LONDON (ShareCast) - (Sharecast News) - Upstream oil and gas project investor Reabold Resources has entered into a conditional convertible loan instrument with Corallian Energy, under which it would advance £1m to Corallian.
The AIM-traded firm said that under the existing shareholders agreement, to which Reabold is a party, the convertible loan was conditional on Corallian receiving the consent of 75% or more of its shareholders.

Reabold has an existing 36.9% shareholding in Corallian, which the board said could count towards the 75% threshold.

Corallian was intending to use the proceeds of the convertible loan to support work streams related to the submission of a draft field development plan for the Victory gas field, which it was aiming to do before the end of 2021, as well as for general working capital purposes.

The convertible loan, including interest at a rate of 15% per annum, would convert into new ordinary shares in Corallian within 21 months of the date of instrument.

If, during that period, Corallian was acquired, undertakes a material disposal of assets, an initial public offering or a reverse takeover, where the relevant value is more than £3.20 per share, the convertible loan would convert at £3.20 per share.

If the relevant valuation was below £3.20 per share, then the convertible loan would convert at a price equal to the relevant valuation.

If no such corporate action takes place within 21 months, the convertible loan would automatically convert at a price of £1.50 per share.

"We are delighted to be able to provide further investment in Corallian through an attractive structure in order to fund near-term activity, in line with our stated strategy," said co-chief executive officer Stephen Williams.

"The Victory environmental study will take place this summer and we are eagerly awaiting the submission of the draft field development plan to the OGA at the end of this year.

"Victory is a simple, low-risk project, which has been fully appraised and requires no further pre-development drilling, accelerating the potential return on investment for Reabold."

At 1350 GMT, shares in Reabold Resources were down 4.02% at 0.57p.

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