CGX Energy To Raise $73.6 Million Via Rights Offering, Frontera To Act As Backstop

CGX Energy (TSXV: OYL) this morning announced that is has secured funding for a bridge loan via a rights offering that is to be conducted by the company. The firm will look to raise up to $73.6 million under the offering, which will enable the company to continue to fund its operations.

Under the rights agreement, each shareholder as of October 1 will receive the right to acquire another share on the basis of 0.157 of a right for each share held. Each whole right will enable a shareholder to acquire an additional share of the company at a price of $1.63 per share.

Based on the currently outstanding 287.6 million shares of the company, CGX expects to raise $73.6 million from the offering, with Frontera Energy (TSX: FEC) agreeing to act as a backstop commitment, purchasing any right that goes unexercised. Once issued, the rights are expected to trade on the TSX Venture under the symbol “OYL.RT” until their expiry on October 28, 2021.

The offering is expected to result in the issuance of 45.2 million shares of the company.

Funding from the offering is to be used for the exploration and development of the firms Corentyne and Demerara blocks off the shore of Guyana, as well as the onshore blocks of Berbice. Funds will also be used for the development of the firms deep water port in Guyana.

Additionally, the firm has entered into a term sheet with Frontera Energy, whereby Frontera will provide the company with an initial US$20 million rights offering bridge loan, which will enable the company to meet its current obligations while the offering is ongoing. The loan is effectively being treated as an advance on the company’s involvement in the rights offering.

The offering is expected to provide the short term capital needs of the company over the course of the next twelve months.

CGX Energy last traded at $1.91 on the TSX Venture.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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