Olisol Transaction Update
Olisol Transaction Update
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Tethys Petroleum Limited (TSX:TPL)(LSE:TPL) ("Tethys" or the "Company") today provided an update on the previously announced US$15 million convertible debt facility ("Interim Facility") with Olisol Petroleum Limited ("OPL"), a wholly owned subsidiary of Olisol Investments Limited (together with OPL, "Olisol").
Following the Company's announcement on 22nd January 2016, Tethys received a further US$1 million on January 28th, 2016. Olisol has now indicated that it believes that it can transfer an additional US$1 million by February 12th, 2016. 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 12th, 2016 or that further funding will be received. Olisol has continued to inform the Company that the funds are subject to USD transfer restrictions imposed by the bank authorities in Kazakhstan, which have prevented further transfers within the contractually obligated timeframes.
Olisol have also indicated that in the near future they will be able to draw down on the facility with Bank RBK that was agreed to be the source of funding for investments in Tethys under the Letter of Intent signed with Olisol and announced by Tethys on November 9, 2015 ("LOI").
In a new development, Olisol has also stated that due to difficult business and banking environment in Kazakhstan they would like to renegotiate some of the key terms of the transactions envisaged in the LOI. This would include changes to the Facility Agreement for the Interim Facility and the Investment Agreement which the Company announced entering into on December 8th, 2015. A further update will be provided to shareholders once the proposal has been fully clarified in its entirety.
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 19th, 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.
Background to the Interim Facility
The Interim Facility was entered into with OPL on November 19, 2015, as the first transaction of those contemplated in the LOI. Under the terms of the Interim Facility, Tethys was entitled to draw down the corresponding funds within two business days of entering into the facility and, as announced on December 29, 2015, the Company submitted draw down notices for the entire loan amount of US$15 million on November 21st, 2015. As previously announced, Tethys received US$5,138,918 in late November 2015 which was used to repay the US$5 million term loan from Nostrum Oil & Gas PLC as required under the conditions of the advance.
Current Financial Position
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. There is no guarantee that the Olisol transactions can be completed or that Tethys will be able to secure any alternative financing.
Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.
Olisol and its subsidiaries and affiliates have investments in energy and oil & gas operations in the Russian Federation and Kazakhstan. Olisol is incorporated under the laws of Cyprus and is headquartered in Almaty, Kazakhstan.
Some of the statements in this document are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of the Company or its officers with respect to Olisol's access to funds, the Interim Facility, the placing to Olisol, potential alternatives to the transactions with Olisol and related transactions. When used in this document, the words "expects," "believes," "anticipates," "plans," "may," "will," "should" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements including risks and uncertainties with respect to completion of the placing and related transactions and receipt of proceeds, required shareholder approval and required regulatory approvals, use of proceeds, waiver of currency controls and receipt of funds pursuant to the Interim Facility.
No part of this announcement constitutes, or shall be taken to constitute, an invitation or inducement to invest in the Company or any other entity, and shareholders of the Company are cautioned not to place undue reliance on the forward-looking statements. Save as required by the Listing Rules and applicable law, the Company does not undertake to update or change any forward-looking statements to reflect events occurring after the date of this announcement.
CAMARCO (Financial PR)
Ginny Pulbrook/ Billy Clegg / Georgia Mann
+44(0)203 757 4983