Victorian oil and gas exploration company Lakes Blue Energy is seeking $8 million in new funding to capitalise on the East Coast’s gas supply crunch.
The deal is being jointly managed by Alpine Capital and Morgans with 11 million new shares offered to institutional and wealthy investors, for 30¢ a piece – a 36 per cent discount on the company’s last closing price of 47¢.
Another 15.7 million shares will be part of a rights issue on a one-for-4.7 basis. The placements and rights issue included a free attaching option with a 36¢ strike price and a five-year expiry.
Investors were pitched the deal as a savvy way of capitalising on predicted gas shortfalls for the East Coast domestic market which are expected as early as this year.
“LKO is strategically positioned to address these supply challenges through its key gas projects … The Wombat Gas Field offers a timely and cost-effective solution to Victoria’s ongoing gas supply shortfall and the associated high gas prices,” the term sheet seen by Street Talk said.
The majority of the new funds will go towards the company’s Wombat Gas Field project in Gippsland, Victoria. The rest will go to regulatory and development expects and working capital.
The company has a pre-raising market cap of $34.5 million. Investors have until 5pm to get their bids in.
Lake Blues Energy was seeking $10 million in an equity raising in May last year, offering new shares at 75¢. Those funds also went towards the Wombat project.