Convertible Facility Agreement

RNS Number : 5610K

Lekoil Limited

02 September 2021

 

2 September 2021

Lekoil Limited

("LEKOIL" or the "Company")

Convertible Facility Agreement

LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, is pleased to announce the entry into a Convertible Facility Agreement ("CFA") with Hadron Master Fund ( "Hadron") , TDR Enterprises Ltd (a company controlled by Tom Richardson) and a non-related third party (together "the Lenders") to allow it to access up to £200,000 for working capital purposes.  

The entry into the CFA should be read in conjunction with the Company's Corporate and Operational Update issued on 2 September 2021.

The key terms of the CFA are:

Amount:	Up to £200,000 in total, with Hadron providing up to £100,000 and each of TDR Enterprises Ltd and the third party providing up to £50,000 each.
Use of proceeds:	For payment of corporate costs (regulatory and compliance and legal fees) and for general corporate purposes as approved by the Board and the Lenders.
Availability:	£100,000 available immediately, with £100,000 available after 1 October 2021.
Term:	6 months.
Repayment:	Principal and interest to be repaid from proceeds of capital raise and/or monies recovered from CEO Loan.  Repayment immediately due on a change of control of the Company. No conversion before expiry of the Term.
Conversion right:	In the event of non-payment at the expiry of the Term, Lenders have the option to convert the outstanding amounts into ordinary shares of the Company at the Conversion Price.
Conversion Price:	0.5 pence.
Interest Rate:	10% per annum.
Shareholder approval/Security for Repayment:	At the Company's upcoming AGM, the Company will seek shareholder approval for the issuance of the shares pursuant to the Conversion (if required). In the event shareholder approval is not obtained, the Lenders will be entitled to an assignment by way of security of the CEO Loan.

Tom Richardson is a non-executive director of the Company, controls TDR Enterprises Ltd and is the CEO of Metallon Corporation. Metallon was previously the Company's largest shareholder but no longer owns any of the ordinary shares of the Company.  Hadron Master Fund  is an affiliate of Hadron Capital, which owns 4.66% of the ordinary shares of the Company.  Marco D'Attansio is a non-executive director of the Company and the Chief Investment Officer of Hadron Capital.  

Given that Tom Richardson and Marco D'Attansio are non-executive directors of the Company and given Hadron's shareholding in the Company, the entry into the CFA with these parties is deemed to be a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies ("AIM Rules"). For the purposes of the AIM Rules, the independent directors of the Company, having consulted with the Company's Nominated Adviser, SP Angel, consider that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

Anthony Hawkins, Interim Executive Chairman, commented:

"As set out in our Corporate and Operational Update released earlier today, I expect that in the medium term the Company will be well funded to protect and pursue the recovery of its investment in Lekoil Nigeria.  In the short term, the Convertible Facility Agreement will allow the Company to fund its day-to-day operations and I would like to thank the lenders for making the funds available.  I would also encourage our shareholders to participate in the envisaged capital raise so that the Company can repay the CFA and allow the Company to pursue the recovery of its investment in Lekoil Nigeria."

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

For further information, please visit www.lekoilplc.com or contact:

SP Angel Corporate Finance LLP (Nominated Adviser and Joint Broker) John Mackay / Jeff Keating / Stuart Gledhill / Richard Hail	[phone]
Tennyson Securities (Joint Broker) Peter Krens / Edward Haig-Thomas	[phone]

 

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