REG - TomCo Energy PLC - Placing to raise £0.925m, Update re Greenfield

TomCo EnergyAnnouncement

30/11/2022 07:00

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RNS Number : 9997H  TomCo Energy PLC  30 November 2022

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law by virtue of the European Union (Withdrawal) Act 2018, as amended.

 

30 November 2022

TOMCO ENERGY PLC

("TomCo" or the "Company")

 

Placing to raise £0.925 million, Update re Greenfield,

Issue of Replacement Warrants and Further Extension of Valkor Loan

 

TomCo Energy plc (AIM: TOM), the US operating oil development group focused on
using innovative technology to unlock unconventional hydrocarbon resources, is
pleased to announce a placing to raise gross proceeds of £0.925 million, an
update on the funding plans for the Company's wholly owned subsidiary,
Greenfield Energy LLC ("Greenfield"), the issue of certain replacement
warrants in respect of warrants issued previously by the Company that are
scheduled to expire and a further extension of the Valkor Loan.

 

Details of the Placing

 

The Company has raised gross proceeds of £925,000 through the placing of
264,285,714 new ordinary shares of no par value in the capital of the Company
(the "Placing Shares") at a price of 0.35 pence per share (the "Placing").
The Placing was arranged by Novum Securities Limited ("Novum"), the Company's
broker, and the Placing Shares will represent approximately 11.77 per cent. of
the Company's enlarged issued share capital.  The Placing price represents a
discount of approximately 27 per cent. to the mid-market closing price on AIM
of 0.48 pence per ordinary share on 29 November 2022, being the latest
practicable business day prior to the publication of this announcement.

 

The Company has also agreed to issue 15,857,143 'broker' warrants to Novum,
giving them the right to acquire such number of new ordinary shares at an
exercise price of 0.35 pence for a period of two years from the date of
admission of the Placing Shares to trading on AIM.

 

Novum has entered into an agreement with TomCo (the "Placing Agreement") under
which, subject to the conditions set out therein, Novum has been instructed by
TomCo to assume the duties of placing agent to target subscribers for the
Placing Shares.  The Placing Agreement includes customary provisions
including that the Placing Agreement can be terminated, inter alia, if (i)
there is a breach of any material warranty, or any of the other obligations on
the Company which is material in the context of the Placing, and (ii) in the
reasonable opinion of Novum there has occurred a material adverse change in
the business of or the financial or trading position of the Company, or (iii)
the name or reputation of Novum is likely to be prejudiced if it continues to
act as placing agent.

 

Background to the Placing and Greenfield Update

 

The Placing has been undertaken to provide additional funds to cover the
Company's expenditure as it progresses its plans for Greenfield in relation to
the Tar Sands Holdings II LLC ("TSHII") site located in the Uinta Basin, Utah,
United States.  As previously announced, Greenfield owns a 10% Membership
Interest in TSHII with an exclusive option, at its sole discretion, to acquire
the remaining 90% of the Membership Interests for additional cash
consideration of US$16.25 million up to 31 December 2022.

 

The Company is currently in discussions to secure a potential non-equity
funding package for Greenfield, that would, inter alia, enable Greenfield to
ultimately acquire the remaining 90% of the Membership Interests in TSHII and
cover the currently estimated construction costs of two commercial scale oil
sands separation plants and requisite associated supporting infrastructure to
enable the future mining of oil baring sands at the TSHII site.

 

Whilst there can be no certainty that such funding arrangements will be
successfully concluded, or as to the terms or structure of any such non-equity
funding in TomCo, one scenario that is currently under active consideration
would involve TomCo disposing of a majority stake in Greenfield to a
partner(s) in return for, inter alia, certain upfront cash consideration, a
continuing equity participation for TomCo in Greenfield without the
requirement for further capital contributions from TomCo and the provision of
a sizeable funding package to Greenfield.  It is the intention of TomCo that
any funding package provided to Greenfield would enable the construction of
two oil sands separation plants capable of processing at least 6,000 tonnes
per day of oil sands, along with at least 14 in-situ oil recovery wells.  Any
such proposed disposal would likely constitute a fundamental disposal pursuant
to the provisions of Rule 15 of the AIM Rules for Companies and therefore be
subject, inter alia, to the approval of TomCo's shareholders at a duly
convened general meeting.

