Tethys Petroleum Ltd (LON:TPL, TSE:TPL) shares dropped around 14% on Thursday as Kazakhstan investment group Olisol issued a statement regarding the funding agreements between the companies.
It follows months of talks between Tethys and Olisol, which still require some resolution.
In a stock market statement, Tethys told investors: “The company has requested a proposal from Olisol to resolve certain issues that it feels are important to be agreed prior to completion of the private placement.”
“The company remains hopeful that Olisol will provide a proposal to address the issues raised with Olisol in time to allow completion to take place by the outside date of October 27, 2016 as contemplated by the investment agreement.”
According to Tethys the issues that require resolution include the finalisation of a relationship agreement that would ensure all transactions between Tethys and Olisol are ‘at arm’s length’ and are ‘on normal commercial terms’. It would also set out matters relating to related party transactions and corporate governance.
Olisol has separately stated that it intends to direct Tethys to repay outstanding working capital advances, plus interest, in connection with the Kazakh investor’s obligation to subscribe for 181.24mln new Tethys shares at a price of 5.4 Canadian shares.
The AIM quoted company in its own statement clarified that, in accordance with a revised agreement from April, Olisol is required to transfer the full purchase price equating to C$9.78mln prior to the closing date of the agreement.
Tethys added that Olisol has the right to convert any amounts outstanding under the arrangements, including working capital indebtedness, into new Tethys shares at the price of 5.4 cents. It also noted the agreed conversion rate for US dollars (the currency envisaged in the original deal) into Canadian dollars was US$1:C$1.268.
It told investors that it expects that Olisol will hold 42.03% of Tethys issued share capital upon completion of the placing.
Story by ProactiveInvestors