Americas Petrogas Inc. (CVE:BOE) (PINK:APEOF) stock price started to move as a large financing deal is coming closer to closing.
On Wednesday, BOE hit a new multi-year high at $4.24 per share after the price passed above the psychologically and technically important $4 per share. The move was unprovoked – there was no news out recently, thus the sustainability of this new price level remains questionable although there are some positive developments to cling onto.
At the beginning of February 2012, the company signed an agreement for $50 million bought deal financing. 14.3 million shares were sold at $3.50 each. Until the deal is sealed the underwriters can also choose to buy additional 2.8 million shares, raising the company’s proceeds up to $60 million. This would be a very attractive option if the price continues to run up like it does right now. The offering should close on around February 22, 2012.
Additionally, 2.5 million shares were also offered under a non-brokered private placement to Kisan International Trading FZE at the same price of $3.50.
Americas Petrogas need the cash to fund the exploration and development of their oil and gas properties, as well as cover administrative expenses. The company is already cashing in on sales of oil and gas, but the amounts produced are still that of an exploration stage business. BOE still burns a lot of cash in development and creates large dilution to shareholders covering that through sales of capital stock. The dilution rate reached 49% over the past year of operation.
