Oilexco slides on debt U-turn

SHARES in Canadian oil explorer Oilexco – which is listed in both Toronto and London – plunged yesterday after it announced plans to raise up to £100million in debt and sell shares to raise more cash, but later said it had abandoned the proposals.

The company, which focuses on the UK North Sea, saw its shares in London tumble 29.5p or more than 24% to 91.5p. The shares have been as high as 964p within the last 52 weeks.

It also said that it had hired investment banker Morgan Stanley to advise it on strategic alternatives, including “mezzanine” and debt financing, industry and financial partnerships.

Oilexco has been searching for ways to pay for its exploration and development programme since early October, when it said it was having difficulty closing a deal for finance it had agreed with the troubled Royal Bank of Scotland.

The company said that its board cancelled the plan to issue stock and debt because in the current market conditions the proposed offering was too dilutive to shareholders and did not reflect the value of the company’s assets.