existing Loans. This figure includes the
approximately GBP2.6 million of deferred interest and royalties due
to noteholders/lenders as set out in the Company's circular sent to
shareholders on 15 March 2017. In the Board's opinion, the Company
has limited working capital resources and, should the Company be
required to make the Cash Payment, this could have a significant
negative effect on its available cash and working capital
potentially including jeopardising the ability of the Company to
continue trading.
The Company and its advisors are preparing a Circular and
related resolutions for consideration by its independent
shareholders in order to obtain the Waiver and expect to be posting
the Circular, scheduling a General Meeting, shortly.
Related Party Transactions
The amendment of the terms of the Existing Loans by Johan
Claesson, and related companies, is considered a related party
transaction for the purposes of Rule 13 of the AIM Rules for
Companies. The independent directors, being the Directors other
than Johan Claesson, having consulted with the Company's nominated
adviser, Stockdale Securities Limited, consider that the terms of
the transaction as fair and reasonable insofar as the Company's
shareholders are concerned.
Enquiries:
Nighthawk Energy plc
Rick McCullough, Chairman +1 303 407 9600
Kurtis Hooley, Chief
Financial Officer +44 (0) 20 3582 1350
Stockdale Securities
Limited +44 (0) 20 7601 6100
Richard Johnson
David Coaten
This information is provided by RNS
The company news service from the London Stock Exchange
END
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