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VSA Capital Market Movers - Columbus Energy Resources PLC

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Columbus Energy Resources (LON:CERP)

Columbus Energy Resources (LON:CERP) has announced a favourable revision to the terms on its lending facility with Lind Partners. Following the agreement announced in December 2016 for a US$8.9m convertible loan facility of which US$1.825m (T1) has been drawn down, CERP has negotiated an increase in the conversion price, an increase in the facility and an improvement in payment terms.

• T1 conversion price increased by 50% to 4.5p/sh.

• Issue of 17.9mn shares to Lind, held in escrow for at least six months from 23rd September.

• The next monthly repayment of T1 will be paid in shares (2.3m) at a price of 3p/sh.

• Lind intends to exercise its right to increase the size of the facility by US$750k (T2) with funds available to CERP in Q4 2017. T2 will be repaid at a monthly rate of US$38.7k in cash or shares as determined by CERP.

• Lind will be eligible for 7.6mn share options on provision of T2 exercisable at a price of 50% above the preceding 20 day average to the award date for up to 40 months.

The additional funds will aid in furthering the new management’s turnaround strategy. This includes field optimisation, well stimulation and the water injection pilot programme for which an application has been submitted. CERP expect to be cash flow positive during Q4 2017 as a result of these initiatives and we believe this can be achieved from the expanded cash resources given their low cost nature.

Furthermore, we believe that Lind’s decision to improve the terms of the facility, which has weighed upon the shares in recent months, reflects positively on the new management and their strategy, underpinning our positive outlook.

We reiterate our Buy recommendation and 22p target price.

CERP will announce interim results on 13 September and hold an AGM and investor presentation on 14 September at the company's solicitors, Kerman and Co LLP, who are located at 200 Strand, London WC2R 1DJ


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