Jericho Oil (JCO.V) was eyeing some acquisitions in April where it planned (or still plans) to take advantage of the low oil price to buy additional assets for pennies on the dollar. In order to do so, Jericho needed to raise cash and its core shareholders agreed to fund the company with C$5M by acquiring 50M units at C$0.10. Each unit consisted of one common share as well as a full warrant allowing the warrant holder to acquire an additional share of Jericho at C$0.36.
As Jericho didn’t want investors to start speculating on this financing and the C$5M financing will solely consist of the large families (and existing shareholders like us aren’t even allowed to participate) so we can expect this financing deal to close very soon. As Jericho’s share price is currently trading at C$0.15, the warrants are already in the money so we can reasonably say the total share count will increase by 100M shares if the warrants indeed expire in the money. The positive side of dealing with the major shareholders is that we can expect them to not clip the warrant after 4 months and one day.
And let’s now hope Jericho can announce some acquisitions sooner rather than later. The oil price has been moving up lately and it would be dramatic if the acquisitions fall through, rendering the 100M share increase (50M shares + 50M warrants that are currently in the money) useless. We hope (and expect) to see news soon.
Disclosure: The author has a long position in Jericho Oil. Jericho has been a sponsor of the website in the preceding 12 months.
