Providence hints at ‘alternative’ finance after latest missed deadline

Oil explorer again forced to extend deadline for receipt of funds from Chinese investor

Providence, which is led by chief executive Tony O’Reilly jnr, said it had received “further assurances” that the loan advances due were in the process of being paid. Photograph: Dara Mac Dónaill

Providence, which is led by chief executive Tony O’Reilly jnr, said it had received “further assurances” that the loan advances due were in the process of being paid. Photograph: Dara Mac Dónaill

 

Providence Resources says it will need to put in place “alternative financial arrangements” by the end of the month if it has not received a promised $10 million (€8.9 million) from its Chinese investor to cover exploration costs off the coast of Ireland.

The Dublin-listed explorer was again forced to extend the deadline for the receipt of funds from Chinese company Apec on Tuesday, triggering a further decline in the value of its stock.This is seventh time the deadline has been extended.

Apec had originally been due to transfer the funds to Providence’s account – $9 million to cover exploration costs at its flagship Barryroe project and $1 million to cover Apec’s costs – by June 14th.

The subsequent sequence of missed deadlines has generated significant investor unease and seen the company’s share price slide to a 12-month low of seven cent.

In a note to the stock exchange, Providence, which is led by chief executive Tony O’Reilly jnr, said no funds had been received as of the close of business on Monday, August 12th but that it had received “further assurances” that the loan advances due were in the process of being paid.

Alternative arrangements

As a result, it said it had agreed to a backstop extension of on or before Monday, August 19th. However, the company said should these funds not be received by the revised backstop date, it would need to put in place alternative financing arrangements in order to meet its working capital requirements beyond the end of August.

Providence has said previously it has received documents provided to Apec’s funders by banking giant HSBC showing that the money has debited from their account for payment to Providence but the transaction was not fully processed.

In March last year, Providence struck a deal which gave Apec a 50 per cent stake in Barryroe in exchange for the Beijing-based firm covering half of the cost of an associated $200 million five-well drilling programme.

Last week Providence secured permission from the Government to carry out a further site survey at Barryroe off the Cork coast that effectively paves the way for drilling at the field. Drilling is expected to commence in the fourth quarter of 2019.