Convertible Bond of US$30.5 million
Pantheon Resources to issue US$30.5 million to US$35 million convertible bonds due March 2028 to refinance existing debt and fund operations.
- Convertible Bond Issue Size US$30.5m - US$35m
- Coupon 5.0% per annum
- Maturity Date March 2028
- Initial Conversion Price US$0.8675
- Existing Bonds to be Repaid US$12.25m
- Working Capital and G&A US$18.25m
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Pantheon Resources plc ("Pantheon" or the "Company"), the AIM-quoted oil and gas exploration company with 100% working interests in certain projects located adjacent to transportation and pipeline infrastructure on the Alaska North Slope, is pleased to announce that it has agreed to issue between US$30.5 million and US$35 million in aggregate principal amount of senior convertible bonds due March 2028 (the "Convertible Bonds") to Sun Hung Kai & Co. Limited and its affiliates, clients and funds managed or advised by them (the "Convertible Bond Investor"), as the lead investor to the Convertible Bonds. The Convertible Bond Investor is a leading Hong Kong-based financial institution recognised for its expertise in alternative investments and wealth management, listed in Hong Kong. Pantheon has agreed to issue, and the Convertible Bond Investor has agreed to subscribe for, the Convertible Bonds on or before 24 March 2025.
The Convertible Bonds will have a coupon of 5.0% per annum payable quarterly in arrears commencing three months from 24 March 2025 (the "Issue Date"). The initial conversion price will be US$0.8675 subject to adjustment for splits, consolidations, and similar corporate actions. The Convertible Bonds will be repaid on the third anniversary ("Maturity Date") unless previously converted or redeemed as noted below.
The main purpose of the issuance of the Convertible Bonds will be (i) to allow the Company to fund the future repayment(s) of the then outstanding principal of $12.25 million principal remaining on the US$55 million senior unsecured convertible bonds due 2026 ("Existing Bonds") in cash ; (ii) for general corporate purposes including additional costs for flow testing of the Megrez-1 well resulting from additional high potential zones identified; and (iii) continued marketing activity for strategic investment into the Company's assets.
Further details of the terms of the Convertible Bonds are set out below. Notwithstanding that the definitive documentation has not been finalised, under the agreement the Company is obliged to issue and the Convertible Bond Investor is obliged to subscribe for the Convertible Bonds. The Convertible Bonds will be issued on or before 24 March 2025 with definitive documentation reflecting the terms set out below (or otherwise being on terms no more onerous on the Convertible Bond Investor and the Company than the Existing Bonds).
Rationale for the new Convertible Bond
Pantheon has made significant progress over the last 12 months including the Megrez-1 discovery on the Company's Ahpun East acreage and the impending commencement of the flow testing programme over up to seven separate horizons, continuing progression of the Alaska LNG project (and Phase 1 natural gas pipeline) and now the removal of quarterly share issues to satisfy the Existing Bond repayments.
Pantheon continues to focus on its stated goals of advancing both the Ahpun and Kodiak projects towards FID, and ultimately development of these projects. Fundamental to this goal is to provide sufficient additional data to both support, and potentially accelerate these objectives. Megrez-1 is located on the new Ahpun East Area where the reservoir section encountered is younger and shallower, with superior reservoir characteristics than in any of Pantheon's wells to date. The Company is currently finalizing testing plans and modelling planned flow rates, recognizing constraints on oil storage and physical equipment limitations. An update prior to the start of testing will be provided in the coming fortnight.
Use of proceeds
The gross minimum proceeds of the Convertible Bond of US$30.5m, before expenses are expected to be used as follows:
| Cash to fund repayment of Existing Bonds | US$12.25m |
| Working Capital, Expenses and G&A | US$18.25m |
David Hobbs Executive Chairman of Pantheon Resources, said:
"This agreement removes speculation around the issuance of shares for quarterly interest and amortization of the Existing Convertible Bond, providing three years during which Pantheon's ultimate development financing strategy can be implemented. It provides flexible long-term capital that we can retire after a year, if the Company continues successful execution of its core strategy of bringing its discovered resources into production. We are delighted to begin this relationship with Sun Hung Kai and to work together to ensure that Pantheon has the liquidity to press ahead with the work to progress Ahpun Field FID."
Below is a summary of certain of the key terms of the Convertible Bonds. This summary does not contain all of the terms of the Convertible Bonds.
| Bonds: | Convertible 3-year bonds, due [March 2028]; issued at par; subject to English law Issued in denominations of US$100,000 per bond |
| Initial Amount: | US$30.5 million unless increased to US$35 million by the parties |
| Coupon: | 5.00% per annum, computed on a 30/360 basis, payable quarterly in arrears, commencing three months after the Issue Date. |
| Repayment: | Unless earlier converted or repaid, bullet repayment of the at par on the Maturity Date. |
| Conversion Right: | Unless previously redeemed or purchased and cancelled, bonds will be convertible into shares in the capital of the Issuer ("Shares") at the Conversion Ratio at the option of the Bondholders at any time from the Issue Date up to and including the 5 th business day prior to the Maturity Date. |
| Conversion Price: | US$0.8675, subject to adjustment for splits, consolidations, and similar corporate actions. |
| Conversion Ratio: | The principal amount of a bond divided by the Conversion Price on the date of conversion. |
| Security: | Upon the full redemption of the outstanding principal of the US$55 million senior unsecured convertible bonds due 2028 first-ranking security over the assets of the Issuer and its subsidiaries, subject to certain carve outs including financings to which the majority of bondholders has consented. |
| Negative pledge: | Yes |
| Transferability: | The Bonds may be transferred at any time and from time to time, in whole or in part, by the bondholders, subject to applicable restrictions under applicable laws |
| Ratings: | None |
| Call Right | If at any time from the first anniversary of the Issue Date to 10 business days preceding the Maturity Date the volume weighted average price for the 10 preceding days exceeds US$1.119, the Issuer may call the bonds for redemption and all outstanding bonds shall be redeemed at the call price (being 90% of the US$ equivalent of such volume weighted average price of the Shares). The bondholders shall have the right to preempt the Call Right by exercising their conversion right during the 5 business days following the date on which notice of exercise of the Call Right is given. |
| Financing Call Right | If the majority of bondholders refuse consent to release security to permit a proposed financing with net proceeds of no less than US$50,000,000 within [10] business days after being given notice of the relevant proposed financing (a "Financing Call Notice"), the Issuer may, on the 15 th business day after the Financing Call Notice either redeem all outstanding bonds for cash at par plus accrued interest or, if the US$ equivalent of the volume weighted average price of the Shares (for the 10 trading days prior to the date of the Financing Call Notice (the "Financing Call VWAP") exceeds the Conversion Price, redeem all outstanding Bonds for Shares at a price equal to 90% of the Financing Call VWAP. The bondholders shall have the right to preempt the Financing Call Right by exercising their conversion right during the 15 business days following the Financing Call Notice. |
Cleaned text: letterheads, contacts and legal notices removed. View the original announcement ↗ · Company filings. Not investment advice.