President has announced a fund raising and loan restructuring this morning, $20m will be raised at a 15% discount from ‘certain existing and new institutional investors’. It is a placing of $17.2m and a subscription of $2.8m and the IFC will subscribe for its corner. The proceeds will be used to fund the 10 well workover programme in Argentina, about half, and the rest will be used to strengthen the balance sheet and ‘provide critical mass and additional internal and inorganic growth opportunities’ whatever that means. IYA Global which is Peter Levine’s vehicle is restructuring its loans, some are replaced at a lower 9% rate and others converted into equity giving him 29.72% of the company.
This deal makes a lot of sense to me although I suspect that PL is spitting daggers about the operational disasters that made this happen at 6p not 12p, but that is water under the bridge now. I havent had time to talk to him this morning, hopefully later, but when I do it will be to suggest that he has done well out of a tricky situation. Normally PPC goes straight to him when it needs more money but this is more considered and whilst he is still in it up to here, the injection of equity and restructuring of his loans is a smart move which will go down well. As a fan of Argentina and of PL this ticks a lot of boxes, shareholders should be happy that the finances are now a bit more solid and that while he has increased his equity stake he has made life easier for the company on the loan front. As a long term watcher of PPC the story has taken longer to play out than I suspect anyone may have thought, but in the survival stakes this deal keeps the company in the game, for a while at least, two and a half cheers….