Financing Update

RNS Number : 5278X

Tower Resources PLC

01 September 2020

 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.

This announcement does not constitute a prospectus or offering memorandum or an offer in respect of any securities and is not intended to provide the basis for any decision in respect of Tower Resources PLC or other evaluation of any securities of Tower Resources PLC or any other entity and should not be considered as a recommendation that any investor should subscribe for or purchase any such securities.

1 September 2020

Tower Resources plc

Shard Merchant Capital Loan Facility Agreement

Extension of Pegasus Loan Facility

Issue of Shares and Warrants in connection with Loans

Subscription to raise US$200,000

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM listed oil and gas company with its focus on Africa, is pleased to announce that, further to the Company's financing update announcement on 14 August 2020, the Company has on 28 August 2020 agreed a six-month Loan Facility (the "Shard Facility") of US$500,000 with Shard Merchant Capital Ltd ("Shard"). The terms of the Shard Facility include the issue of 31,446,541   attached three-year warrants at a strike price of 0.6 pence and 5,761,198 shares to pre-pay interest .

The Company has also, on 28 August 2020, agreed a further six-month extension to its existing US$750,000 Loan Facility (the "Pegasus Loan Facility") with Pegasus Petroleum Limited ("Pegasus"), as part of which it will issue 47,169,811 attached three-year 0.6 pence warrants, and Pegasus has agreed to subscribe for 37,854,971 shares to convert the current accrued interest on the Pegasus Loan Facility into shares, and to pre-pay interest (the "Pegasus Extension").

The aggregate number of shares to be issued in consideration of accrued and pre-paid interest for the Shard Facility and Pegasus Loan Facility is therefore 43,616,169 shares ("Loan Facility Interest Shares").

The Company also announces a subscription (the "Subscription") agreed on 28 August 2020 to raise gross proceeds of US$ 200,000 through a subscription of approximately 38,407,989   new ordinary shares of 0.001 pence each (the "Subscription Shares") at a subscription price of 0.393 pence per Subscription Share (the "Subscription Price") to clients of Shard. The Subscription Price of 0.393 pence per share represents a discount of 9.7% to the midpoint price of the Company's shares at the close of trading on 28 August 2020.

The purpose of the Shard Facility, Pegasus Extension and the Subscription is to cover working capital while the Company finalises funding arrangements for the drilling of the NJOM3 well on the Thali licence as highlighted in the Company's 20 August 2020 announcement.

Shard Facility and Issue of Shares and Warrants

The Company has agreed a six-month funding facility of US$500,000 with Shard Capital Management Limited. The Shard Facility will rank pari passu with the existing Pegasus Facility. The material terms of the facility comprise interest of 1% per month paid monthly in arrears, sharing of the rights of Pegasus under the existing fixed and floating charge over the Company's assets shared held by Pegasus, and the issue of 31,446,541 three-year warrants at a strike price of 0.6 pence per share ("Shard Warrants"), which is a premium of 37.9% to the midpoint price of the Company's shares at the close of trading today. The Shard Facility has a term of 6 months and a redemption fee of 8%. The Shard Facility will also be repayable from future issues of equity by the Company or other fundraising by the Company or its subsidiaries subject to certain conditions and above a $2.5 million threshold level similar to the repayment provisions of the Pegasus Loan Facility. The Shard Facility contains usual default provisions including an option to convert into equity if and only if a default occurs.

As part of the Shard Facility agreement, $42,000 of interest would be prepaid via the issue of 5,761,198 shares at a price of 0.393 per share (the "Issue Price") and using an exchange rate of US$ 1.325 = £1 (the "Exchange Rate").

Extension of the Pegasus Loan Facility and Issue of Shares and Warrants

As previously announced on 1 July 2020, the US$750,000 Loan Facility, provided by Pegasus, was extended with repayment due on or before 15 August 2020 with a further grace period to account for any delays.

