AJ Lucas to get injection
Investors vote to fix Lucas' debt. Photo: Getty Images
SHAREHOLDERS in drilling services provider AJ Lucas have overwhelmingly approved a long-awaited plan to recapitalise the company's debt-laden balance sheet.
The plan could result in the shares resuming trading early next year after a suspension of more than six months. The $151 million capital raising, at $1.35 a share, will see Hong Kong hedge fund Kerogen
Capital take an initial 15 per cent stake in Lucas, which could rise to 30 per cent through share options and a subsequent renounceable rights issue. More than 98 per cent of shareholders voted the plan through at a special meeting in Sydney yesterday.
The resolution of the urgent funding woes also allows it breathing space to pursue the development of its much-hyped Bowland shale gas project in
Britain, in which it has a 56 per cent share, including through its 42 per cent ownership of Cuadrilla Resources.
''While we have some hurdles to overcome, I am excited by the potential of this world-class asset,'' said Lucas chief executive Allan Campbell.
Cuadrilla estimates there to be more than 200 trillion cubic feet of gas underground at its Bowland asset, which, if proven to be true, would significantly reduce Britain's reliance on imported energy sources, provided the gas can be extracted viably - and safely.
The controversial extraction method of injecting water and chemicals at high pressure to fracture rocks deep underground, known as hydraulic fracturing or ''fracking'', has environmental groups up in arms over the potential effect on water aquifers.
Fracking conducted by Cuadrilla was also found to have caused two significant tremors and 48 aftershocks near the British town of Blackpool in April and May, further stoking fears over the extraction technique's safety.
Lucas has about $90 million of debt, equal to its entire market capitalisation, a legacy of over-aggressive expansion, including the acquisition of Mitchell Drilling, just before the global financial crisis hit. The urgency of the situation had forced Lucas to consider selling its core drilling business, before Kerogen's intervention.
''We have not had to sell the family jewels,'' Mr Campbell said.