 

A further announcement(s) in respect of such ongoing discussions will be made
in due course, as appropriate.

 

Further extension of the Valkor Loan

 

The repayment date for the remaining US$1,000,000 outstanding principal amount
of the unsecured loan from Valkor Oil & Gas LLC ("Valkor") to Greenfield
(the "Valkor Loan"), which was used for the acquisition of the initial 10% of
the Membership Interests in TSHII, as detailed in the Company's announcement
of 16 November 2021, has been further extended.

 

On 31 May 2022, 28 June 2022, 1 August 2022, 1 September 2022, 14 October 2022
and 1 November 2022, the Company announced that the terms of the Valkor Loan
had been varied in order to extend the repayment date, with the last extension
being to on or before 30 November 2022. The Company announces that the terms
of the Valkor Loan have now been further varied to extend the repayment date
for the remaining US$1,000,000 principal amount of the loan to the completion
date of a suitable funding transaction for Greenfield that provides sufficient
funds to TomCo to, inter alia, enable it to affect repayment.

 

As a former joint venture partner, Valkor is considered to be a related party
of the Company (as defined in the AIM Rules for Companies) with respect to the
Valkor Loan and, accordingly, the further variation of the Valkor Loan's terms
is deemed to constitute a related party transaction pursuant to AIM Rule 13.
The TomCo directors, having consulted with Strand Hanson Limited, the
Company's Nominated Adviser, consider that the further variation of the Valkor
Loan's terms is fair and reasonable insofar as the Company's shareholders are
concerned.

 

Issue of Replacement Warrants

 

As part of the Company's placing to raise gross proceeds of £3.5 million, as
announced on 16 November 2020 (the "November 2020 Placing"), 388,888,888
warrants were issued (the "Warrants").  Each Warrant issued pursuant to the
November 2020 Placing affords the holder the right to acquire one new ordinary
share in TomCo at an exercise price of 0.9 pence per share until 30 November
2022.  The Company announces that it has agreed with the Warrant holders that
on expiry they will be issued with an equivalent number of new warrants
exercisable on the same terms save for the expiry date being 31 March 2023
(the "Replacement Warrants").

 

If the abovementioned Replacement Warrants were ultimately to be exercised in
full, it would result in the issue of 388,888,888 new ordinary shares at 0.9
pence per share raising a further £3,500,000 for the development of the
Company's business, which would represent approximately 14.77 per cent. of the
Company's issued share capital as enlarged by such shares and the Placing
Shares.

 

Admission and Total Voting Rights

 

The Placing Shares will rank pari passu in all respects with the Company's
existing ordinary shares.  The Placing is conditional, inter alia, on there
being no breach of the Company's obligations under the Placing Agreement prior
to admission of the Placing Shares to trading on AIM ("Admission"), and such
Admission becoming effective.  Application will be made to the London Stock
Exchange for the Placing Shares to be admitted to trading on AIM.  It is
expected that Admission will become effective and that dealings in the Placing
Shares on AIM will commence at 8.00 a.m. on or around 15 December 2022.

 

On Admission, the Company's issued share capital will consist of 2,244,504,969
ordinary shares, each with one voting right.  There are no shares held in
treasury. Therefore, the Company's total number of ordinary shares and voting
rights will be 2,244,504,969 and this figure may be used by shareholders
following Admission as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a change to
their interest in, the Company under the FCA's Disclosure Guidance and
Transparency Rules.

 

Enquiries:

 

TomCo Energy plc

Malcolm Groat (Chairman) / John Potter (CEO)
  +44 (0)20 3823 3635

 

Strand Hanson Limited (Nominated Adviser)

James Harris / Matthew Chandler
                +44 (0)20 7409 3494

 

Novum Securities Limited (Broker)

Jon Belliss / Colin Rowbury
                          +44 (0)20 7399 9402

 

IFC Advisory Limited (Financial PR)

Tim Metcalfe / Florence Chandler
                  +44 (0)20 3934 6630

 

For further information, please visit www.tomcoenergy.com
(http://www.tomcoenergy.com/) .

 

 

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