3rd Jul 2015 08:39
LONDON (Alliance News) - Max Petroleum PLC Friday said its lender, Sberbank, has unconditionally granted a six-month standstill on all principal and interest payments due under the company's USD80 million loan until December.
Although the extension assists the company in dealing with its financial worries, the company also is facing fresh troubles as the government of Kazakhstan is now claiming the company owes USD20 million in historic payments.
Max Petroleum has accrued USD3.8 million of interest under the Sberbank facility as of the end of June, and the interest will continue to be accrued during the standstill period, which will end on December 14, 2015.
Max Petroleum said it was still operating under "severe financial stress".
"Discussions with AGR Energy continue to secure financing to ensure the ongoing viability of the business and with Sberbank for a longer-term debt restructuring," said the company.
Max is in discussions with AGR about an equity investment and in March the company said it would need bridge financing of at least USD6.5 million to ensure it will be viable until regulatory and other approvals can be put in place to permit the debt restructuring and potential equity investment.
"The directors of Max Petroleum currently continue to believe that there remains a reasonable prospect that such discussions could result in a sufficient refinancing of the company and, on that basis, have not yet put the company into administration," it added.
However, Max Petroleum faces fresh challenges after the Ministry of Finance in Kazakhstan alleged the company owes more than USD20 million for "Soviet-era historical data costs" incurred on the company's exploration and appraisal blocks.
Its bank accounts for its operations in Kazakhstan were suspended in March due to non-payment of sums owned to tax authorities. Export sales have been halted in the region, due to uncertainty over the company's ability to guarantee future payment for transport and other costs needed to ensure delivery of those sales.
"The company disagrees with this interpretation and application of the tax legislation and considers that to date it has met its obligations to reimburse historical costs as they fall due. The company intends to put its case to the tax authorities," said the company.
Max Petroleum said it continues to produce over 3,500 barrels of oil per day from its operations in Kazakhstan, including from the Sagiz West field after regulatory permission was granted in June to resume production from both Sagiz West and East Kyzylzhar I fields under a trial production phase.
The East Kyzylzhar field is to be commissioned to return to production within the next week, which will contribute "several hundred additional barrels per day" to overall production.
Max Petroleum shares were up 6.3% to 0.170 pence per share on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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