Beef magnate Larry Goodman may end up owning more than three-quarters of Barryroe Offshore Energy in just over two years’ time, after agreeing to provide a €40 million funding backstop to help the oil and gas explorer secure a lease to progress its key prospect off the Cork coastline.
The commitment of up to €40 million, by way of redeemable secured convertible loan notes, was first announced on Tuesday. The Dublin-listed company was known as Providence Resources until it was renamed in September after its prized Barryroe field.
The terms of the deal were released on Wednesday evening. Funds drawn down from a facility from Mr Goodman’s Vevan Unlimited vehicle will carry an annual interest rate of 10 per cent until they fall due for repayment at the end of 2024.
The complex deal initially allows Vevan, which already owns a 16.1 per cent stake in Barryroe, to subscribe for up to 113.8 million shares for a nominal price of almost €113,800.
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This would leave Mr Goodman with just over a 24 per cent stake in the company, where he first emerged as a shareholder in April last year.
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Funds drawn down by Barryroe over the lifetime of the facility will be convertible into shares when they mature at the end of 2024 at either 1.5c per share or Barryroe’s prevailing share price at the time, if that is lower. If the maximum €40 million is borrowed and converted into equity for 1.5c per share, Mr Goodman would end up with a stake of 76.6 per cent, according to Irish Times calculations.
Barryroe has also agreed to issue warrants to Vevan that would allow the billionaire’s company to buy further shares for up to 10 years from the end of 2024.
The backstop is aimed at addressing concerns at the Department of the Environment, Climate and Communications about Barryroe’s ability to finance drilling at the Barryroe field.
[ Goodman agrees €40m Barryroe funding to help secure key lease off Cork coastOpens in new window ]
Following long delays in assessing the application which was made in April last year, the department informed Barryroe last month that it had not yet demonstrated sufficient financial capability to be awarded a crucial lease undertaking to progress the project.
Alan Curran, who took over as Barryroe chief executive in July, said that company “will rapidly move to commence preparations for drilling operations” once the department grants the lease undertaking. However, it will likely be 2024 before drilling will start.
Investors in Providence have seen three Barryroe development partnership deals come to nothing in the decade since the field was found in 2012 to have more than 300 million barrels of recoverable oil.
The latest was abandoned in April last year, prompting the company, which has an 80 per cent stake in the Barryroe licence, to say that it would proceed alone.
