LONDON (Alliance News) - New World Oil & Gas PLC Monday said it may be moving away from the oil and gas sector after signing an agreement to potentially complete a reverse takeover of a data services company, in a deal which could include a fundraising.
New World Oil underwent significant change in the second half of 2015 after a shareholder action group successfully called for a board reshuffle and the company has been quiet after admitting there had been no new developments on its onshore oil project in Belize since last October.
The Blue Creek project is New World's only significant asset and the licence was extended in late 2015, the same time when the company decided to relinquish its licenses in Denmark. However, the deal Monday suggests the company is hoping to offload Blue Creek and move away from the oil and gas sector entirely.
Moving in an completely different direction, New World has signed a non-binding letter of intent to takeover Big Sofa Ltd, a company which started out as a marketing consultancy firm before developing into its current state as a technology services company focused on video and image analytics.
Big Sofa uses visual data by utilising technology that has been developed internally to provide customer and consumer insights to its clients. By managing and analysing visual data on a large scale, the company can enable its clients to get closer to how consumers interact and provide them with a competitive edge in developing new products or innovative services, New World said.
New World believes the deal will provide a cash injection and access to other capital markets in order to deliver this "sizeable growth opportunity".
"To date, Big Sofa has won a number of substantial contracts with multi-national consumer brand companies on a global basis as well as being well advanced in discussions with other companies and agencies," said New World.
"This progress underlines Big Sofa's credentials in the sector and the company is now positioned to achieve significant growth," the company added.
The deal is subject to due diligence and shareholder approval being secured at an extraordinary general meeting, the date of which will be unveiled shortly. The deal is also likely to lead to a fundraising being conducted shortly afterwards.
As a precursor to the possible deal, New World has agreed to provide a short-term loan of up to GBP500,000 to Big Sofa, which can be drawndown in two equal tranches, the first of which has been drawn immediately. The loan carries a 6.0% coupon and will have to repaid on October 19, 2016, if the deal does not advance.
Importantly, the second tranche to be provided to Big Sofa will also require shareholder approval at the EGM.
"It is also envisaged that the group will seek to raise additional funds from both existing shareholders and new investors to finance the development of the group going forward," said New World.
If the company's merge, New World shareholders would own around 45% of the enlarged group.
The company said it plans to retain its assets in Belize for the meanwhile, but said the board will "consider withdrawing from its oil and gas activities" if the deal is completed.
As the deal would be classed as a reverse takeover, New World shares have been suspended as of Monday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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