KEY POINTS:
New Zealand Oil and Gas has put on hold for the fourth time this year the flotation of its Pike River Coal project after disclosing a $40.5 million cash call.
NZOG said the project - a mine in the Paparoa Range northeast of Greymouth producing high-quality coking coal - would be floated on the NZX early next year. A prospectus would be registered in early February, it said.
The capital raising, by way of a $23 million renounceable rights issue and a $17.5 million placement of new shares with professional investors, would fund the development of NZOG's Kupe oil and gas prospect and provide NZOG with working capital.
NZOG's shares closed down 3c to $1 amid disappointment over the Pike River delay.
"They have had issues with the project. It is disappointing, but we are reasonably relaxed with it," said one investor.
On Tuesday NZOG placed 17.5 million shares for $1 a share and 5.83 million options. The options are in the same class as the existing options and can be exercised in June 2008 at $1.50.
NZOG general manager Gordon Ward said the organisation had considered raising more, but the $17.5 million reflected the best balance between demand for the shares and the price.
Meanwhile, early next month NZOG will offer shareholders the right to buy one new share for $1 and an option for every share they hold. The rights issue, the first by NZOG, will raise $23 million, but it is not underwritten.
Yesterday, NZOG's 2008 options closed at 16.4c, implying the value of the rights at around 5.5c a share. One observer said the incentive may not be enough to encourage all shareholders to take up their rights.
Development costs for the Kupe project, New Zealand's largest undeveloped gas field, are $1 billion. NZOG will cover its $150 million share with a $125 million loan from Westpac. The remainder covered by the capital raising.
NZOG will use the remaining $15 million of the issue to help fund its share of the US$225 million ($340.9 million) Tui prospect which, like Kupe, is off the coast of Taranaki, as well as to fund other activities such as exploration.
The Pike project, in which NZOG has a 61 per cent share, will cost about $174 million to develop, including working capital of $30 million.
This will be covered by the $60 million equity Pike has raised from two Indian investors, NZOG and other minority investors.
The remainder is to be covered by a $65 million loan from Westpac and the float, which will raise from $60 million to $65 million.
Ward said the company had wanted to get the float away before Christmas, but delays in securing bank financing meant crucial steps of the flotation would have straddled the holiday.
Launching in February gave a clean run at the float, when the banks had returned from holidays. "The investment community shuts down from the middle of December until the end of January," he said. "We would have liked to get it away before Christmas, but we ran out of time."
