West Perth-based Liquefied Natural Gas Ltd has raised $11.4 million, partly through the sale of a 10 per cent stake in its issued capital to Arrow Energy Ltd.
The company raised the money via the placement 17.5 million fully paid ordinary shares, at an issue price of 65 cents per share.
Arrow Energy has subscribed for 14 million shares at a total cost of $9.1 million, while the balance of shares wereplaced with clients of Bell Potter Securities Limited.
LNG will also now proceed with additonal $5 million capital raising by inviting existing shareholders to subscribe for additional fully paid ordinary shares in the company at an issue price of 65 cents a share.
LNG managing director Maurice Brand said the $5 million raised would be applied to the company's Gladstone LNG Project, including completion of the detailed feasibility study and ongoing funding to financial close during 2008.
The Company considers the Arrow Energy shareholding as a further major milestone in developing the world's first coal seam gas to LNG project.
Arrow Energy, with a current market capitalisation of about $2 billion, will be the company's fourth largest shareholder.
The world's largest independent group dedicated to LNG shipping with assets exceeding US $2.6 billion, Golar LNG Limited, will remain the company's largest shareholder.
Shares in LNG were up 19 per cent to 78 cents on close of trade today.
The full announcements from LNG and Brisbane-based Arrow Energy Ltd appear below:
Capital Raising of up to $16.4 Million "Arrow Energy becomes 10% Shareholder"
The Directors of Liquefied Natural Gas Limited (the Company) are pleased to announce that the Company has raised $11.375 million through a Share Placement of 17.5 million fully paid ordinary shares, at an issue price of $0.65 per share. Arrow Energy (www.arrowenergy.com.au) has subscribed for 14 million shares, with the balance of shares placed with clients of Bell Potter Securities Limited.
In addition, the Company will now proceed with a Share Purchase Plan (SPP). Under the SPP, existing shareholders, as at the "record date" of 21 December 2007, will be invited to subscribe for additional fully paid ordinary shares in the Company at an issue price of $0.65 a share. The SPP will provide for a maximum of $5,000 per shareholder and the aggregate capital raising under the SPP will be limited to $5 million.
The Company's Managing Director, Mr Maurice Brand, said that "$5 million of the funds raised will be applied to the Company's Gladstone LNG Project, including completion of the detailed (bankable) feasibility study and ongoing funding to financial close during 2008.
The balance of the funds raised will be applied to a definitive study in relation to gas supply for the Company's potential LNG project in PNG; progression and restructure of the Company's Qeshm LNG Project; final funding for Gas Link Global Limited; identification and progression of other LNG project opportunities and general working capital".
The Company considers the Arrow Energy shareholding as a further major milestone in developing the world's first coal seam gas to LNG project. The investment is a further demonstration of both parties commitment to the initial 1.3 million tonnes per annum LNG plant, in Gladstone, and the opportunity to take advantage of the shortfall of new LNG supply, in the next few years, to meet ongoing strong growth in LNG demand.
Arrow Energy has been extended an invitation to appoint a Director to the Company's Board and have advised that they intend to nominate Arrow Energy's Managing Director and Chief Executive Officer, Mr Nick Davies. Mr Davies has extensive experience in the global LNG industry and was the forme President of BP's Asia Gas & Power business.
"The Company's Directors welcome Mr Davies to the Board and look forward to working with Mr Davies in realising the Company's mid-scale LNG project development objects.
Indeed it is now the intention of Arrow Energy and the Company to enter into a broader strategic alliance to further cement the relationship. Under such strategic alliance Arrow will target part of its overall Australian/Asian portfolio of coal seam gas assets to provide gas feedstock for further LNG project opportunities and the Company will be responsible for the design and development of the LNG plants.
Arrow Energy will have a right to a fully funded 50% interest in all LNG plants developed pursuant to the alliance", said Mr Brand.
Arrow Energy, with a current market capitalisation of ~$2.0 billion will be the Company's fourth largest shareholder.
Golar LNG Limited (www.golarlng.com), with assets exceeding US $2.6 billion, will remain the Company's largest shareholder. Golar LNG is the world's largest independent group dedicated to LNG shipping, with over 30 years experience in the global LNG industry. In recent years Golar LNG has expanded it activities to include floating LNG regasification vessels and other sectors of the LNG value chain.
