It will also keep the wolves from the door after a massive debt has become due.
The three-for-eight pro-rata non-renounceable entitlement offer, priced at $0.21 per share, will be partially underwritten by Patersons Securities.
The debt-ravaged firm’s two largest shareholders, Paul Fudge’s Kerogen Investments and Paul Fudge himself, have agreed to take up their entitlements, with Kerogen and certain new institutional investors to help sub- underwrite any shortfall.
Kerogen has committed to subscribe for its pro rata entitlement of $11.1 million and to sub-underwrite $2.9 million. It will also forego the bonus share being offered as an incentive to other sub‐underwriters.
Fudge has agreed to subscribe in full for his pro rata entitlement of $2.6 million.
The new international institutional investors are sub‐underwriting for up to a total amount of $4.5 million, while a retail component will raise $3.7 million.
Patersons will underwrite the shortfall.
The shares are at a 16% discount to the current trading price.
As a result, the combination of the shareholder commitments and underwriting of the shortfall is equal to the full $21.1 million.
The funds will be used to partially repay amounts due and payable under the Kerogen senior secured and short term loans and to provide funds for short term general working capital purposes, including ongoing funding of the company's UK investments and scheduled payments to the Australian Taxation office.
After meeting an expected $11.1 million minimum payment back to Kerogen it should leave the company with around $7.7 million.
Any amount due to Kerogen not paid will be further delayed to September 30.
But a further capital raising is on the horizon, with today’s raising something of a stop-gap measure as AJL develops a larger funding strategy to meet its commitments for the Cuadrilla shale gas projects in the UK.
"We believe it is in the interests of all shareholders to support the capital raising and we are pleased with the binding commitments we received so far. This capital raising is the first step in a broader strategy to provide financial flexibility to enable AJ Lucas to manage its debt obligations and future commitments for the Cuadrilla shale gas project," chairman Phil Arnall said.
AJL owns 45% of Cuadrilla and has direct interest in the Bowland (23.75%) and Bolney (25%) shale projects.
A key appraisal program is planned for 2016‐17, subject to approvals, for Preston New Road and Roseacre Wood.
Some 100.3 million new shares would be issued as part of AJL’s capital raising, increasing total issued share capital to some 367.7 million
At the end of the process Kerogen will emerge with up to 56% of the company and Fudge 12.4%.
The diversified infrastructure, construction and services group delivered yet another loss recently y due to continuing fall in demand for its services in the coal, oil and gas sectors, to the tune of $17.9 million.
The company is carrying debts of $88.9 million, up $10.1 million due to interest changes and foreign exchange charges, with the company making just $400,000 in repayments over the half year.
Kerogen has continued to support the company through agreeing to defer all interest payments worth $8.1 million due on the facility since April 2015 until March 2016.
The principal repayment is due at the expiry of the facility in early 2017, and while the company has around $17.1 million in cash around half of that is escrowed for JV purposes.
