Petroneft Resources PLC Heads of Terms for Potential Disposal (6826C)
14 June 2023 - 5:17PM
UK Regulatory
TIDMPTR
RNS Number : 6826C
Petroneft Resources PLC
14 June 2023
PetroNeft Resources plc
14 June 2023
PetroNeft Resources plc ('PetroNeft' or 'the Company')
Licence 67
Heads of Terms for Potential Disposal
PetroNeft announces that it has entered into a non-binding
conditional Heads of Terms (the "HoT") to sell its entire interest
in Lineynoye LLC ("Lineynoye"), the subsidiary through which the
Company holds its interest in Licence 67, to Pavel Tetyakov (CEO of
PetroNeft) for a consideration of Rub 210million (US$2.56m at
current exchange rates) plus the assumption of debt (the "Proposed
Disposal").
PetroNeft owns 90% of Lineynoye with the remaining equity being
owned by Belgrave Naftogas ("Belgrave"), formerly Arawak Energy,
who have also agreed to sell its interest.
In addition, a loan agreement is being executed between
Lineynoye and Pavel Tetyakov for Rub 4.4M (the "Loan Agreement").
The aim of this loan agreement is to enable Lineynoye to settle an
outstanding shareholder loan agreement between the Company and
Lineynoye for Rub 4.4M. The proceeds of the loan will be put
towards the Company working capital requirements. The loan will be
for a six-month period, at zero interest rate and is unsecured.
The Proposed Disposal is subject, inter alia, to the execution
of a formal binding sales and purchase agreement. If agreed, the
Proposed Disposal would be subject to all applicable corporate and
government approvals, as well as approval of independent
shareholders of the Company under AIM and Euronext Growth Rules.
Moreover, the Proposed Disposal would amount to a related party
transaction for PetroNeft under AIM and Euronext Growth Rules.
Further announcements will be made, as appropriate, in due
course.
Background and rationale
As a result of the considerable and increasing challenges faced
by the Company due to the Ukrainian conflict, on 29 November 2022,
the Company announced a Strategic Asset review. On the 10 February
2023, the Company announced that Pavel Tetyakov (CEO and Executive
Director of PetroNeft) had expressed an interest in acquiring the
Company's Russian Assets. An independent committee of the board of
PetroNeft was constituted to review any offers and to consider all
other viable options.
Since November 2022, the Company has run a competitive process,
inviting interested parties to participate in a potential disposal
of all or some of its Russian assets. During the process, two
additional parties issued expressions of interest and undertook due
diligence. After completion of their respect due diligence
exercises, both parties declined to submit a bid. As of today's
date, the only interested party is Pavel Tetyakov.
In addition to Licence 67, Pavel Tetyakov also expressed an
interest in acquiring 100% of Stimul-T LLC (which owns and operates
Licence 61), but the Company's joint venture partner in respect
Licence 61, Oil India International B.V., have so far rejected the
offer. Stimul-T LLC voluntarily filed for bankruptcy administration
in Russia in May 2023.
The Loan Agreement constitutes a related party transaction
pursuant to AIM and Euronext Growth Rules. The Independent
Directors consider, having consulted with Davy, the Company's
nominated adviser and Euronext Growth Adviser, that the terms of
the related party transaction (being the Loan Agreement) are fair
and reasonable insofar as the Company's independent shareholders
are concerned.
Debt Settlement Agreements
As of 31 May 2023, the Company has four main debt instruments
totaling US$5,586,603, which includes US$947,003 of accumulated
interest. The debt instruments include the Petrogrand B.V. loan,
two convertible loans issued in 2019 and 2021, and a loan from
Belgrave Naftogas issued as part of the acquisition of the
additional interest in Licence 67 in 2021.
The Company has been engaging with the debt holders to reach a
settlement agreement in conjunction with the Proposed Disposal,
which is likely to result in a significant reduction of the
principal amount and forgiveness of interest.
2022 Audit Update
Whilst the Company will continue to try to source an auditor in
respect of the Company's financial statements for the financial
year ended 31 December 2022, the Company will not be able to
publish audited accounts for 2022 by the required deadline of the
30 June 2023 under the under AIM and Euronext Growth Rules. The
likely consequence is that the Company's ordinary shares will be
suspended from trading on 3 July 2023, until such time as the
situation can be resolved.
For further information, contact:
David Sturt, Executive Chairman, PetroNeft Resources +353 1 647
plc 0280
Brian Garrahy / Ciara O'Mongain, Davy (NOMAD and +353 1 679
Corporate Broker) 6363
+353 1 498
Douglas Keatinge, Murray Consultants 0300
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation and is disclosed in
accordance with the Issuer's obligations under Article 17 of the
Market Abuse Regulations.
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END
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