MARKETS

Indebted AJL successfully raises funds

DRILLING and services firm AJ Lucas has announced an effectively underwritten capital raising of ...

Haydn Black

It will also keep the wolves from the door after a massive debt has become due.

The three-for-eight pro-rata non-renounceable entitlement offer, priced at $0.21 per share, will be partially underwritten by Patersons Securities.

The debt-ravaged firm’s two largest shareholders, Paul Fudge’s Kerogen Investments and Paul Fudge himself, have agreed to take up their entitlements, with Kerogen and certain new institutional investors to help sub- underwrite any shortfall.

Kerogen has committed to subscribe for its pro rata entitlement of $11.1 million and to sub-underwrite $2.9 million. It will also forego the bonus share being offered as an incentive to other sub‐underwriters.

Fudge has agreed to subscribe in full for his pro rata entitlement of $2.6 million.

The new international institutional investors are sub‐underwriting for up to a total amount of $4.5 million, while a retail component will raise $3.7 million.

Patersons will underwrite the shortfall.

The shares are at a 16% discount to the current trading price.

As a result, the combination of the shareholder commitments and underwriting of the shortfall is equal to the full $21.1 million.

The funds will be used to partially repay amounts due and payable under the Kerogen senior secured and short term loans and to provide funds for short term general working capital purposes, including ongoing funding of the company's UK investments and scheduled payments to the Australian Taxation office.

After meeting an expected $11.1 million minimum payment back to Kerogen it should leave the company with around $7.7 million.

Any amount due to Kerogen not paid will be further delayed to September 30.

But a further capital raising is on the horizon, with today’s raising something of a stop-gap measure as AJL develops a larger funding strategy to meet its commitments for the Cuadrilla shale gas projects in the UK.

"We believe it is in the interests of all shareholders to support the capital raising and we are pleased with the binding commitments we received so far. This capital raising is the first step in a broader strategy to provide financial flexibility to enable AJ Lucas to manage its debt obligations and future commitments for the Cuadrilla shale gas project," chairman Phil Arnall said.

AJL owns 45% of Cuadrilla and has direct interest in the Bowland (23.75%) and Bolney (25%) shale projects.

A key appraisal program is planned for 2016‐17, subject to approvals, for Preston New Road and Roseacre Wood.

Some 100.3 million new shares would be issued as part of AJL’s capital raising, increasing total issued share capital to some 367.7 million

At the end of the process Kerogen will emerge with up to 56% of the company and Fudge 12.4%.

The diversified infrastructure, construction and services group delivered yet another loss recently y due to continuing fall in demand for its services in the coal, oil and gas sectors, to the tune of $17.9 million.

The company is carrying debts of $88.9 million, up $10.1 million due to interest changes and foreign exchange charges, with the company making just $400,000 in repayments over the half year.

Kerogen has continued to support the company through agreeing to defer all interest payments worth $8.1 million due on the facility since April 2015 until March 2016.

The principal repayment is due at the expiry of the facility in early 2017, and while the company has around $17.1 million in cash around half of that is escrowed for JV purposes.

TOPICS:

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

editions

ESG Mining Company Index: Benchmarking the Future of Sustainable Mining

The ESG Mining Company Index report provides an in-depth evaluation of ESG performance of 61 of the world's largest mining companies. Using a robust framework, it assesses each company across 9 meticulously weighted indicators within 6 essential pillars.

editions

Mining Magazine Intelligence Exploration Report 2024 (feat. Opaxe data)

A comprehensive review of exploration trends and technologies, highlighting the best intercepts and discoveries and the latest initial resource estimates.

editions

Mining Magazine Intelligence Future Fleets Report 2024

The report paints a picture of the equipment landscape and includes detailed profiles of mines that are employing these fleets

editions

Mining Magazine Intelligence Digitalisation Report 2023

An in-depth review of operations that use digitalisation technology to drive improvements across all areas of mining production