New World eyes possible acquisition of Big Sofa Ltd

New World Oil and Gas has signed a non-binding letter of intent to acquire the entire issued share capital of Big Sofa Ltd for new shares in New World.

As the deal would amount to a reverse takeover, New World has requested and granted a suspension in the trading of its shares, pending the publication of the required AIM Admission Document or confirmation that the Acquisition is not proceeding.

The Acquisition, if completed, would result in New World shareholders having around 45% of the enlarged group prior to the impact of any associated fund raising.

"As a precursor to the Acquisition, the Company has also agreed to provide Big Sofa with a short-term loan of up to £500,000 for working capital purposes," New World said in a statement.

"This loan will be drawn down in two tranches, with £250,000 being drawn immediately. The loan will pay a coupon of 6 per cent., is secured by way of debenture and is fully repayable on 19 October 2016 in the event that the Acquisition does not proceed.

"It is also envisaged that the Group will seek to raise additional funds from both existing shareholders and new investors to finance the development of the Group going forward.

"For the time being, the Company will continue to retain its Belize Licences. However, if the Acquisition completes, the Board will consider withdrawing from its oil and gas activities.

"The Company intends to hold an Extraordinary General Meeting ("EGM") in June in order to seek shareholder approval for the Company to consider opportunities outside of the oil and gas sector and for release of the second tranche of the loan to Big Sofa.

"The appropriate notice to convene this meeting will be posted shortly. It should also be noted that if the Acquisition proceeds, specific shareholder consent will also be required at a subsequent meeting in accordance with AIM Rule 14 and associated matters including any applicable requirements of the Takeover Code."

At 9:48am: (LON:NEW) New World Oil Gas PLC share price was -0p at 0.06p