Update on status of Loan Note payable
Independent Resources plc
("IRG" or the "Company")
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.
For more information, please visit www.ir-plc.com or contact:
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Greg Coleman
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Independent Resources plc
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020 3367 1134
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Adam James
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Panmure Gordon (UK) Limited
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020 7886 2500
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(Nominated Adviser & Joint Broker)
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Oliver Stansfield
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Brandon Hill Capital
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020 3463 5000
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Jonathan Evans
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(Joint Broker)
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Simon Hudson
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Tavistock Communications
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020 7920 3150
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This information is provided by RNS
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