23rd Sep 2015 15:32
LONDON (Alliance News) - Nostrum Oil & Gas PLC said Wednesday it has agreed headline terms for the acquisition of Tethys Petroleum Ltd, and also proposed terms for up to USD20 million in interim funding to Tethys.
The two, who have been in talks since last month, have inked a non-binding letter of intent setting out the proposed terms of the offer and funding, and have agreed to use "all commercially reasonable endeavours" to agree legally binding documentation for the implementation of the proposed offer by the end day on October 6.
Additionally, Tethys has granted Nostrum bid exclusivity until the same date and has agreed a break fee of USD1 million will be payable if it breaches the terms of this exclusivity.
The proposed offer is for CAD0.147 per Tethys share, which it would satisfy by the issue of shares in Nostrum. The exchange ratio of Nostrum to Tethys shares would be 1 Nostrum share for every 69.4333 Tethys shares, representing the closing price of 500.5 pence of Nostrum's shares on Tuesday.
Shares in Nostrum were down 0.6% at 497.30p at the close Wednesday.
Conditions of the deal include the receipt of all the necessary consents from relevant government bodies and joint venture partners in Kazakhstan, Tajikistan and Georgia, and some additional conditions as to the status of the business and financial condition of Tethys.
Nostrum will provide a further USD20 million in interim funding to Tethys' subsidiary, Tethys Kazakhstan SA, on top of the USD5 million loan it provided in August, to support short-term liquidity for the company until the deal is completed.
Last week, Nostrum had said it was confident in reaching a deal with Tethys in the near future, with hopes of completing a deal before the end of 2015.
It had previously made an offer of CAD0.2185 per share back in August, and later that month said it would be prepared to make an offer at CAD0.147 per share, the same price as agreed Wednesday. It lowered its potential offer following due diligence, it said, and in light of the recent devaluation of the Kazakh tenge and change in macro-economic conditions.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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