Tethys Petroleum Gets Repayment Demand From Olisol
The dispute between the two groups has intensified recently.
Major shareholder Olisol has demanded immediate payment of US$5.7mln in working capital from Tethys Petroleum (LON:TPL) after it said a key deal had been scrapped.
Olisol claims a gas purchase agreement between Intergas and Tethys was terminated recently.
Intergas is the only entity authorised to purchase natural gas produced in Kazakhstan and accordingly the end of the deal represented a substantial and material curtailment of Tethys’ business, added the locally-based Olisol.
The repayment demand came after Tethys claimed Kazakh group Olisol was in breach of a proposed US$9.8mln investment agreement as the dispute between the two groups intensified.
Olisol says that because of the InterGas development it had a right to declare the investment agreement with Tethys in default.
Olisol provides update on terminated transaction with Tethys Petroleum Limited
Cancellation of Gas Purchase Agreement
Olisol has been advised that on October 18, 2016, Intergas Central Asia JSC (“Intergas”) ceased purchasing natural gas from Tethys’ subsidiary, TethysAralGas LLP (“TAG”), and on October 21, 2016, Intergas formally terminated its natural gas purchase agreement (#057-01-16R dated March 18, 2016) with TAG (the “Gas Purchase Agreement”). Intergas is an indirect subsidiary of KazMunaiGas and the operator of the gas transportation system in Kazakhstan. Olisol believes that Tethys derives a significant portion of its operating revenue from sales under the cancelled Gas Purchase Agreement and will not be readily able to secure other purchasers without access to Intergas’ pipeline network. Intergas is the only entity authorized under Kazakhstan law to purchase natural gas produced in that country. Accordingly, Olisol believes that the termination of the Gas Purchase Agreement represents a substantial and material curtailment of Tethys’ business.
Event of Default Under the Facility Agreement
In light of Olisol’s belief that the cancellation of the Gas Purchase Agreement constitutes a substantial curtailment of Tethys’ business and will have a material and negative effect on its operating revenue, Olisol exercised its right to declare an event of default under the Facility Agreement between Tethys and Olisol dated November 19, 2015 (the “Facility Agreement”) through delivery of a notice to Tethys on October 24, 2016. As a result, approximately US$5.7 million of working capital advances made by Olisol to Tethys under the Facility Agreement and the Amended and Restated Investment Agreement between Olisol, Olisol Investment Limited and Tethys, dated as of April 28, 2016 (the “Investment Agreement”), together with interest accrued thereon, became immediately due and payable. Olisol has demanded immediate repayment of such amounts and intends commence a collection action to enforce repayment if repayment is not made forthwith.
Termination of Investment Agreement
Olisol has been advised by Intergas that, in the current circumstances, its decision to terminate the Gas Purchase Agreement is irrevocable. Accordingly, on October 27, 2016, Olisol advised Tethys, in writing, that the cancellation of the Gas Purchase Agreement constituted a material adverse change for purposes of the Investment Agreement giving rise to a right of termination in favour of Olisol. Olisol has further advised Tethys that it was exercising its right to terminate the Investment Agreement as of such date.
Olisol is headquartered in Almaty, Kazakhstan and its subsidiaries and affiliates have investments in energy and oil and gas operations in the Russian Federation and Kazakhstan. Olisol has worked with Tethys in Kazakhstan for over seven years, is joint owner of the Aral Oil Terminal with Tethys and has its own fleet of special oil trucks involved in oil transportation from Tethys’ oil fields. Olisol, through its affiliates, is engaged in railroad transportation, processing of oil, storage and sale of oil products.