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Extension of Bridging Loan Facility

Source: www.gulfoilandgas.com 7/30/2019, Location: Africa

Tower Resources plc, the AIM listed oil and gas company with its focus on Africa, is pleased to announce an extension of its Bridging Loan Facility ("Facility") of US$750,000. The terms of the extension include the issue of 3 million of attached five-year 1.0 pence warrants with the Facility now being due for repayment on or before 31 August 2019, representing a two month extension from its original term (the "Extension").

As previously disclosed, the purpose of the Facility is to cover working capital while the Company seeks to finalise funding arrangements for the drilling of the NJOM3 well on the Thali licence. The purpose of the Extension is to allow additional time to progress farm-out discussions and arrange for refinancing of the Facility. The Company continues to manage its limited cash resources carefully as these discussions are progressed.

Bridging Loan Facility and Issue of Warrants

The Company has agreed an extension of the repayment of the Facility until 31 August 2019 in return for the issue of 3 million five-year warrants with a strike price of 1p per share. The value of these warrants, based on a Bloomberg valuation using Black-Scholes, is approximately 0.4p per warrant, with the aggregate warrant value corresponding to approximately 2% of the value of the Facility, and is intended to compensate the Facility lenders for their additional risk and for the additional default interest that the lenders will forego by granting the extension. The Bridging Loan will continue to have a preferential right of repayment from any future financing in excess of $750,000, and will remain secured by the Company with interest due of 1% per month (accrued and paid on repayment) along with a fixed and floating charge over the Company's assets.

Some of the warrants will be issued to Pegasus Petroleum Ltd, a company owned by Jeremy Asher, which is one of the lenders in the Facility. Jeremy Asher, as a director of the Company, and Pegasus Petroleum Ltd, are considered to be "related parties" as defined under the AIM Rules and accordingly, the Extension and issue of warrants constitute related party transactions for the purposes of Rule 13 of the AIM Rules.

800,100 of the warrants will be issued to Peel Hunt LLP, another one of the lenders in the Facility. Peel Hunt LLP, as a substantial shareholder of the Company, is also considered to be a "related party" as defined under the AIM Rules and accordingly, the Extension and issue of warrants constitute related party transactions for the purposes of Rule 13 of the AIM Rules.

Related Party Transaction
The Directors independent of the Facility, 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 extension to the Facility and issue of warrants are fair and reasonable insofar as the Company's shareholders are concerned.

Farm-out discussions
The Company is continuing farm-out discussions with multiple parties and is hopeful of achieving a first term sheet in the near future.

For more information about related Opportunities and Key Players visit West Africa Projects

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