News blog
TomCo Energy
- BY: Andrew Hore |
- POSTED: 11/02/2009 |
Shares in TomCo Energy have been suspended because of cash problems.
The shares were suspended at 0.35p each, which values TomCo at £1.88m.
The oil and gas explorer blames contractual difficulties relating to its investment in the Heletz field in Israel for its shortage of cash. TomCo needs cash to service its debt and enable it to continue operating.
This seems strange given that, in January, TomCo said that GEM Global Yield Fund Ltd had provided a £5m equity line of credit, which TomCo can choose to draw down when it wants to over the next three years. GEM has been issued with 34.7m warrants exercisable at 1.5p a share. The arrangement fee was £50,000.
The problem may be that TomCo could issue five times the average daily volume over 15 days at 90% of the average closing bid price over those 15 days. GEM can choose to by between 50% and 200% of the requested number of shares.
Average daily trading volumes over the past 15 days have been well under 1m shares. The average mid price has been well below 1p and the spread is quite wide. That means that even if GEM were keen to take up shares TomCo is unlikely to be able to raise even £100,000 and probably a lot less than that.
Some of the cash from this equity line of credit was supposed to be used to develop the Heletz oil fields in southern Israel in order to build production to at least 300 barrels a day.
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