8th Oct 2014 11:01
LONDON (Alliance News) - New World Oil and Gas PLC Wednesday said Niel Petroleum SA has not secured the required funding from Al Maram Trading & Contracting Ltd to progress its equity investment in New World.
New World shares dropped 48% to 0.222 pence per share Wednesday morning on the news.
In September 2013, Niel Petroleum agreed to invest USD25 million in New World in return for a 75% stake in the oil and gas explorer which operates in Belize and Denmark. Niel Petroleum planned to buy the 2.19 billion shares in New World for USD25 million, while also providing a USD25 million debt facility. Earlier this year, Niel Petroleum made an initial USD4.8 million payment to New World.
The deal was subject to Kuwaiti businessman Muaaz Alfahaid, representing Al-Maram Trading & Contracting Ltd, acquiring a 20% stake in Niel Petroleum for USD20 million. Niel Petroleum were to use the cash proceeds for the final subscription payment to New World. The agreed deadline, which has already been delayed, for Al Maram to transfer the required funds to Niel Petroleum was Wednesday. New World said Niel Petroleum have still not received the funds.
New World said Wednesday it is discussing closing the proposed subscription with Niel Petroluem on an accelerated basis due to the failure of Al Maram to fulfil its obligations.
In the meantime, Niel Petroleum said it continues to fund the running costs of New World from funds held in an escrow account which it controls. Niel Petroleum originally paid USD4.8 million into the account, and a further USD250,000 for previous delays. As of October 1, the account held USD1.7 million, which is considered sufficient to fund New World for at least the next 12 months, it added.
"New World is considering its options regarding its relations with Al Maram, and will vigorously defend its rights under the share purchase agreement signed with Al Maram to recover among others, the EUR1 million advance paid thereunder," said New World.
New World has received its brokers resignation with immediate effect, as the company considers what action to take regarding appointing a new broker, reducing corporate overheads and spending, the structure of the board and the Director loans currently due. An update will be announced shortly, said New World.
By Joshua Warner; [email protected]; @JoshAlliance
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