Hong Kong private equity firm Kerogen Capital has backed a $110m recapitalisation of Australian infrastructure and mining company AJ Lucas.
The recapitalisation is in conjunction with other restructuring initiatives, including the sale of some or all of the company’s drilling business, it said.
The company said it would strengthen its balance sheet and improve group liquidity. It would also allow the company to maintain its European shale gas exploration investment held principally through its 41 per cent shareholding in Cuadrilla Resources Holdings.
Kerogen will subscribe to a placement of ordinary shares to raise a total of $13,388,827. It will also provide a mezzanine loan facility of $66.5m and be granted options to acquire shares.
The company said it will also as well as conduct a rights issue to raise between $30m and $35m
Martin Green, independent director of AJL, said, “The recapitalisation will allow the company to meet its immediate payment obligations, reduces debt servicing costs and provides the Company with the necessary resources to maintain our investment portfolio.
“Over several months, the board has given exhaustive consideration to a range of recapitalisation and balance sheet restructuring possibilities. We have now identified a strategy that will introduce strength to the AJ Lucas balance sheet, minimise dilution for shareholders and allow AJ Lucas to maintain its shareholding in Cuadrilla.
“The board is particularly pleased to welcome Kerogen to the share register. Kerogen is a specialist oil and gas investor who understands our business. The board and the management team look forward to working closely with the Kerogen team in delivering on the potential of AJ Lucas.”
Kerogen’s executive chairman Ivor Orchard, added, “The Kerogen proposal offers a comprehensive balance sheet solution for AJ Lucas and its shareholders. It will provide the company with financial flexibility and does so in a way that minimises dilution to existing shareholders. Our proposal will allow AJ Lucas to remain a sustainable business with a solid platform for future growth. We hope shareholders will accept the proposed financing structure.”
The company said the recapitalisation are a “vital part” of the Company’s restructuring that commenced earlier this year with the sale of its underground in-seam business.
It is also continuing to investigate the sale of some or all of its remaining drilling business activities.
Proceeds from the sale of the drilling business or other operating activities will be used to pay the amounts owing to the Australian Taxation Office,a s well as other debt.
Kerogen Capital is targeting to raise a fund of $1.5bn by the end of 2011, with $875m having been committed to date.
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