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Madagascar Oil Limited
Comprehensive re-financing of the Company’s balance sheet, via an initial short term bridge loan of US$15m from two existing shareholders, followed by the execution of an agreement to provide up to US$65m in financing via a proposed non pre-emptive convertible preference share (“CPS”) issue, US$45m of which was from two existing major shareholders (the “Initial Fundraising”), creating the demand for a revised equity led structure, replacing the CPS element of the Initial Fundraising with US$78.4m (gross) raise, via a fully underwritten, pre-emptive placing and open offer to existing shareholders (the “Revised Fundraising”).
£95.6 million
Background
In late 2012, Strand Hanson was engaged by Madagascar Oil Limited (“Madagascar Oil” or the “Company”) to advise on securing US$15m of short term funding, via a bridge loan, in advance of a non pre-emptive CPS issue to raise up to US$65m, US$45m of which was to be provided by two of the Company’s largest institutional shareholders. The funds raised were to be used to fund the Company’s completion of the Tsimiroro Steam Flood Pilot and to evaluate further the potential for full field development.
Strand Hanson led negotiations relating to all the key terms of the Initial Fundraising transaction, particularly with regard to the economic terms of the CPSs and the Relationship Agreement between the Company and the shareholders providing the majority of the funding. The Initial Fundraising was executed and announced on 18 December 2012.
Upon announcement of the proposed transaction, several leading institutional shareholders of the Company expressed an Interest in providing funding, via a common shared issue , as an alternative to the CPS financing . Accordingly, Strand Hanson and the Company proposed a revised, alternative financing transaction in order to maximise this demand for the Company’s benefit, Whilst ensuring the continued support of the Initial Fundraising shareholders.
The revised Fundraising had more attractive terms for shareholders in the Company, involving a lower level of dilution and allowing a greater number of the Company’s shareholders to participate, but, given the terms of the Initial Fundraising, effectively required the support of the Initial Fundraising shareholders, particularly with regard to the extension of the US$15m, short term, bridge loan.
Strand Hanson played a lead role throughout the time-critical negotiations between the Company and Shareholders resulting in the execution and announcement of the Revised Financing on 15 January 2013 and acted as sole financial adviser to the fully underwritten, pre-emptive placing and open offer to existing shareholders to raise US$78.4m (gross).