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Shares of i3 Energy (LON: I3E) are trading lower on Monday morning after the company announced a contract restructuring with Baker Hughes and creditor consent to proceed with its dividend strategy.
i3 Energy's share price is down over 1% at 8.2p following the announcement.
In September 2017, the company entered a £5.8 million contract with GE Oil & Gas UK Limited for subsea trees and wellheads, intended for the i3's eventual development of its Liberator field.
Then, in 2019, i3 announced it had awarded Baker Hughes, a GE company (GE Oil & Gas UK Limited and Baker Hughes collectively referred to as BHGE), contracts for its H2 2019 drilling programme at its Liberator and Serenity sites.
BHGE agreed that £3 million of oilfield service and oilfield equipment contract payments would not become payable until i3 received its first sales revenues from Liberator (the Deferred Payment Invoice Balance).
i3 issued BHGE warrants up to £3 million at an exercise price of 56.85p as part of the transaction.
The DPIB agreement and warrants contained conditions, which prevented the company from reducing its share capital to make dividend distributions to its shareholders and another that required repayment of the DPIB at or above £3 million as part of a farm-down of i3's UK assets.
The AIM-listed company said it has shifted its focus to its Canadian assets, and in the UK, its Serenity asset, and due to its desire to pay dividends to shareholders, it has agreed on a restructuring with BHGE.
The restructuring includes the remaining balance of the equipment contract being cancelled without penalty, permission from BHGE for i3 to restructure its balance sheet, the warrants converted to i3 shares, a 10% fee will be paid to BHGE for any dividend payments associated with i3's 2021 cash flow, and a fee of £145,383 to be paid to BHGE before September 21st.
The company also said that relevant creditors have consented to i3 proceeding with its reduction in share capital and the payment of its maiden dividend.
Graham Heath, CFO of i3 Energy, commented: “We are pleased to have reached this important milestone which enables us to proceed with our promised dividend strategy, and we want to reiterate our appreciation for the supportive and creative relationships we continue to foster with our partners and creditors as we evolve the Company.”
i3 Energy shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are i3 Energy shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies
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