# TomCo Energy New Convertible Loan facility

- Link: https://www.directorstalkinterviews.com/tomco-energy-new-convertible-loan-facility/4121112677
- Published: 2023-03-30T07:12:13+01:00
- Author: Ethan Davis

**TomCo Energy plc** (LON:TOM), the US operating oil development group focused on
using innovative technology to unlock unconventional hydrocarbon resources, has 
announced that the Company has obtained an unsecured committed facility of up to
£1,000,000 via a convertible loan note instrument and associated subscription and
put option agreement entered into with certain subscribers introduced by Novum Securities
Limited (“NSL”), the Company’s broker, as further detailed below.

The Convertible Loan is intended to further bridge the Company’s general working
capital requirements, to the extent required, as the Board seeks to finalise due
diligence and documentation in respect of its preferred arrangements with a potential
financing party for a funding package to enable the Company to execute on its previously
stated development plans for its wholly owned subsidiary, Greenfield Energy LLC (“
Greenfield”) and the Tar Sands Holdings II LLC (“TSHII”) site.  These plans include,
_inter alia_, securing the remaining 90% of the Membership Interests in TSHII, with
its 760 acres of land and a large mining permit in Utah, USA, constructing two oil
sands processing plants and associated infrastructure on the TSHII site, and drilling
a series of in-situ oil recovery wells.

As previously announced, Greenfield currently owns a 10% Membership Interest in 
TSHII and holds an exclusive option (the “Option”), exercisable at its sole discretion,
to acquire the remaining 90% of the Membership Interests for additional cash consideration
of US$16.25 million which was scheduled to expire on 31 March 2023 (the “Agreement”).
To allow additional time for the abovementioned funding package to be secured, the
Agreement has now been varied in order to further extend the exercise period of 
the Option.  Accordingly, Greenfield may now exercise the Option, at its sole discretion,
by delivering a notice of exercise on or before 30 April 2023 and making payment
of the US$16.25 million cash consideration by no later than 5 May 2023.  However,
there can be no certainty that appropriate funding arrangements will ultimately 
be successfully secured or as to the terms of any such funding or consequently that
the Option will be exercised.

**The Convertible Loan**

The £1,000,000 Convertible Loan facility is available for drawdown by the Company
in four equal tranches of £250,000.  The Company has, at its sole election, an option
to draw down one or more of the £250,000 tranches on or before 31 March 2024.  Interest
equating to a fixed amount of five per cent. of the principal amount drawn down 
shall accrue until repayment, conversion or redemption of the relevant notes.

Amounts drawn down under the facility and the associated accrued interest are convertible
at any time at the election of a noteholder via service of a conversion notice. 
Alternatively, they may be repaid in cash before 31 March 2024 at the election of
the Company by way of the Company giving not less than five business days’ notice
in writing during which period the noteholder(s) concerned remain entitled to serve
a conversion notice prior to such repayment.

If any amounts drawn down under the Convertible Loan are not repaid or converted
prior to the scheduled redemption date of 31 March 2024, the noteholder(s) concerned
shall be deemed to have served a conversion notice to convert the outstanding balance
and the associated accrued interest into new ordinary shares of no-par value in 
the capital of the Company (“Ordinary Shares”).

The conversion price per new Ordinary Share under the facility shall be determined
as the lower of: (i) 0.60 pence; and (ii) the volume-weighted average price of an
Ordinary Share during any five of the fifteen business days prior to service or 
deemed service of a conversion notice, as selected by the noteholder(s) concerned
and sourced from Bloomberg L.P., discounted by 15%. 

**Warrants**

The Convertible Loan subscribers have been issued with, in aggregate, 41,666,667
warrants by the Company, with each warrant affording the holder the right to subscribe
for one new Ordinary Share at an exercise price of 0.60 pence per share, for a period
of three years (“Warrants”).

If any £250,000 tranche of the Convertible Loan is drawn down, the Convertible Loan
subscribers will be issued with, in aggregate, a further 41,666,667 Warrants by 
the Company for each of the first three £250,000 tranches drawn down, exercisable
for a period of three years from the date of any such drawdown.

Accordingly, if the full £1,000,000 of the Convertible Loan was to be drawn down
a total of 166,666,667 Warrants would be issued.  If these were to subsequently 
be exercised in full, it would result in the issue of 166,666,667 new Ordinary Shares
raising a further £1,000,000 towards the development of the Company’s business.

NSL will also be issued on drawdown of the initial tranche of the Convertible Loan
with 10,000,000 warrants, with each warrant affording the right to subscribe for
one new Ordinary Share at an exercise price of 0.60 pence per share, for a period
of two years from the date of such drawdown (the “Broker Warrants”).  If the Broker
Warrants were to subsequently be exercised in full, it would result in the issue
of 10,000,000 new Ordinary Shares raising a further £60,000 towards the development
of the Company’s business.

> **Commenting today, John Potter, CEO of TomCo Energy, said**: _“This Convertible
> Loan facility provides the Company with the flexibility to have financing available
> to drawdown, to the extent required, whilst we seek to finalise negotiations with
> a potential financing partner for a funding package that, if secured, would enable
> the Company to execute on its development plans for Greenfield and the TSHII site.
> Whilst there can be no certainty that the preferred funding package being negotiated
> will ultimately be secured, these remain very exciting times for TomCo and I look
> forward to making further announcements in due course.”_

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