https://www.copyright link/street-talk/251m-equity-raising-a-bridge-too-far-20191209-p53i1o.
Blue sky Senegalese oil play FAR Ltd has told shareholders all about a planned $US350 million-odd debt raising – but what about its equally if not more ambitious equity offer?Street Talk can reveal FAR has spent the past week pitching a $251 million equity raising to fund managers, which was to be done via a placement of new shares and help fund its aim to be one of the biggest ASX-listed oil producers.FAR Limited's mooted equity raising has been met with scepticism by some investors and analysts. Peter BraigIt is understood FAR and its brokers started crossing fund managers early last week – and judging by the fact it is yet to hit the tape, we can only assume it hasn’t had as strong a reception as the explorer was hoping for.
The mooted deal was slated as a $251 million placement underwritten by Macquarie Capital and Bell Potter, according to a presentation sent to wall-crossed investors and seen by Street Talk, although fundies reckon Macquarie has either dropped off or was never there and FAR was now talking about a non-underwritten deal via Bell Potter.The proposed placement was subject to FAR receiving binding and committed terms for a senior debt facility – arranged by Macquarie as announced last month but now said to include “several leading financial institutions” - by December 31.RELATED QUOTESFARFAR Limited$0.0510.20%1 year1 dayJan 19Apr 19Jul 19Oct
Dec 9, 2019 — 4.10pm. Data is 20 mins delayed.View FAR related articles AdvertisementThe twin debt and equity raisings would see FAR secure $US520 million ($768 million). Proceeds are earmarked primarily to develop the Sangomar field – a $US4.2 billion ($6.2 billion) oil project in Senegal in which it was controversially joined by Woodside Petroleum in 2016 – with the cost to FAR put at $US492 million ($727 million) to reach start-up, the presentation said.FAR was originally targeting project financing for the venture, but those plans were derailed by the ongoing arbitration it initiated over Woodside's buyout of ConocoPhillips's stake in the project, then known as SNE. But with Woodside sticking to a final investment decision by the year-end, for production to start "by early 2023", FAR does not have time on its side.The placement was to have been followed by a non-underwritten share purchase plan to raise up to another $30 million.
It’s a tall ask for the Africa-focused oil and gas explorer, which has a $340 million market capitalisation and a number of sceptics in the institutional investment community. As of after-market on Monday, the latest iteration of the deal, or "plan D" was $100 million in new equity and $150 million in mezzanine debt. Cornerstone investors were being sought, sources told this column.It is not known at what price FAR was aiming to secure the equity injection. The prolonged sounding process is no doubt trying to determine what price – if any – fund managers would be willing to back the blue sky story.It comes after Woodside and its partners in Sangomar – which include Cairn Energy and Senegal's Petrosen – took a significant step towards committing to construction last week, submitting a development plan to the government just before their licence expired.FAR’s shares closed at 5.4¢ on Monday.
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