How Conico’s $2.09M Recapitalisation Resolves Greenland Drilling Debt

Legal Dispute Resolution

Conico Ltd has brought closure to a protracted legal dispute with Cartwright Drilling Inc concerning unpaid drilling invoices from the 2022 Greenland field season. An arbitrator in Newfoundland ruled that Conico and its partner Longland were jointly liable for over CAD$1.39 million, including contractual interest and arbitration costs. The settlement involves a cash payment of approximately A$360,555 already made, a further equal payment due by November 2025, and the issuance of 34.7 million fully paid ordinary shares to Cartwright. This resolution removes a significant overhang on Conico’s balance sheet and allows the company to focus on its operational and financial recovery.

Recapitalisation Strategy

To fund the settlement and bolster working capital, Conico has secured $900,000 in converting loans from sophisticated investors, including director Guy Le Page. These loans will convert into shares at a post-consolidation price of $0.008 per share, subject to shareholder approval at a general meeting scheduled for July 2025. Additionally, the company plans a fully underwritten non-renounceable entitlement offer on a 4-for-5 basis, aiming to raise approximately $1.19 million before expenses. RM Corporate Finance is appointed as lead manager and underwriter, with fees to be paid partly in shares and options, further aligning interests.

Share Consolidation and Debt Conversion

Ahead of the rights offer, Conico proposes a 1-for-8 share consolidation to streamline its capital structure. This move will reduce the number of shares on issue and adjust the share price accordingly, potentially improving market perception and liquidity. The company also intends to convert outstanding related party debts, including unpaid directors’ fees, advisory fees, and broker fees, into shares at the rights offer price. This approach conserves cash while addressing liabilities, but will increase share count and dilute existing shareholders if approved.

Implications for Shareholders and Market

The recapitalisation and settlement package represents a critical step for Conico to stabilise its financial position after the Greenland drilling dispute. Shareholders face dilution risks from multiple share issuances, but the fully underwritten rights offer provides an opportunity to maintain their proportional ownership. The involvement of RM Corporate Finance as lead manager and underwriter adds credibility and support to the capital raising. The upcoming shareholder meeting in July will be pivotal in determining the final structure and timing of these initiatives.

Looking Ahead

Conico’s management is focused on resolving legacy issues and positioning the company for future growth. The successful execution of the settlement, share consolidation, and capital raising will be closely watched by investors as indicators of the company’s ability to manage risk and rebuild value. Market reaction post-consolidation and rights offer will provide further insight into investor confidence in Conico’s turnaround strategy.