Finalised Loan Terms

RNS Number : 4267X

Island Oil and Gas PLC

14 August 2009

 



Island Oil & Gas plc

('Island' or 'the Company')

Finalised Related Party Loan Terms

Highlights:

• Finalisation of terms of loan of £300,000 from Mr Benitz, Chairman of Island and the Gascoigne Trust  to provide working capital to allow the Celtic Sea assets disposal process to be concluded in a manner and time frame that is most advantageous to shareholders 

• US$150,000 loan from Longreach Oil and Gas Ventures to cover a bank guarantee, thereby securing Island's position in the Zag Exploration Licence, onshore Morocco

Further to the announcement made on Friday 7th August 2009 regarding the agreement of Mr. Benitz, Chairman of Island to provide a further loan of £300,000 to the Company, the Board of Island is pleased to announce that it has finalised terms with Mr Benitz and the Gascoigne Trust ('Gascoigne'), a family trust connected to Mr Benitz, (together the 'Lenders') for the provision of these funds which will be used for working capital purposes. In addition the Board of Directors has agreed terms with Longreach Oil and Gas Ventures Limited ('Longreach') for the provision of US$150,000 to cover a bank guarantee given to the government of the Kingdom of Morocco to secure Island's position in the Zag Concession, onshore Morocco, where the Reconnaissance Licence awarded to the Company has recently been converted to a full Exploration Licence (the 'Licence').  

Chairman's Loan

Mr Benitz and Gascoigne have agreed to advance a loan of £300,000 to Island, [comprised of £100,000 from Mr Benitz in his personal capacity and £200,000 from Gascoigne] (the 'Chairman Loan'). The principal terms of the detailed loan agreement are summarised below. The Chairman Loan is repayable on 31 March 2010 (the 'Repayment Date') and shall bear interest at 10 per cent. per annum, accruing daily. At any time during the period of the Chairman Loan, or in the event of any non-repayment out of a Company sale of assets or fundraising by the Repayment Date, or a change of control of Island, the Lenders may, at their absolute discretion, elect to have the Chairman Loan converted into ordinary shares in Island at a conversion price calculated as the volume weighted average of the closing price of Island's ordinary shares on the AIM market of the London Stock Exchange for the 20 days prior to service of notice by the Lenders. A fixed and floating charge over the assets of the Company will be given in favour of the Lenders as security for the Chairman Loan. Mr Benitz, on account of his personal interest in this transaction and his connection with Gascoigne, absented himself from board consideration of the Chairman Loan.

Longreach Loan

Longreach has agreed to advance a loan of US$150,000 to Island (the 'Longreach Loan'). The principal terms of the detailed loan agreement are the same as for the Chairman Loan. A charge over the assets of the Company will be given in favour of Longreach as security for the Longreach Loan. Mr. Benitz, who has a beneficial interest in Longreach, absented himself from board consideration of the Longreach Loan. 

Related Party Transactions

The Chairman Loan and the Longreach Loan (the 'Loans') are considered related party transactions pursuant to the AIM Rules for Companies. The Directors of the Company, with the exception of Mr Benitz, having consulted with its nominated adviser, Davy, consider that the terms of the Loans are fair and reasonable insofar as its shareholders are concerned. In forming their opinion the Directors have taken into account that the Company has not been able to obtain sufficient funding from other sources for working capital purposes, together with the need to secure the Licence.

14 August 2009

For more information

Island Oil & Gas plc	Tel: [phone]
Paul Griffiths
Carl Kindinger
www.islandoilandgas.com
Davy (NOMAD and Broker)	Tel: [phone]
Anthony Farrell
Matrix Corporate Capital LLP	Tel [phone]
Louis Castro
Alexander David Securities	Tel + 44 (0)20 7448 9800
David Scott
College Hill (PR)	Tel: [phone]
Paddy Blewer
Nick Elwes

 

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