Nexus raises $31m for Crux, Longtom

Nexus Energy has raised $31 million from an instiutional placement with funds to be used for ongoing development of its 85 per cent owned Crux liquids project off WA and Longtom gas operation in Victoria.

The Melbourne-based company added tha it will now call on shareholders for an additional $43 million through a heavily discounted rights issue.

The placement was to institutional and sophisticated investors, and combined with the proceeds of a fully underwritten non-renounceable rights issue, would strengthen its balance sheet and provide financial flexibility to the end of 2010.

Nexus placed 96.8 million shares at an issue price of 32 cents with institutional investors.

The one-for-3.75 rights issue will be at 22 cents per share.

Shares in Nexus dropped 4.5 cents to 35c at 15:05 AEST.

"Proceeds will be used to fund ongoing development of the Longtom gas project, long lead items for the Crux liquids project and general working capital," Nexus said in a statement on Wednesday.

The company announced yesterday that it needed to raise capital to complete its Longtom gas development, off the coast of Victoria.

Nexus also said there was renewed interest in its 85 per cent-owned Crux liquids project off Western Australia, which it planned to sell-down.

"The company's immediate priority is the start-up of the Longtom gas project in October 2009," Nexus said on Wednesday.

"This capital raising avoids the requirement to consider a forced sale of assets, and provides the opportunity to deal with Nexus's interest in the Crux liquids project in a manner that maximises shareholder value."

Chairman Michael Fowler said the capital raising would allow Nexus to complete the Longtom project.

The company said in June that the costs to complete Longtom were about $63 million, bringing the revised project cost to $315 million.

The cost of building the Longtom facility rose after delays earlier in the year following a contractual dispute with a diving support vessel.

A new diving support vessel has been enlisted since to complete the offshore installation work.

Nexus flagged in May that it would sell 50 per cent of Longtom to AED Oil Ltd but the sale could not be finalised until the gas facility had been built.

The capital raising will allow the the transaction with AED to proceed once offshore installation work is completed.

Nexus also announced on Wednesday that Symon Drake-Brockman would be invited to join the board as a non-executive director with a 7.3 per cent stake in the company.

Conrad Clauson, the chairman of Viking Oil & Gas International Ltd, which holds a 14.57 per cent interest in Nexus, also will be asked to join the board as a non-executive director.