Ascent Resources plc has agreed to sell a 45% interest in Italian drilling contractor Perazzoli Drilling srl for a cash consideration of EUR1.85 million.
Ascent's original interest was purchased to provide priority access, and ensure optimal contract terms for drilling services. These advantages will be retained through a five year service alliance with Perazzoli, which provides for a 30% discount on EUR10 million of drilling services to Ascent and first call on uncommitted drilling units. Perazzoli owns three drilling units including a state-of-the-art HH-200 unit which provides low environmental impact drilling capability.
The Company's original 22.5% interest in Perazzoli was held through its 50% owned subsidiary, Ascent Drilling Limited ('Ascent Drilling'), which was owned jointly with Ascent Director Malcolm Groom. To facilitate the transaction, Ascent agreed to purchase Groom's 50% interest in Ascent Drilling and therefore a further 22.5% interest in Perazzoli by placing to him, 15,529,981 Ascent shares, providing Ascent with a 45% interest in Perazzoli. These shares, when issued, will be priced at 5.105p each representing a 9% discount to the 15 day average trading price preceding 26 January 2010, which is the pricing mechanism used for Ascent's Equity Line of Credit with GEM Global Yield Fund.
Jeremy Eng Ascent's Managing Director said, "The sale of our interest in Perazzoli, whilst retaining the benefits that the ownership of a minority interest brought, is an excellent outcome for Ascent. Perazzoli is aiming to expand its operations and will therefore require additional funding which, given the intensive work programs being conducted on our portfolio of oil and gas assets, would I believe, not be the best use of our shareholders' funds.
"This transaction allows us to retain access to Perazzoli's drilling equipment with attractive discounts on its services and provides additional funds for use in developing our projects. Furthermore, we were pleased that Mr Groom has demonstrated his sustained confidence in Ascent, having agreed to sell his interest in Ascent Drilling in an all share agreement."
As Groom is a Director of Ascent, the purchase of his share of Ascent Drilling is a related party transaction. The Board of Directors of Ascent, with the exception of Groom, having consulted with the Company's Nominated Adviser, Astaire Securities Plc, consider the terms of the transaction to be fair and reasonable insofar as the Company's shareholders are concerned.
The purchase of Groom's 50% interest in Ascent Drilling is conditional on the relevant resolutions being duly passed by Shareholders at an Extraordinary General Meeting, scheduled for 12 March 2010 to authorise the transaction. Following completion, Groom will be interested in 17,527,686 shares of Ascent representing 3.40% of the total issued shares.
In the most recently published audited financial statements of the Company, being for the year ended 31 December 2008, Ascent reported a share of profit from Perazzoli of GBP88,000. At that time the carrying value of the Company's investment was GBP1.3 million. As disclosed in the Notes to the Financial Statements and the Accounting Policies of the Company, both values reflect a 45% interest in the investment.
Ascent is proposing to convene an Extraordinary General Meeting to, inter alia, approve the purchase of Groom's 50% interest in Ascent Drilling on 12 March 2010 at 11 a.m. at the offices of Sprecher Grier Halberstam LLP, 5th Floor, One America Square, Crosswall, London EC3N 2SG.
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