Cardinal Resources plc
18 September 2007
Stock Exchange Announcement
For immediate release
London - 18 September 2007
Takeover talks terminated. Refinancing discussions continue.
Cardinal Resources plc (AIM: CDL) ('Cardinal' or the 'Company'), an independent
oil and gas exploration and production company operating in Ukraine, today
announces that the discussions with multiple parties announced on 3 September
2007, which could have led to an offer being made for the Company, are not now
expected to lead to any such offer being forthcoming. Takeover talks have
therefore terminated.
The origin of more than one of these discussions was the need, described at the
time of Cardinal's 2006 results announcement on 30 June 2007, to conclude
negotiations for a medium term financing package and raise equity finance either
by way of institutional private placement or underwritten rights issue.
Discussions with one or more potential equity providers continue.
On 30 June 2007, Cardinal announced that it was in discussions with Silver Point
Capital to restructure the bridge PIK notes first issued on 23 December 2005 and
that it had obtained a Commitment Letter from Hares Group Holdings GmbH ('Hares
'), to fund the Company's working capital requirements in case of any shortfall
over the period ending 1 July 2008. The detailed terms of the Silver Point
Capital PIK note facility require prior consent of Silver Point Capital (as is
normal for a senior lender) before Cardinal is able to draw down on any
subordinated loan such as that provided for by the Hares Commitment Letter. As
part of the current negotiations, Silver Point Capital have not provided consent
to such a drawdown. Instead of drawing down under the Hares Commitment, Cardinal
is therefore seeking to re-designate and access a portion of the undrawn US$14.1
million RC re-instatement facility for general working capital purposes.
Following the last covenant review, Silver Point Capital have neither waived
covenant breaches nor issued any notice of default. In the meantime, Cardinal's
cash-flow remains very tight.
Conclusion of negotiations and improvements in cash flows have been hampered by
a delay in start up of production and sales from the new gas gathering and
separation facility which the Directors had hoped would commence some weeks ago.
Start up has been delayed principally by the need, following Ukraine
government inspection of the completed facility, to add further health and
safety features. This additional work has now been completed and permission to
commence production and sales is expected shortly.
Contacts:
Cardinal Resources plc
Charles Green / Natalia Egorova
+44 20 7936 5250
investor.relations@cardinal-uk.com
Nominated Adviser - Nabarro Wells & Co. Limited
John Wilkes / Marc Cramsie
+44 20 7710 7400
cardinal@nabarro-wells.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange