LONDON (ShareCast) - (ShareCast News) - Shares in Trap Oil Group plummeted over 20% early on Tuesday, after the company said it had reached a deal to acquire Jersey Oil and Gas E&P for £495,000.
The deal will be financed by the issuance of 2.25m of new Trap Oil shares, the London-listed company said on Tuesday, adding it will conduct a separate placing of 3.7m shares at 22p each to raise an extra £820,000 to be used as working capital.

Furthermore, the company said it was considering a share consolidation on a 1-for-100 share basis to "facilitate the proposals".

In a statement released on Tuesday, the oil group said the proposed acquisition, placing and capital reorganisation remain subject to shareholders approval, adding that should the acquisition go ahead, the company would change its name to Jersey Oil and Gas.

Trap has received irrevocable undertakings for 73.3m shares, representing a 32.2% stake of the company, to vote in favour of the three proposals.

Andrew Benitz and Ronald Lansdell, the founding shareholders and directors of Jersey Oil, are expected to be appointed as the newly-formed company's chief executive and chief operating officer respectively.

"The proposed acquisition of Jersey Oil and Gas, refined business strategy and injection of new capital, presents a welcome opportunity to enable the company to resume a growth strategy going forward," said Trap non-executive chairman Marcus Stanton.

Trap Oil shares were down 20.83% to 0.257p at 1038 BST on Tuesday.

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