There were a number of stocks that emerged as significant gainers on Wednesday and one of the most notable movers was that of Houston Natural Resources (OTCMKTS:HNRC). The stock had come into major focus among investors yesterday after a key announcement from the company and had ended up with gains of as much as 38%.
In light of such gains, it may be a good time to take a closer look at the actual announcement. The company announced yesterday that it had inked a letter of intent with regards to a transaction with the firm Cunningham Energy.
As per the provisions of the transaction, the company is going to be involved in spending cash as well as securities for the purpose of establishing a Special Purpose Acquisition Company or SPAC. The SPAC in question is going to be used for picking up interests in assets for the aim of exploring and producing oil and natural gas in Canada and the United States. The company also announced that it plans to invest as much as $100 million in the form of cash and securities. That will happen in due course once the due diligence and financing formalities are completed.
However, that is not all. As per the provisions that have been laid out in the letter of intent signed by the company yesterday, Houston Natural Resources is also going to commit to further developmental funding to the tune of as much as $600 million.
That funding is going to come from the PIPE and SPAC follows on transactions. Hence, it is perhaps no surprise that there is significant excitement about this deal among investors and the remarkable rally in the stock on Wednesday was perhaps not a surprise. The two entities are currently committed to concluding the transaction no later than June 30, 2022.
