AIMdarlingTethys Petroleum(LSE: TPL) is in the news today after the companys potential acquirer,Nostrum Oil and Gas, withdrew its proposed offer to buy the company.
Nostrums offer to buy Tethys was agreed in principle back during September. Butthe dealhas now fallenapart, as it turns out thatTethys largest shareholder,Pope Asset Management LLC, did not support the proposed transaction.Nostrum has stressed that the deal wasconditional on Tethys three largest shareholders agreeing to the offer.
As part of the buyout, Nostrum was also going to supplyTethys with $20m in interim funding for its subsidiary, Tethys Kazakhstan SA. This offer has now been withdrawn, which leaves the company with somewhat of a funding gap.
Tethys has warned thatit does not currently have sufficient funding to meet its obligations over the coming 12months. Without the$20mlifeline, management has warned that there would be significant doubt about Tethys ability tocontinue as a going concern.
However, Tethys has announced today that it has received anon-binding letter of intentfrom AGR Energy Holdings Limited in connection with a potential $20m equity fundraising. According to the press release on the matter, the letter of intent also suggests that AGR could provide a $5m loan to support short-term liquidity. While theres no certainty that any short-term loan or equity raising will occur, its good to know thatTethys isnt out of options just yet.
Whats more, even though Nostrum has dropped its offer to acquireTethys for the time being, the company hashinted that it may return withanother offer. Nostrum stated today that:Nostrum reserves the right to propose alternative transactions to Tethys and/or to make an offer for the share capital of Tethys on different terms to those previously announced.
So,Nostrum has stepped back, and AGR Energy has stepped forward, but theres also another suitor in the mix.
Earlier this month,OlisolInvestment Groupcame forward tooffer Tethys $8m by way of share subscriptions. Moreover,Olisol has offered to make an additional $24m of new equity available to Tethys as part of the deal.
Olisolhas already partnered with Tethys in its Aral Oil Terminaland, therefore, knows the company better than most.
Tethys acknowledged but politely declined Olisols offer when it was originally made at the beginning of this month, as the company was ina period of exclusivity with Nostrum. But now Olisols offer could be back on the table.
Indeed, when Olisols offer was initially put forward, the companys management said it wasexcited by the prospect of investing in the company, and it lookedforward to entering into discussions with Tethys at the earliest possible moment.
So it looks as if Tethys has an interesting future ahead of it. Even though Nostrums bid is now off the table, the company has a number of suitors willing to lend it the cash to push forward with its development plans.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