The Company's share structure, post the Share Placement and SPP, will be as follows;
(i) Share Placement: Placement of new shares in the Company pursuant to ASX Listing Rule
- Number of Shares: 17,500,000 fully paid ordinary shares;
- Issue Price: $0.65 per share; and
- Funds Raised: $11.375 million (gross of fees).
Following the share placement the share structure of the Company is as follows:
Issued Fully Paid Ordinary Shares 135,520,100 Options1 10,740,000
Redeemable Preference Shares2 12 1 Each option is convertible into 1 fully paid ordinary share subject to payment of the stipulated exercise price. The Company's Option Plan Rules restrict total options to 15% of the Company's total issued fully paid ordinary shares.
2 Each Redeemable Preference Share is convertible into 1,000,000 fully paid ordinary shares, subject to the achievement of prescribed performance milestones.
(ii) Share Purchase Plan: Offer of new shares to existing shareholders pursuant to ASIC Class order 02/831. Under the SSP all existing shareholders, as at 21 December 2007 (Record Date), will be offered additional fully paid ordinary shares in the Company on the following terms (Offer):
- Number of Shares: Up to the equivalent of $5,000 (at the Issue Price) of
fully paid ordinary shares, per existing shareholder as
at the Record Date;
- Total Number of Shares: 7,700,000
- Issue Price: $0.65 per share; and
- Funds Raised: $5,000,000 (aggregate limit of the SPP).
Following the SPP the share structure of the Company will indicatively be as follows:
Issued Fully Paid Ordinary Shares1 143,220,100 Options 10,740,000
Redeemable Preference Shares 12
1. Assumes the full $5 million is raised. However, the actual number of shares will be determined by the number of shareholder at the Record Date and level of shareholder acceptances, subject to the aggregate SPP capital raising limit of $5 million.
A copy of the Company's Capital Raising presentation, dated 11 December 2007, will be separately released to the ASX today and shortly thereafter be available on the Company's website (www.LNGlimited.com.au).
ARROW ENERGY LTD ANNOUNCEMENT:
The Directors of Arrow Energy Ltd (Arrow) are pleased to announce Arrow has subscribed for approximately 10% of the ordinary shares of Liquefied Natural Gas Ltd (LNGL) (ASX: LNG) and agreed a comprehensive strategic alignment of the two companies.
Under the terms of the arrangement between the two companies Arrow:
- has agreed to subscribe for 14 million shares of LNGL at 65 cents per share for a total cost of $9.1m with a right to participate in future equity issues on a "no dilute" basis
- has reached agreement with LNGL which gives Arrow the option to bring in LNGL to design fit for purpose LNG facilities for any coal seam gas (CSG) accumulations in Australia or Asia which Arrow deems appropriate for LNG development. Arrow will then have an option to take a 50% interest in any LNG plants subsequently developed.
- has an option to take a 20% interest in the proposed Gladstone LNG terminal at "ground floor" (ie at cost) terms (compared with the previous "promote" terms)
- will join LNGL in the marketing of LNG from the Gladstone LNG plant
- will be given expanded and full aggregation rights for any gas supply to the Gladstone LNG plant
- will have the right to appoint a director to the Board of LNGL.
Arrow intend to nominate Arrow MD & CEO, Nick Davies to fill this position. Nick has extensive experience in the international LNG arena, particularly in his role prior to joining Arrow as President of BP's Asian Gas & Power business.
This investment will allow Arrow to pursue a broader range of resource opportunities across Asia without
being constrained solely to local markets and to develop a specific "CSG to LNG" strategy to compliment the
current international portfolio.
The investment also closely follows Arrow's broader strategy of maximising margins by selling higher value
product and through downstream investment where appropriate.
Commenting on the investment, Arrow CEO Nick Davies said:
"This investment represents an exceptional fit with Arrow's high margin strategy. We believe that the proposed Arrow/LNGL Gladstone LNG project will represent a major milestone in the global LNG business by proving that smaller gas accumulations can be developed as LNG projects.
This will bring previously stranded gas accumulations into the realms of commercially viable LNG projects and could be particularly enhancing for typical sized CSG accumulations and hence for our future business"