Ascent Resources granted loan to repay debts

Ascent Resources has been granted another loan to repay debts and finance projects in the New Year.

Ascent Resources has been granted another loan to repay debts and finance projects in the New Year.

The European-focused oil and gas exploration company has entered into an agreement with Henderson Global Investors and Henderson Alternative Investment Advisor for the subscription of convertible loan notes of up to £5.5m.

Part of the funds will be used to repay the firm's £2.3m loan from YA Global Master SPV, an investment fund managed by Yorkville Advisors. The Yorkville loan facility charge an interest rate of 9% per annum. Ascent owed £1.9m by December 2012, in addition to about £0.8m of debt to Cento Bank in the company's Italian subsidiary.

While the company had sufficient cash resources to meet overheads until year end, it needed the loan to meet overheads and to continue making repayments to Yorkville and Cento bank of £1.9m and cira £350,000 respectively.

The company attributed a decline in sales and demand of hydrocarbons for its underperformance.

"Monthly revenues from the sale of hydrocarbons are declining, as expected, as the field nears towards the end of its life over the next 12 to 18 months and hence the company does not currently have the capital resources to make its loan repayments and also meet its other obligations," the company said in a statement.

"The company has therefore sought other sources of financing, including additional loans from major shareholders and other third parties."

The loan will also be used to finance its Petiovci Project in Slovenia, which has been stalled awaiting various signatures that have been unreasonably withheld.

The convertible loan will be issued in units of £1 and interest will be at a fixed rate of 9% per annum, which will be rolled up quarterly in arrears and included as principal to be repaid or converted.

The news sent the share price plunging 35% to 1.02p by mid-morning.

RD

Recommended

I wish I knew what a share buyback was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what a share buyback was, but I’m too embarrassed to ask

A share buyback means just what it says – a company buys back its own shares. But why? And how does that benefit shareholders?
3 Aug 2021
Improve your odds of investment success with these three stocks
Share tips

Improve your odds of investment success with these three stocks

Professional investor Tom Wildgoose of the Nomura Global High Conviction Fund highlights three of his favourite stocks.
2 Aug 2021
How to profit from pampered pets beyond the pandemic
Share tips

How to profit from pampered pets beyond the pandemic

Covid-19 has greatly boosted ownership. But the market had been expanding for years, and demographic, cultural and medical trends all point to long-te…
30 Jul 2021
Share tips of the week – 30 July
Share tips

Share tips of the week – 30 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
30 Jul 2021

Most Popular

Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021