Tullow-Oil

Tullow Oil plc, one of the biggest players in the country’s oil fields, is to raise £586 million through a Rights Issue in a move expected “to assist the Group to accelerate the reduction of its debt.”

The proposed issue of 466,925,724 new ordinary shares will be at an issue price of 130 pence per share by means of a 25 for 49 rights issue.

A circular to shareholders on March 21, 2017 and signed by the Chairman of Tullow Oil plc, Mr Simon Thompson,  said the Group would convene a general meeting in London on April 5, 2017 to seek approval from shareholders.

At the meeting, shareholders will be asked to consider resolutions authorising the directors of the company to take certain actions in connection with Rights Issue.

Reason for Rights Issue

The circular said “The proceeds of the Rights Issue (expected to be approximately £586 million net of expected issue costs and expenses), together with the Group’s cash flow from production growth and portfolio management activities, are expected to assist the Group to accelerate the reduction of its debt”.

“The Directors believe this stepped reduction of debt will improve the company’s financial and operational flexibility, and enable growth within the next three to five years by allowing the Group to: invest in further infill drilling opportunities in both its operated and non-operated portfolio; undertake exploration and appraisal around the Jubilee and TEN fields to further develop the high return near field resource base; undertake further exploration and appraisal activity in Kenya to further shore up the resource base; drill high impact, potentially high return prospects across the company’s African and South American portfolio; and finally take advantage of other opportunities that industry conditions offer.”

Request to shareholders

Accordingly, the circular said “it is very important that shareholders vote in favour of the resolutions to be proposed at the General Meeting so that the Rights Issue may proceed.”

At the General Meeting, shareholders will be asked to consider the following resolutions: an ordinary resolution to approve the terms of the Rights Issue and to authorise the Directors to take all steps and enter into all agreements and arrangements necessary, expedient or desirable to implement the Rights Issue; an ordinary resolution, conditional upon the passing of Resolution 1, to authorise the Directors to allot shares in the Company up to a nominal amount of £46,692,572.40 (representing 466,925,724 ordinary shares) pursuant to or in connection with the Rights Issue. If granted, this authority will apply until the date falling three months after the passing of the resolution; and a special resolution, conditional upon the passing of Resolutions 1 and 2, to give power to the Directors to allot up to 466,925,724 New Ordinary Shares, representing approximately 51 per cent of the company’s existing issued share capital and being the maximum number of New Ordinary Shares that could be allotted under the Rights Issue as if section 561 of the Companies Act 2006 (as amended) did not apply to such allotment. If granted, this authority will apply until the date falling three months after the passing of the resolution.”

The circular said these matters required shareholder approval by way of a resolution supported by a simple majority, in the case of an ordinary resolution, and 75 per cent, in the case of a special resolution, of shareholders present and voting at the General Meeting (whether in person or by proxy).

“The Rights Issue is being made to existing shareholders (although, with certain limited exceptions, not those in the United States, Canada, Australia, Hong Kong, Japan, New Zealand, Ghana, the People’s Republic of China or the Republic of South Africa (the “Restricted Territories”)) and is conditional, among other things, upon the passing of the resolutions at the General Meeting.”

It noted emphatically, however, that in the event that the resolutions are not passed at the General Meeting, the Rights Issue would not proceed.

The circular said “The Directors believe that the proposed Rights Issue is in the best interests of shareholders and the Directors recommend that shareholders vote in favour of each of the resolutions so that the Rights Issue may proceed.”

Source:   http://www.graphic.com.gh