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InterOil issues new shares

June 4th, 2009 · 19 Comments

A real vote of confidence..

InterOil has sold new shares above market price, which is something one doesn’t often see, here is the PR:

InterOil Announces U.S.$70.4 Million Registered Direct Common Stock Offering

THE WOODLANDS, Texas, June 4 /PRNewswire-FirstCall/ — InterOil Corporation (NYSE: IOC – News; IOC:POMSoX) today announced it has entered into a definitive agreement with a number of institutional investors to sell 2,013,815 shares of its common stock in a “registered direct” offering. The investors have agreed to purchase the shares of common stock at a purchase price of U.S.$34.98 per share, which represents a one cent premium to the closing price on the New York Stock Exchange on June 3, 2009, for gross proceeds of U.S.$70,443,249 before deducting estimated offering expenses. The transaction is expected to close on or about June 5, 2009, subject to customary closing conditions and regulatory approvals.

The shares of common stock are being offered by InterOil Corporation pursuant to a prospectus supplement to a previous base shelf prospects dated August 6, 2008 and registration statement dated August 7, 2008.

InterOil intends to use the net proceeds from the sale of the shares for the development of the Elk/Antelope gas and condensate fields, the development of a proposed liquefied natural gas facility in Papua New Guinea, potential acquisitions, repayment of up to $9 million of the credit facility with the Overseas Private Investment Corporation and general corporate purposes.

—–[End of PR]——

Noteworthy:

  • We can see that second rig coming soon now
  • Above market price is a real sign of confidence, and that’s how the market is taking it

Tags: IOC

19 responses so far ↓

  • 1 kencooksam // Jun 4, 2009 at 7:34 pm

    Helps IOC get its price for the deals

  • 2 rory mcgowan // Jun 4, 2009 at 7:52 pm

    I was anticpating a 2ndary but it gone better than I would have thought. $70 million ? why not 100? how much for the drilling rig? there spending $ like drunken sailors on ant-1 hope its worth it.

  • 3 rory mcgowan // Jun 4, 2009 at 10:11 pm

    ADMIN: try to get a prospectus of the new offerring. might see more drilling info.

  • 4 Dave // Jun 4, 2009 at 10:51 pm

    I question why they issued stock at $34.98. It would seem a convertible issue, like the one recently called, with a strik price in excess of market would have been more favorable to existing shareholders.

  • 5 admin // Jun 5, 2009 at 1:08 am

    Well, what we can say is, the market seems to disagree, Dave..

  • 6 Dave // Jun 5, 2009 at 1:58 am

    Basic question: Is the market’s immediate reaction to an announcement indicative of a sound decision? We can all see how the market responded. If the market goes down tomorrow, will your point be moot? Do we know how the market would have responded if a convertible debt issue with a conversion price greater than $34.98 been the announcement?

    My issue as an investor is that I desire management to take actions that increase the value to existing shareholders. Thus, I question the nature of the financing. It maybe that management had to issue equity, as they may not be able to currently tap the debt markets given the recent forced conversion. I am not in management’s shoes and I am not privy to the information they have. But, I do know it would have been in my interests if they could have structured a financing that would have effectively issued the shares at a higher price.

    By the way, management states the shares were issued at a premium of $0.01 as compared to the closing price on June 3rd. Rephrased, they issued the shares at a discount of $0.63 as compared to the average closing price for the past 30 days.

  • 7 admin // Jun 5, 2009 at 3:27 am

    Well, all we’re saying basically is that being able to issue shares above the market price is not something we’ve seen too often, usually these sell at a significant discount. It’s a sign that investors who seriously kicked the tires think it’s worth quite a bit more. We have no idea why they didn’t do another convertible, to be honest. But here, for 5% dilution, we get twice the speed in exploration and a better negotiating position, that’s not a bad deal, we think.

  • 8 Janine // Jun 5, 2009 at 3:42 am

    Stp: Here are my thoughts.. To think that anybody knows more than the people at the sight for more than 1 year is very immature. The company is spending a tremendous amount of money to further enhance the value of Ant #1.Ant #2 from all reports will double all previous estimate numbers on Elk/Antelope.Antelope #4 will be the crown jewel and all closing arguments will be lost …. This company has done a tremendous job on increasing the future value of shareholders.Don’t need to see this Yahoo… Much more to come… Nippon deal is the standard for all future deals.

  • 9 admin // Jun 5, 2009 at 3:45 am

    That Nippon deal sure was something, Janine.. 🙂

  • 10 Roger // Jun 5, 2009 at 4:04 am

    Janine , great to hear from you again. The 5 % dilution hurts, but I’m Long IOC and have faith in management.

  • 11 Harold Chamberlin // Jun 5, 2009 at 4:17 am

    Thanks Janine.

  • 12 Janine // Jun 5, 2009 at 4:50 am

    Roger: You worry about the wrong things.Stp is very smart and well informed.

  • 13 shamrockoil // Jun 5, 2009 at 4:52 am

    I like the fact that they are spending so much time and money on Antelope 1. This time will pay 10 fold shortly. The info gathered not only gives us much greater value in negotiations and helps define new prospects much more accurately.

    Thanks Stp for providing a refreshing place to review info without the likes of….well….you know…..

  • 14 rory mcgowan // Jun 5, 2009 at 5:00 am

    Now a days Debt is a four letter word. Stock offering is clean and fast, like ripping off a band-aid. It hurts a little but its over and won’t have to do it again. Hopefully the shorts weren’t able to cover. I wonder if there any convert stock overhang?

  • 15 rory mcgowan // Jun 5, 2009 at 5:06 am

    Janine: tells us about the rig IOC is buying. A work over or the real deal? How much to buy? Helecopter ready?

  • 16 Janine // Jun 5, 2009 at 5:29 am

    Shorts are dead… Shamrockoil is correct. Rig news to come shortly.. No need for cash now. Company will decide what to buy Rory.. Stop worrying so much. Many more wells to drill…

  • 17 kencooksam // Jun 5, 2009 at 10:48 am

    Good string..As predicted the secondary was a Huge sucess.

  • 18 rory mcgowan // Jun 6, 2009 at 4:47 am

    Janine says the Nippon deal is a floor or a ceiling for BNP to work from. Is Mitsue ready to sign if the thai is company ready to follow? Isn’t Phil in Bangchok this week? is he bringing Somate?

  • 19 kencooksam // Jun 6, 2009 at 2:44 pm

    Phils traveling in the Far East not sure where. Phil had raised the price from the Nippon deal because he has a better deal and oil has risen from $35 a barrel to $68 range.And he has the demand to do that.The Nippon deal was @1% for $200 million and Phil’s raised the price. The longer they wait the higher the price…They now know that to be true..Deal soon maybe next 30 days..