Sterling Funds Up As It Considers Vitol Approach
Sterling Resources has secured an injection of equity capital that it says will carry it through through to June 2013.
The European focused explorer, is facing an unsolicited bid from Vitol Anker International B.V.. a unit of oil trader Vitol.
Vitol has announced that it intends to make an unsolicited cash offer for all of the outstanding common shares for the Canadian listed oil and gas exploration company, placing an enterprise value of C$290.6m.
Sterling will use the net proceeds of approximately $51.4 million for repayment of the US$12 million loan from Vitol, as well a for Phase 1 development costs and costs relating to the Breagh senior secured loan facility for the Breagh project and certain exploration, appraisal and pre-development expenditures and other corporate purposes.
Sterling has been considering various equity and mezzanine financings to raise approximately CAD 50 million or more to cover expenditure requirements in the first half of 2013 and into the third quarter. Recently, it had announced plans for a high-yield bond issuance in the second quarter.
Walter DeBoni, Chair of the Sterling Board, said that the financing would provide the Company " with the appropriate time to undertake a thorough and systematic review of all of our strategic alternatives as announced on February 12, 2013 in response to the unsolicited offer from Vitol.”
Sterling said that it had been has been working with RBC Capital Markets to review a full range of options, including:
• A corporate sale, merger or other business combination, which may include discussions with Vitol
• Joint venture or farm down transaction to accelerate activities in the North Sea and Romania
• Selling specific assets of the Company
• Addressing long term capital requirements via a high yield bond and other forms of financing
"The Board is committed to acting in the best interest of shareholders to maximize value," said Mr. DeBoni, adding "We have believed for some time that our stock price does not reflect the underlying value of our assets. The significant capital required to develop these assets can be accessed through the capital markets or via partnerships and business combinations and we will seek the alternative that delivers the most value for our shareholders."