Tower Resources plc (TRP.L, TRP LN)  has announced an extension to its existing loan agreement with Pegasus, a new loan agreement with Shard and a subscription agreement to raise US$0.2m. 

The purpose of the Shard Facility, Pegasus Extension and the Subscription is to cover working capital while the Company finalises funding arrangements for the drilling of the NJOM3 well on the Thali licence as highlighted in the Company's 20 August 2020 announcement. 

Shard Facility 

The Company has agreed a six-month Loan Facility (the "Shard Facility") of US$500,000 with Shard Merchant Capital Ltd ("Shard"). The terms of the Shard Facility include the issue of 31,446,541 attached three-year warrants at a strike price of 0.6 pence and the issue of 5,761,198 shares to pre-pay interest. 

Pegasus Facility 

The Company also agreed a further six-month extension to its existing US$750,000 Loan with Pegasus Petroleum Limited ("Pegasus"), as part of which it will issue 47,169,811 attached three-year 0.6 pence warrants, and Pegasus has agreed to subscribe for 37,854,971 shares to convert the current accrued interest on the Pegasus Loan Facility into shares, and to pre-pay interest. 

Subscription 

The Company also announces a subscription to raise gross proceeds of US$200,000 through a subscription of approximately 38,407,989 new ordinary shares of 0.001 pence each at a subscription price of 0.393 pence per Subscription Share to clients of Shard. The Subscription Price of 0.393 pence per share represents a discount of 9.7% to the midpoint price of the Company's shares at the close of trading on 28 August 2020. 

Shares in Tower resources have had a turbulent three months, trading up from lows of 0.32p to open at 0.4p in early trade following this announcement. 

Related Party Transactions 

Jeremy Asher, Chairman and CEO, is the ultimate beneficial owner of Pegasus, which has agreed the Pegasus Extension, and payment of accrued and pre-payment loan interest via the issue of shares ("Loan Facility Interest Shares"). 

Jeremy Asher, as a director and substantial shareholder of the Company, and Pegasus Petroleum Ltd, are considered to be "related parties" as defined under the AIM Rules and accordingly, the Pegasus Extension and associated issue of shares and warrants constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules. 

The Directors independent of the Pegasus Extension, being Peter Taylor and David M Thomas, consider, having consulted with SP Angel Corporate Finance LLP, the Company's nominated adviser, that the terms of the Pegasus Extension and issue of warrants and shares are fair and reasonable insofar as the Company's shareholders are concerned. 

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