Beef magnate Larry Goodman is expected to still end up with a majority stake in Barryroe Offshore Energy in just over two years’ time, even after agreeing to share with other large shareholders the €40 million funding backstop he provided to the oil and gas explorer last year.
It is believed that businessman Nick Furlong and his Pageant Holdings vehicle, who combined own about 12.7 per cent of Barryroe, and London-based hedge fund Kite Lake Capital Management, which holds a 10.2 per cent stake, are among major shareholders that have signed up to participate in the funding line, by way of loan notes that are ultimately convertible into equity.
Barryroe said on Friday that Mr Goodman’s Vevan Unlimited vehicle, which currently owns more than 16 per cent of the company, and which has provided the €40 million backstop, has reached an agreement on “sub-allocation” of a portion of the loan notes with “certain shareholders”.
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The funds are key to Barryroe’s effort to secure a long sought-after lease undertaking from Minister for the Environment Eamon Ryan to progress work on its Barryroe oil and gas prospect, 50km off the coast of Cork. An application on the matter has been with Mr Ryan’s department for two years.
The money would cover the cost of drilling an appraisal well at the Barryroe site, which was found a decade ago to have more than 300 million barrels of recoverable oil.
“We are particularly pleased that the sub-allocation discussions have satisfactorily concluded,” said Barryroe chief executive Alan Curran. “We now look forward to progressing the Barryroe project, especially to the grant of the Lease Undertaking by the Minister, so that we can finally expedite the necessary appraisal well preparations. On behalf of the board and myself I would especially like to thank all shareholders for their ongoing support.”
Mr Goodman would have been on track to end up owning more than 75 per cent of Barryroe had he not agreed to sell down some of the convertible notes facility. Money drawn down from the facility will carry an annual interest rate of 10 per cent until the notes fall due for repayment at the end of 2024.
It will be convertible into shares when they mature at either 1.5 cent per share or Barryroe’s prevailing share price at the time if that is lower. There are also share subscription rights and stock warrants attached to the funding agreement.
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Investors in Providence have seen three Barryroe development partnership deals come to nothing in the decade since the capacity of the field was established in 2012.
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.
Shares in Barryroe have fallen by more than 50 per cent in the past 12 months, to 1.7 cent each, giving the company a market value of €19.48 million.