Imperial confirms plans to raise cash

OIL company Imperial Energy has confirmed plans to raise more than £300m cash through a rights issue at a vastly discounted value of its shares.

The move is one of the first examples of the credit crunch spilling over into the oil and gas sector.

The Leeds-based company has entered a share underwriting facility with Merrill Lynch and ABN AMRO's Hoare Govett.

In the past six months many businesses have been shut out of debt markets and many companies face higher interest rates and tougher lending conditions.

However surging oil prices, which hit a record above $111 a barrel last month, means that oil companies have had little difficulty raising cash for projects.

The Leeds-based company said it remained on track to deliver its year-end production target of 25,000 barrels of oil per day.

In March Imperial said it had received approval from the Russian authorities to register substantial new oil reserves in west Siberia.

The funds from the issue will be used to finance the company's development and capital expenditure programme.

Leeds Lawyer and chairman Peter Levine said: “With the proceeds of the fully underwritten rights issue, the company will be fully funded to the time when it is expected to be cash flow positive, strongly capitalised and the proceeds of the rights issue will mean that the company will be free of all bank debt.”