I3 Energy advances Gain Energy transaction with £30m raise
This morning’s raise follows last week’s announcement that i3 had entered into a binding purchase and sale agreement to acquire all the petroleum and infrastructure assets of Gain Energy which holds operations in the Western Canadian Sedimentary Basin for C$80 million.
This would see the group sell the package of assets to a third party, Harvard Energy, for C$45mln, meaning that the net acquisition cost was reduced to C$35mln (US$26mln).
In the share placing, some 568,496,326 new ordinary shares are being issued at a price of 5p per share. The additional placing will also see the issue of 12,650,929 shares, if approved.
I3 said the diversification of its portfolio will add ‘a quality production base to provide internal free cash flow to grow the enlarged group and provide a near-term return to its shareholders.’
Shares in i3 Energy opened at 6.1p this morning.
Prior to the end of Q1 2021, i3 anticipates that it will begin paying a dividend of between 20% and 30% of free cash flow annually, and then up to 40% as its Canadian business expands.
The company said this transaction will be executed as a reverse takeover under AIM rules.
"We look forward to the completion of this placing and subscription, which will allow us to acquire our first production assets and transform the Company's future potential as we look to build a large production base in the Western Canadian Sedimentary Basin,” said CEO, Majid Shafiq.
He added, “Following completion of the Gain Assets acquisition we will focus on production optimisation and cost reduction opportunities in this extensive asset base, in parallel with the ongoing execution of our strategy to rapidly grow production, targeting accretive, material, and complementary assets."
The Company expects its shares to resume trading today following a suspension.
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