The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamas-based oil explorer says it achieved its targets after local investors purchased 35 percent of the available shares in the investment fund it created.

Simon Potter, the Bahamas Petroleum Company's (BPC) chief executive, said in a statement that the BPC Investment Fund had delivered on the company's promise to set-up a vehicle that would allow Bahamian investors "to invest in the outcome of our potentially transformational exploration well".

That well is due to be drilled in waters south-west of Andros, near The Bahamas' maritime boundary with Cuba, in April 2020, and Mr Potter reiterated that the BPC Investment Fund's creation had never been about raising capital to finance this activity since it already possessed the funding required.

Some capital markets observers may view the fund's launch as relatively unsuccessful, given that just £700,000 of the available £2m worth of shares were taken up by Bahamian institutional and other so-called "sophisticated" investors.

However, Mr Potter said achieving full subscription had never been the objective. "The mutual fund initiative was set up with the straightforward goal of allowing Bahamian investors the opportunity to invest in the outcome of our potentially transformational exploration well,"he explained, "targeting 0.77bn to 1.44bn barrels of oil, which is to be drilled in the first half of 2020. An opportunity they would otherwise have effectively been precluded from.

"Further, by offering this opportunity at a subscription price of 2p, potential Bahamian investors have been extended this opportunity under the same conditions as had recently applied to UK investors alike. Accordingly, the fund has and will continue to accomplish its objective, in creating a vehicle through which Bahamian investors can, should they so wish, participate now or in future in the fortunes of the company.

"I would emphasise for all shareholders' benefit that any funds raised from the Fund initiative, now and in the future, will be additive to our existing financial resources but are not essential to meeting the estimated costs of drilling, for which costs we have been implementing a staged, co-ordinated funding strategy, as previously communicated to the market."

BPC's statement said the fund's placement agent, Leno Corporate Services, had received subscriptions for $914,000 or £700,000 worth of shares, meaning about 35 percent of the £2m available was bought by local investors.

BPC Investment Fund's only investment is the shares it holds in its oil explorer sponsor. Its holdings will be valued at the end of every month, which is when investor subscription and redemption requests will be honoured.

Should new investor subscriptions exceed monies being taken out, BPC said the net surplus will be used to "to either purchase additional shares in BPC on the open market or, at the company's discretion, subscribe for new ordinary shares in the company at the then-prevailing market price".

In a bid to further incentivise local investor participation, BPC said the fund's subscription price would be fixed at 3.35 UK pence per share at the first monthly valuation only, which is scheduled to take place on March 31, 2020.

It explained: "Given the company's share price is currently significantly greater than the initial subscription price of two pence per share, BPC has advised Leno it will not accommodate any further late or additional subscription entitlements at this level.

"However, seeking to ensure the opportunity for further local Bahamian participation in the project is maintained as the venture gains greater public profile, the company has agreed to fix an issue price for subscription requests, at the first valuation event on 31 March, 2020, only, at 3.35p per share, being the closing market price of BPC shares on February 12, 2020. This subscription price will only apply for up to a maximum of 40 million additional shares."

The BPC Investment Fund's offering period, which started on January 6, 2020, was supposed to close on February 7 but was extended by three working days to February 12 at Leno's request so that it could process late subscriptions. Any future net proceeds from investor subscriptions will be applied against the company's domestic costs since they will be received in US dollars.

No mention was made of whether there has been any progress in opening BPC Investment Fund to smaller Bahamian retail investors. Leno announced in late January that a formal request seeking regulatory approval for this had been made to the Securities Commission, but nothing further has been mentioned.

The application seeks permission to convert the BPC Investment Fund from a professional fund into a lower subscription standard fund, which would allow individual and retail investors to purchase shares in it.