No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Africa-focussed oil and gas explorer Bowleven announced plans to delist its shares from trading on AIM on Friday, re-register as a private limited company, and adopt new articles of association.
The firm said the proposals would be subject to shareholder approval at a general meeting scheduled for 29 August.
It said the decision to cancel its AIM listing came as the company looked to reduce costs, streamline operations, and focus resources on its core asset, the Etinde Permit in offshore Cameroon.
The board cited the significant legal, regulatory, and financial burdens associated with maintaining its AIM listing, which it believed outweigh the benefits, especially given the limited liquidity and volatility of the company's shares.
To provide an exit for minority shareholders who did not wish to remain invested in a private company, Crown Ocean Capital, Bowleven's largest shareholder with a 58.33% stake, would offer to purchase shares at 0.225p apiece.
The offer represented a premium of 3.93% over the three-month volume-weighted average price and 17.32% over the six-month average.
Bowleven said the exit opportunity would be open from 9 August until 11 September, and was contingent on the approval of the delisting resolution.
Following the proposed delisting, Bowleven said it intended to implement a matched bargain facility through JP Jenkins to facilitate the trading of shares for at least 12 months.
However, the company warned that the facility might not be permanent.
The board said it had received irrevocable undertakings to vote in favour of the proposals from Crown Ocean Capital and its chief executive officer Eli Chahin, representing a combined 58.68% of the company's shares.
Despite the delisting, Bowleven said it would remain committed to its long-term strategy of developing the Etinde Permit, although progress had been slow, and additional funding might be required before reaching a final investment decision.
"The board continues to be of the view that Etinde is a potentially substantial energy asset and core to the company's strategy," said chief executive officer Eli Chahin.
"The board has been considering the company's capital requirements in light of the anticipated development of the Etinde project, and has been evaluating all possible means of reducing the cost base of the business in order to extend the company's cash runway, whilst still maintaining appropriate governance arrangements and allowing it to contribute to its share of the development costs at Etinde.
"Whilst it has been a difficult decision to reach, having taken into account all relevant factors, the board believes that pursuing the cancellation is in the company's best interests, to allow Bowleven to further reduce its overheads and provide financing and operational flexibility as it pursues its objective of monetising and generating value from its Etinde interest."
At 1006 BST, shares in Bowleven were flat at 0.25p.
Reporting by Josh White for Sharecast.com.
