8th Feb 2016 10:46
LONDON (Alliance News) - Tethys Petroleum Ltd on Monday said it has received a further USD1.0 million payment from Olisol Petroleum Ltd under the previously announced convertible debt facility, but warned that payments have so far been late, causing concern about future payments.
"The company currently does not have sufficient funding to meet its requirements over the next few months and therefore, if the transactions with Olisol do not proceed for any reason, the company's ability to continue as a going concern will be dependent on the company being successful in securing alternative funding," said Tethys.
Tethys secured the convertible loan facility from Olisol back in November, and was entitled to draw down from the USD15.0 million limit soon after the facility was secured, but has faced lengthy waits for funds since then, causing concern it will not secure the vital funding it needs to keep going.
Tethys wanted to draw down the entire USD15.0 million and requested that sum in late November, but has since only received USD5.1 million of the funds which had to be used to repay a loan.
Tethys had to repay a USD5.0 million loan provided to the company by fellow London-listed company Nostrum Oil & Gas PLC, which had agreed to provide a short-term loan whilst it tried to buy Tethys. However, Tethys pulled out of that deal and was forced to repay the loan.
Tethys on Monday said it received a USD1.0 million payment from Olisol on January 28 and has been informed by Olisol that another USD1.0 million can be transferred before the end of this week, but Tethys is cautious because of the previous delays in securing funds.
"Olisol has stated on many occasions that funds would be forthcoming imminently, only for each of their own targets to pass without any transfer being made. There can be no guarantee that the further payment will be made by February 12, 2016 or that further funding will be received," said Tethys.
"Olisol has continued to inform the company that the funds are subject to US dollar transfer restrictions imposed by the bank authorities in Kazakhstan, which have prevented further transfers within the contractually obligated timeframes," it added.
Olisol has said it will soon have access to its own credit facility which was secured specifically for the USD15.0 million investment into Tethys, as agreed between the pair under the terms outlined in the letter of intent back in November.
However, Olisol also has informed Tethys it now wants to renegotiate some of the terms outlined in the letter of intent due to the "difficult business and banking environment" in Kazakhstan.
"This would include changes to the facility agreement for the interim facility and the investment agreement which the company announced entering into on December 8, 2015. A further update will be provided to shareholders once the proposal has been fully clarified in its entirety," said Tethys.
"Whilst the company considers that Olisol is in breach of all the legally binding agreements made between Olisol and Tethys, as reported to the market on November 19, 2015, the board of directors of Tethys continues to believe that the transactions with Olisol are in the best interests of Tethys stakeholders and that Olisol is a strong in-country strategic partner," it said.
Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region. Olisol and its subsidiaries and affiliates have investments in energy and oil & gas operations in Russian and Kazakhstan.
Tethys shares were down 27% to 1.64 pence per share on Monday morning, near its 52-week low of 1.45p. The stock's 52-week high is 11.42p.
By Joshua Warner; [email protected]; @JoshAlliance
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