Exploration company Providence Resources has unveiled plans to raise $68.4m through a share placing and open offer.

The company said it would use the funds to pay off debt, settle a litigation case and fund a new drilling campaign. 

Under the plan, Providence will offer new shares to institutional investors and shareholders on the basis of one new share for every 4.4 shares held.

The placing will be done at a price of 12 pence, a 13% to the closing price before Providence shares were suspended in April.  

Providence said the funds raised would be used to fund its payment from recent litigation with drilling firm Transocean and also repay $20m of debt to US-based Melody Finance.

The funds will also be used to strengthen Providence's financial position and to fund its share of drilling costs for an exploration well at the Druid prospect, in the Porcupine basin off the western coast.

Under the terms of the deal, Providence said that Melody has agreed to convert some of the amounts due to it to shares in the company.

The company's chief executive Tony O'Reilly Junior said the moves will completely restructure the company's balance sheet, while also removing its financial instability.

Mr O'Reilly also said it will broaden the company's already significant UK institutional shareholder base.

"This restructuring will allow for the payment of amounts owing to Transocean as well as the retirement of the Melody debt facility, thereby providing the balance sheet flexibility for us to progress various commercial negotiations on our assets, most notably Barryroe and Spanish Point," the CEO added.

"Furthermore, the financing illustrates our investors' willingness to support and provide substantial further capital to finance our share of an exploration well on the high impact Druid prospect in the southern Porcupine Basin during 2017," Mr O'Reilly stated. 

In a note, Davy stockbrokers said that the funds from the proposed placing and open offer will resolve a number of major issues for the company. 

"Afterwards, it will have no debt or litigation-related liabilities and it has also identified a drilling campaign on the Atlantic margin that can be undertaken with the balance of funding raised," it added.

Shares in the company resumed trading this morning on both Dublin's Irish Enterprise Securities Market and London’s Alternative Investment Market.

They had been suspended in April at the company’s request, pending a final decision in the Transocean case. 

The company had been ordered by a UK court to pay $7m to Transocean in relation to a row over drilling costs incurred at the Barryroe field off the coast of Ireland. 

The share placing deal is subject to shareholder approval at an emergency general meeting next month.