Oilexco plunges as funding is called off
Canadian explorer Oilexco said it has abandoned plans to raise as much as US$150 million selling convertible debentures and to issue 20 million shares because its board considered the move too dilutive.
Oilexco shares plunged following the announcement. After being stopped on 18 November, they resumed trading at midday today and dropped C$1.04, or 42%, to C$1.45 on the Toronto Stock Exchange.
The company has hired investment bankers Morgan Stanley to advise it on strategic alternatives, including "mezzanine and debt financing, industry and financial partnerships together with other financing alternatives," it said.
However Morgan Stanley's hiring does not mean the company has put itself up on the block, an Oilexco spokesman said.
"We are not for sale," Rob Elgie said. "We are not shopping the company around.
Oilexco had planned to issue five-year convertible debentures carrying a 15% coupon as well as issue the shares at a price of C$2.25 each, said a Reuters note.
The company has been searching for ways to pay for its exploration programmes in Britain's North Sea since early October, when it said it was having difficulty closing a financing it had arranged with the troubled Royal Bank of Scotland