13th Jul 2015 09:37
LONDON (Alliance News) - Max Petroleum PLC Monday said it has reached a deal with well construction and upstream engineering service company AGR Energy Group which will result in AGR owning around 63% of the company.
Max Petroleum said it has conducted a conditional cash subscription with AGR to raise GBP9.0 million by issuing AGR with 3.83 billion new shares at 0.2341 pence per share, which will result in AGR holding 63.8% of the enlarged issued share capital of the company.
As part of the subscription, AGR also will provide Max with a GBP1.3 million convertible loan comprised of two tranches of GBP162,623 and GBP1.1 million.
In return, Max has appointed Kanat Assaubayev as its co-chairman alongside current Chairman James Jeffs. Aidar Assaubayev will be appointed as the company's new chief executive officer but will not be a board member.
"The subscription will provide working capital to the company to alleviate its severe immediate financial stress. Further significant financing will be required in the mid and longer term to re-establish going concern status and viability of the business," said Max Petroleum.
"We are very pleased to announce this initial funding phase to bring some stability to Max Petroleum's stakeholders which will, we hope, be the first step in creating value over time," said Jeffs.
The deal comes after Max was suffering from the fall in oil prices in 2014 which had a "severe adverse impact" on its liquidity. The business had become un-viable, and Max shares were suspended on March 2 due to the increasing uncertainty in the business.
Shareholders will have to approve the deal at a extraordinary general meeting, which will be announced shortly.
AGR Energy Group is a special purpose vehicle that has been set up by the Assaubayev family established for the purpose of the subscription. The family are long-term investors in natural resources and metals and mining, according to Max Petroleum.
Separately on Monday, Nostrum Oil and Gas PLC said it was in talks with Australian-listed Tethys Petroleum about a potential takeover offer which would poach the company from AGR Energy Holdings Ltd, which has agreed a subscription deal with Tethys. AGR Energy Holdings does not have any relationship with the AGR Energy that has signed this deal with Max Petroleum.
In June, AGR Energy Limited No. II was set to complete a GBP1.7 million subscription agreement with AIM-listed Frontier Resources International PLC but the deal fell through. Meanwhile, Max Petroleum said back in August 2014 that it had completed a subscription with AGR Energy Limited No. I.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Frontier DevNostrum Oil&gasMXP.L