Clarification on IRG's Release re East Ghazalat
15 August 2016
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Clarification on IRG's announcement re East Ghazalat
Nostra Terra notes the announcement made this morning by Independent Resources plc ("IRG") concerning the Company's joint venture vehicle, Independent Resources Egypt ("IRE"), owned jointly with IRG, which is repeated below, and wishes to issue a further clarification to shareholders:
"Update on status of Loan Note payable in respect of the Company's acquisition of its interest in the East Ghazalat concession.
Receipt of default claim from TransGlobe Petroleum International Inc. ("Trans Globe"), which the Company considers to be unfounded and without merit
In its announcement of its results for the financial year ended 31 December 2015, released on 30 June 2016, the Company provided the following update on the status of its discussions with TransGlobe Petroleum International Inc ("TransGlobe") on the status of the loan note ("Loan Note") issued to TransGlobe by Independent Resources Egypt Limited ("IRE") , the Company's joint venture vehicle ("JV") owned jointly with Nostra Terra Oil and Gas plc ( "NTOG") , in connection with IRE's acquisition of its interest in the East Ghazalat concession:
"The loan note principal payable to Trans Globe is determined only on formal agreement of the final working capital adjustment as provided in the sale and purchase agreement. The loan note principal is varied with that working capital adjustment. We continue to work with Trans Globe to determine the final working capital amount and thus the loan note principal. At 31 December 2015 we have provided for the loan note principal based on Trans Globe's initial assessment of working capital at completion and provided for accrued interest on this estimate although we have not yet made the interest payment that could have been due at March 31, 2016 since the loan note amount is not finalised."
As previously announced by the Company on 10 May 2016, the Loan Note is guaranteed by both the Company and NTOG on a joint and several basis.
The Company has now been notified by TransGlobe that it considers that IRE is in default of its obligations under the Loan Note since it has not paid accrued interest of c.$117,000 which it claims was due on 31 March 2016 and is claiming immediate repayment of the entire principal amounts of the Loan Note and all unpaid accrued interest thereon.
The Company rejects TransGlobe's basis of claim and remains confident that it is not due to pay any interest on the Loan Note until the quantum of the Loan Note has been established in accordance with the provisions of the sale and purchase agreement relating to the acquisition of East Ghazalat ("SPA") as described in its announcement released on 30 June 2016.
The Company has advised TransGlobe that it does not consider that TransGlobe has complied with the relevant provisions of the SPA in this matter including but not limited to:
· TransGlobe failing to satisfy the requirement to provide evidence to substantiate its estimate of the working capital of TransGlobe GOS Inc. at legal completion of the sale of that entity to IRE which has a direct 'dollar-for-dollar' impact upon the principal of the Loan Note; and
· TransGlobe's failure to comply with the procedures specified in the SPA whereby TransGlobe is required to submit a draft statement of the sale entity's working capital position to IRE for review and possible challenge within 30 business days of receipt of the draft statement. IRE has the right under the SPA, to resolve any dispute relating to the quantum of the sale entity's working capital by referring the dispute to arbitration by an independent accountant;
and that, accordingly, its claim of default is unfounded and without merit.
IRG intends to address the default notice by meeting imminently with TransGlobe in order to commence negotiations to reach a mutually acceptable solution. Notwithstanding that, IRG reserves all rights to take any and all actions required to protect the Company. The Company will continue to update the market as events develop.
The JV continues to actively progress Egyptian registration procedures to enable collection of accrued revenues and the Company continues to actively progress discussions with a number of parties regarding the provision of equity and/or debt funding in order to provide additional working capital. The Company also continues to engage in discussions with third parties regarding the provision of funding for work programme activities on the Ksar Hadada licence in Tunisia."
Shareholder clarification
Nostra Terra has seen a copy of the letter dated 8 August 2016 sent by TransGlobe Petroleum International Inc. ("TransGlobe") to IRE and IRG. Nostra Terra's understanding, which has been confirmed by TransGlobe orally, is that TransGlobe has not initiated legal action against IRE, IRG or Nostra Terra.
Discussions remain ongoing with TransGlobe concerning the production by them of a compliant draft final statement required to calculate the outstanding balance of the loan note issued to TransGlobe by IRE (the "Loan Note") in connection with IRE's acquisition of its interest in the East Ghazalat concession in Egypt (the "Acquisition").
The terms of the Loan Note and the Acquisition were announced by the Company on 06 October 2015 and as noted, the principal of US$2.5 million repayable on the Loan Note is subject to certain adjustments, which are currently under discussion, and may result in a reduction of the principal amount outstanding.
Nostra Terra will continue to act in good faith in resolving this matter and will provide a further update to shareholders as and when appropriate.
For further information, visit www.ntog.co.uk or contact:
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Nostra Terra Oil and Gas Company plc Matt Lofgran, CEO
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+1 480 993 8933 |
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Strand Hanson Limited (Nominated & Financial Adviser and Joint Broker) |
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+44 (0) 20 7409 3494 |
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Rory Murphy / Ritchie Balmer |
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Vicarage Capital Limited (Joint Broker) |
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+44 (0) 20 3651 2910 |
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Rupert Williams / Jeremy Woodgate |
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Cornhill Capital Ltd (Joint Broker) |
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+44 (0) 20 7710 9610 |
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Nick Bealer / Colin Rowbury
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Walbrook PR (Financial PR) |
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+44 (0) 20 7933 8797 |
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Gary Middleton / Nick Rome |
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This information is provided by RNS
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