The Company has now agreed with Pegasus a further extension of the repayment of the Pegasus Loan Facility, to coincide with the maturity date of the Shard Facility, pursuant to which the terms of the Pegasus facility would also be adjusted to reflect similar or equivalent terms to the Shard Facility. Therefore the redemption fee on the Pegasus Loan Facility will be changed to match that of the Shard Facility, and an equivalent number of warrants on equivalent terms pro rata will be issued to Pegasus in consideration for the Pegasus Extension. The total number of warrants to be issued to Pegasus, based on the same three year term and strike price per share as the Shard Warrants will therefore be 47,169,811 warrants. The default provisions of the Pegasus Loan Facility will also be conformed with the default provisions of the Shard Facility, and Pegasus will share its security position with Shard.

As part of the extension agreement, $152,120.30 of accrued interest on the Pegasus Loan Facility, together with $45,000 as a prepayment of interest will be converted into shares in the Company at the Issue Price and using the Exchange Rate as set out above.

Related Party Transactions

Jeremy Asher, Chairman and CEO, is the ultimate beneficial owner of Pegasus, which has agreed the Pegasus Extension, and payment of accrued and pre-payment loan interest via the issue of shares ("Loan Facility Interest Shares").

Jeremy Asher, as a director and substantial shareholder of the Company, and Pegasus Petroleum Ltd, are considered to be "related parties" as defined under the AIM Rules and accordingly, the Pegasus Extension and associated issue of shares and warrants constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules.

The Directors independent of the Pegasus Extension, being Peter Taylor and David M Thomas, consider, having consulted with SP Angel Corporate Finance LLP, the Company's nominated adviser, that the terms of the Pegasus Extension and issue of warrants and shares are fair and reasonable insofar as the Company's shareholders are concerned.

The following tables sets out the Directors' share and warrant holdings and percentage interests in the issued share capital of the Company following completion of the subscription and issue of shares. 

	Holding prior to the announcement of Proposed Subscription and Issue of Shares pursuant to the Loan Facility Interest		Number of Shares acquired pursuant to the Loan Facility Interest	Immediately following Admission of the Subscription and Loan Facility Interest Shares:
	Number of Ordinary Shares	% of issued share capital	Number of Ordinary Shares	Number of Ordinary Shares	% of issued share capital	% of fully diluted share capital
Jeremy Asher*	301,276,110	24.2	37,854,971	339,131,081	25.6	32.5
Peter Taylor	18,451,726	1.5	-	18,451,726	1.4	3.0
David M Thomas#	-	-	-	-	-	-

* 1,805,308 of these shares are held by Agile Energy Limited, which is owned by the Asher Family Trust of which Jeremy Asher is a lifetime beneficiary

^# Independent Director

Note: fully diluted share capital is after exercise of all warrants and options, and based on no further conversion of loans to equity.

Director	Number of Warrants being issued	Total number of Warrants held including this issue*	Shareholding upon exercise of total number of Warrants held	% of issued share capital upon exercise of Warrants ‡
Jeremy Asher	47,169,811 †	246,738,416	585,869,498	30.6
Peter Taylor	-	41,404,919	59,856,645	3.1
David M Thomas	-	17,215,461	17,215,461	0.9

*Warrants are held at different prices.

† Warrants issued to Pegasus Petroleum Ltd; a company beneficially owned by Jeremy Asher

‡Excludes share options

Share Capital following the Subscription and Issue of Shares

Application has been made for the Subscription Shares, and the Loan Facility Interest Shares, to be admitted to trading on AIM. It is expected that Admission of the Shares will become effective and that dealings will commence at 8.00 a.m. on or around 4 September 2020.

