Angry investors wiped away more than a quarter of Imperial Energy's market value yesterday after the independent oil producer unveiled a highly dilutive plan to raise $600m (£302m) through the issuance of new shares.
The loss-making company had originally planned to raise the money in the debt markets but was unable to secure a deal – equivalent to more than half its total market value after yesterday's fall – on agreeable terms. Its shares closed down 29 per cent at 899p. The move is the latest sign that the credit crunch that began last summer in deepest reaches of the global debt market is reverberating into new industries.
Royal Bank of Scotland's corporate broking unit, Hoare Govett, and Merrill Lynch will underwrite the standby offering, under which the banks guarantee to find buyers for shares at any time until 1 July. The company said the cash will be enough fund its activities through the end of 2009, by which time it should be pumping enough oil from operations located principally in the Tomsk region of Western Siberia to be self-sufficient. It will also repay a $200m loan from RBS that comes due in November.
Chairman Peter Levine said: "We are disappointed that the current state of the debt markets has prevented us from funding our development programme as we had planned, but we have now put arrangements in place independently of the banks to fully fund our existing long-term plans to the point where we should generate positive cash flow."Reuse content