The MOU with Platinum represents a major boost to Island's international aspirations. Under the terms of the MOU, Platinum will offer Island specific opportunities in what are proven hydrocarbon provinces, These opportunities will be offered under the terms of a proposed Area of Mutual Interest Agreement ("AMI Agreement"), which is to be entered into between the parties. Any consideration payable to Platinum arising from a decision by Island to participate in any opportunity generated under the AMI Agreement will be agreed on a case-by-case basis
Platinum currently holds 15,000,000 ordinary shares in Island (all of which were acquired in November 2004 prior to AIM admission), amounting to approximately 23% of the current issued share capital of 65,141,000 ordinary shares. Following completion of all elements of the proposed investment, that shareholding may rise to 41%. In order to facilitate the Transaction, Island will seek the approval of independent shareholders at an Extraordinary General Meeting ("EGM") to be convened in due course, and has applied to the Irish Takeover Panel for a waiver from any obligation on the part of Platinum to make a general offer to all shareholders that might otherwise arise under Rule 9 of the Irish Takeover Rules ("the Waiver"). If the Waiver is granted by the Irish Takeover Panel, Island will thereafter send an EGM circular to all shareholders, including a resolution asking the independent shareholders of Island to approve the Waiver (the "Approvals").
Island has entered into agreements with Platinum relating to the provision of up to Stg£10 million to Island in two non-interest bearing convertible loans (the "Loans") and to provide Platinum with 10 million warrants to subscribe for ordinary shares in Island at Stg£1.10 each (the "Warrants"), subject to certain conditions. The investment provided by Platinum will be applied to Island's ongoing exploration program. As previously announced Island is funding 100% of the cost of a well in the Seven Heads West Sub-Area, including testing, in return for increasing its equity interest in the Sub Area from 12.5% to 55.75%. Island will also fund 100% of the drilling costs of the Old Head of Kinsale exploration well in return for increasing its equity interest to 100% subject to the normal consents and approvals from the Petroleum Affairs Division ("PAD") of the Department of Communications, Marine and Natural Resources and other regulatory authorities.
Platinum has agreed to provide a convertible loan to Island in the sum of Stg£4,500,000 (the "First Loan"). The First Loan can be drawn down any time after 21 May 2006 upon Island giving Platinum seven days notice. Platinum has also agreed to provide a second convertible loan to Island in the sum of Stg£5,500,000 (the "Second Loan") subject to the granting of the Approvals. The Second Loan can be drawn down within seven days of the Approvals being granted. Should the Approvals not be granted, drawdown will not take place.
Both Loans are convertible into ordinary shares at Stg£1.00 per ordinary share after the EGM of the Company. If the Approvals are granted, both Loans will convert into ordinary shares of the Company. If the Approvals are not granted, only the First Loan will convert into ordinary shares to the extent that the shareholding of Platinum after conversion will not exceed 29.99%. Any loan capital remaining in the First Loan after conversion will be repayable in cash to Platinum by December 31, 2006.
In consideration for Platinum providing the First Loan, Platinum shall have the right to subscribe for 4,500,000 ordinary shares of Island at an exercise price of Stg£1.10 per ordinary share. In consideration for Platinum providing the Second Loan, Platinum shall have the right to subscribe for 5,500,000 ordinary shares of Island at an exercise price of Stg£1.10 per ordinary share. All of the Warrants are exercisable within twelve months of the Approvals being granted.
Commenting on the agreements with Platinum, Paul Griffiths, Chief Executive of Island, said:
"The large investment by Platinum, Island's largest shareholder, is important in cementing the strategic relationship between Island and Platinum, which will be important both in terms of funding our current and future drilling programs and in exploring areas outside of Ireland."
"The execution of the MOU with Platinum potentially adds a new international dimension to Island's expanding portfolio of oil and gas interests, built up over the past 18 months by Island's experienced management team. The MOU will give us access to additional exploration and production opportunities in proven hydrocarbon basins in North and West Africa. These opportunities, combined with having already secured a drilling rig for 2007 and having created an in-house operating capability, have put us in a strong position to secure new exploration and production licenses in North and West Africa, on the basis that Island can fast-track drilling activity on such potential licenses as early as 2007. This gives us a competitive edge compared to other more long-established operators."
Most Popular Articles