Following admission of the Subscription Shares and Loan Facility interest Shares , the Company's enlarged issued share capital will comprise 1,325,296,032  Ordinary Shares of 0.001 pence each with voting rights in the Company. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in the interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Jeremy Asher, Chairman and Chief Executive Officer, commented:

"We are pleased to have agreed this loan facility with Shard, which will provide us with working capital while we complete our asset-level financing for our Cameroon development, and to have made this small placing of shares. I believe that shareholders already know that we are keen to avoid issuing more shares or warrants than necessary at the current share price. The new loan facility, and the extension of the existing one, will allow us to avoid issuing more than a small number of shares, and most of those new shares will also reduce our existing debt. Although the loans require us to issue some warrants, these are at a significant premium to the current share price, and my company Pegasus is also pleased to be supporting the Company by converting existing obligations into shares at the same terms as the subscription. Our intention is that both loan facilities will be repaid when we conclude our asset-level financing for Cameroon, which we are working on at present. "

Note regarding forward-looking statements

This announcement contains certain forward-looking statements relating to the Company's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as "targets" "estimates", "envisages", "believes", "expects", "aims", "intends", "plans", "will", "may", "anticipates", "would", "could" or similar expressions or the negative of those, variations or comparable expressions, including references to assumptions.

The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties which could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements relate only to the position as at the date of this announcement. Neither the Directors nor the Company undertake any obligation to update forward looking statements, other than as required by the AIM Rules for Companies or by the rules of any other applicable securities regulatory authority, whether as a result of the information, future events or otherwise. You are advised to read this announcement and the information incorporated by reference herein, in its entirety. The events described in the forward-looking statements made in this announcement may not occur.

Neither the content of the Company's website (or any other website) nor any website accessible by hyperlinks on the Company's website (or any other website) is incorporated in, or forms part of, this announcement.

Any person receiving this announcement is advised to exercise caution in relation to the Placing. If in any doubt about any of the contents of this announcement, independent professional advice should be obtained.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Contacts

Tower Resources plc	[phone]
Jeremy Asher Chairman and CEO
Andrew Matharu VP - Corporate Affairs
SP Angel Corporate Finance LLP Nominated Adviser and Joint Broker	+ 44 20 3470 0470
Stuart Gledhill Caroline Rowe
Turner Pope Investments (TPI) Limited Joint Broker Andy Thacker Zoe Alexander	+ 44 20 3657 0050
Panmure Gordon (UK) Limited Joint Broker Nick Lovering Hugh Rich		+ 44 20 7886 2500

NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS DISCHARGING MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM:

1.	Details of the person discharging managerial responsibilities/person closely associated
a)	Name:	Jeremy Asher
2.	Reason for the notification
a)	Position/status:	Chairman and Chief Executive Officer
b)	Initial notification/Amendment:	Initial notification
3.	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name:	Tower Resources PLC
b)	LEI:	2138002J9VH6PN7P2B09
4.	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument: Identification code:	Ordinary Shares of 0.001 pence each GB00BZ6D6J81
b)	Nature of the transaction:	Pegasus Loan Facility interest shares
c)	Price(s) and volume(s):	Price(s) Volume(s) 0.393 pence 37,854,971
d)	Aggregated information: Aggregated volume: Price:	Single transaction as in 4 c) above Price(s) Volume(s) 0.393 pence 37,854,971
e)	Date of the transaction:	28 August 2020 17:00 BST
f)	Place of the transaction:	Outside a trading venue

1.	Details of the person discharging managerial responsibilities/person closely associated
a)	Name:	Jeremy Asher
2.	Reason for the notification
a)	Position/status:	Chairman and Chief Executive Officer
b)	Initial notification/Amendment:	Initial notification
3.	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name:	Tower Resources PLC
b)	LEI:	2138002J9VH6PN7P2B09
4.	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument: Identification code:	Ordinary Shares of 0.001 pence each GB00BZ6D6J81
b)	Nature of the transaction:	Bridging Loan Extension Facility warrants
c)	Price(s) and volume(s):	Price(s) Volume(s) 0.6 pence 47,169,811
d)	Aggregated information: Aggregated volume: Price:	Single Transaction as in 4 c) above Price(s) Volume(s) 0.6 pence 47,169,811
e)	Date of the transaction:	28 August 2020 17:00 BST
f)	Place of the transaction:	Outside a trading venue

 

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