Strategic investor moves in at Sterling Energy

14th Aug 2009 08:09

A takeover is off the agenda at Sterling Energy which has, instead, elected to secure its financial position through a share placing.The company is to raise £62.5m (gross) through a placing of shares at 1.3p per share. The placing price is less than half the closing price of the shares on Thursday, 13 August, the day before the placing was announced.As a result of the placing Waterford, an investment vehicle controlled by energy market financier Michael Kroupeev, will hold a 29.99% stake in Sterling.The company will use the funds to repay $35m of debt and to strengthen its working capital position. This will put the company in a stronger bargaining position as it negotiates the sale of its US assets. Conditional on receipt of the proceeds of the Placing and repayment to the banks of $35m, the outstanding principal under the group’s Senior Facility Agreement will be deferred to mid February 2011.The company also intends to raise in the region of £20.6m by mid-November through an open offer pitched at the same level as the share placing.Dr. Richard Stabbins is to step down as non-executive chairman of the company but will remain as a non-executive director. Alastair Beardsall, executive chairman of Emerald Energy, will join the board of Sterling as executive chairman.Current chief executive officer Graeme Thomson will relinquish his role by the end of this year.Thomson said the placing ‘achieves the key objectives of dealing with the company's debt issues and allows us to make real progress with our high impact exploration assets.’