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Tethys takeover by Nostrum is off as shareholder snubs offer

Last updated: 03:01 07 Oct 2015 EDT, First published: 02:27 07 Oct 2015 EDT

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Nostrum still has the right to propose an alternative transaction or make an offer on different terms

--UPDATE, ADDS DETAILS OF AGR’s PROPOSED EQUITY FUNDING--

Pope Asset Management has spiked the proposed takeover of Tethys Petroleum (LON:TPL, TSE:TPL) by Nostrum Oil & Gas (LON:NOG).

The investment group, which is Tethys’s largest shareholder, was one of three major shareholders that needed to approve the deal.

Tethys said it had been working with Nostrum towards a binding agreement, since Nostrum revealed on September 23 that it was prepared to acquire Tethys in a paper-deal worth C$0.147 per share, which at that time was a 63% premium.

As a result of Pope’s rejection the transaction will not proceed.

The dual-listed junior oil company said that Nostrum has the right to propose an alternative transaction or make an offer on different terms.

Tethys is now considering a number of alternative proposals.

Prior to the Nostrum deal, a strategic partnership and funding deal from AGR Energy was on the table.

In a separate statement this morning, Tethys told investors that it has received  a letter of intent from AGR regarding a potential US$20mln equity fund-raise at a price of 16.5 Canadian cents, as well as a US$5mln loan that would support short-term liquidity.

This arrangement would also give AGR the option to buy a further US$20mln of new shares at the same price..

News of Pope’s snub comes just days after a third potential suitor emerged for Tethys.

On Friday it was revealed that Olisol Investment Group, a private Kazakhstan company, had submitted a non-binding proposal to Tethys. At that time, however, Tethys's negotiations with Nostrum were exclusive.

Olisol, which has been working in partnership with Tethys since 2009 in connection with the operation of the Aral oil terminal, proposed to pump C$8mln into Tethys through a share subscription at 16 Canadian cents per share, after which C$24mln would be made available to Tethys.

Tethys shareholders would also be offered the opportunity to sell some of their shares to Olisol at 16 cents each.

According to reports last week, Olisol believed a definitive agreement could be reached inside a fortnight, which would trigger the C$8mln payment, with the balance of the transaction to be completed in six to eight weeks after that.

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