Givot Olam Oil Exploration LP (TASE:GIVO.L) wants to use the time before the production tests at its Meged 5 oil well are known to raise capital. The partnership yesterday published a shelf prospectus to raise NIS 85 million in a rights issue. At least half the partnership's general partners have to approve the issue at the general partners meeting scheduled for February 21.
In December, Givot Olam's main partners tried to raise $20 million, a measure strongly opposed by the company's general partners who objected to the dilution of the stakes that this would cause. The general partners said that if commercial quantities of oil are found at the Meged 5 well, they would not object to raising capital at a higher company value, but until then, they reject the company's request to publish a prospectus.
If Givot Olam's main partners are this time able to persuade the general partners that more capital is essential, the company will probably immediately raise NIS 23.7-27 million in an issue of new partnership units. If all the warrants issued are exercised, additional proceeds could reach NIS 50.8-57.8 million, for total gross proceeds of NIS 85 million.
Givot Olam's share fell 9.5% by mid-afternoon to NIS 0.057.
Published by Globes [online], Israel business news - www.globes-online.com - on February 1, 2010
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