Tethys Petroleum Limited (TSX:TPL)(LSE:TPL) (Tethys or the Company) has announced that, further to the letter of intent announced on November 9th, 2015 (the 'LOI'), the Company has entered into an interim convertible financing facility of up to US$15 million (the 'Interim Financing Facility') with Olisol Petroleum Limited (OPL), a wholly owned subsidiary of Olisol Investments Limited (Olisol). The Interim Financing Facility is convertible into Tethys ordinary shares at C$0.17 per share.
OPL will advance to Tethys up to US$15 million to be used to repay the US$5 million term loan from Nostrum Oil & Gas PLC and potentially the US$7.5 million convertible debenture from AGR Energy Limited No. 1 (the 'AGR Debenture'), in each case plus any other amounts arising thereunder. In the event that AGR Energy exercises its conversion rights under the AGR Debenture prior to redemption, the Interim Financing Facility will be reduced by US$7.5 million, with the Placing (as defined below), at the option of OPL, being increased by US$7.5 million in exchange for 75 million further shares. The balance of the Interim Financing Facility will be used for general and working capital requirements of the company and will be available thirty days after first draw down or, where requested by Tethys, such earlier date as the parties may agree. The Interim Financing Facility has a maturity date of 31 August 2016. Subject to approval of the Toronto Stock Exchange and compliance with other regulatory requirements including listing on the KASE and National Bank of Kazakhstan approvals, the outstanding principal and interest under the Interim Financing Facility shall be convertible into ordinary shares at C$0.17 per share.
A condition to the first draw down under the Interim Financing Facility is that Mr Alexander Abramov, a designee of Olisol, and Mr William Wells, of Pope Asset Management, LLC, a 19.1% shareholder of the Company, be appointed to the Board of Directors of Tethys (the 'Board').
The Interim Financing Facility is the first step in the potential broader transaction provided for under the LOI, where OPL will subscribe to a C$25.5 million private placement of 150 million new ordinary shares at a price of C$0.17 per ordinary share (the Placing) and commit to backstop a further equity fundraising of 50 million shares at C$0.17 per share (the 'further financing', together the 'transaction'). OPL and the Company are in advanced negotiations over binding transaction documentation. In the event the Placing is not completed, Mr Abramov will resign once the Interim Financing Facility is repaid in full.
John Bell, Executive Chairman commented:
"We are pleased to have reached agreement with Olisol on this crucial part of our broader transaction and to now have access to US$15 million in interim financing to see the company through to closing of the placing."Adapted from a press release by Louise Mulhall
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/20112015/tethys-enters-into-us15-million-financing-facility-with-olisol-petroleum-limited/