New US$6 Million Loan Financing
GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - Jan. 16, 2015) - Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL)(LSE:TPL) is pleased to announce that it has signed an agreement for a US$6 million loan facility.
- Financing: Unsecured loan facility - Principal: US$6 million - Term: 2 years - Interest rate: 8% p.a. - Warrants: 35,600,000 - Warrant price: C$0.19 - Lender: Cayman based private entity
The principal is due at the end of two years with interest payments being made every 6 months. The funds are due to the Company ten days after the submission of a drawdown request which the Company intends to submit in the coming days.
This financing has been secured in order to address the short-term liquidity issue disclosed in the 2014 Q3 financial statements. The Company has secured financing in a very difficult financial environment for the oil and gas industry and believes it has done so under competitive terms in comparison with alternative options evaluated by the Company. FirstEnergy Capital LLP acted as financial advisor to Tethys in regards to the financing.
Warrant Surrender Value
In the event that the Company completes the issuance of any additional new ordinary shares (or options, warrants or other securities convertible into ordinary shares) equal to 7.5% or more of the cumulative aggregate number of outstanding shares, the lender will have the option of surrendering the warrant for a "surrender value" which would be added to the principal amount of the loan and be repayable on the 2 year maturity date. The initial surrender is US$2.1 million and will decrease by 25% every 6 months over the term of the loan.
The loan agreement contains events of default and change of control provisions. The submission of a drawdown request and drawdown of the loan are subject to customary conditions, including TSX approval.
John Bell, Executive Chairman said, "We are very pleased to have secured these necessary funds in a very difficult environment for oil and gas companies. This follows our recent announcements on key milestones namely; the extension of the Akkulka Exploration Contract, the signing of the 2015 gas sales contract and the doubling of gas production levels. We can now focus on other key strategic initiatives specifically the closing of the SinoHan transaction and the farm out of Georgia, as well as the further gas production increases forecast for Q2 2015."
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.
This press release contains "forward-looking information". Such forward-looking statements reflect our current views with respect to future events, including drawdown of the loan, gas production and expected completion of the SinoHan transaction. The forward looking statements are based on the following assumptions that gas production will continue at existing levels, all conditions to drawing down the loan will be satisfied, cash calls from the Bokhtar Operating Company will not exceed the amounts budgeted and that the SinoHan transaction will be completed by May 1, 2015. These forward looking statements are subject to a number of risks and uncertainties, including the risk that gas production will not continue at current levels, that the conditions to drawdown will not be satisfied on a timely basis, that the Bokhtar Operating Company will seek to increase its budget and that the SinoHan transaction will not be completed by May 1, 2015. See also our Annual Information Form for the year ended December 31, 2013 for a description of risks and uncertainties relevant to our business, including our exploration activities. The "forward looking statements" contained herein speak only as of the date of this press release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Tethys Investor Relations
Tethys Petroleum Limited
Vice President Investor Relations
FirstEnergy Capital LLP
David van Erp
+44 207 448 0200
Source: Tethys Petroleum Limited