Chagala Shareholder Sells 6% Stake Amid Struggle To Repay Bonds

Chagala Group adds to Kazakhstan portfolio

LONDON (Alliance News) – Chagala Group Ltd said Tuesday that one of its shareholders has sold its entire stake in the company, as it faces a struggle to repay debts and bonds while mired in a legal dispute.

Kazakhstan-focused oil and gas services firm Chagala said that Salink Ltd, the trading company of East Capital Deep Value Fund, sold 1.3 million depositary interests in respect of shares in Chagala at USD1.55 a share on October 24. Chagala said this represents 6.0% of the company’s shares and Salink no longer holds any interest in the company.

Shares in Chagala were untraded at USD1.80 on Tuesday.

Chagala is struggling to raise USD6.7 million to repay Kazakh tenge-denominated bonds to Caspi Ltd LLP, which are approaching maturity on December 1.

Chagala said Friday last week that it has been informed that if it raises new debt financing to repay the bonds, it its also obligated to repay its debt to Al Halil Bank, under the terms of its existing credit facilities with the bank.

Chagala estimated it would need approximately USD14 million to repay both the bonds and its debt to Al Halil, and that based on its discussions with lenders it does not expect to be able to raise sufficient money.

Therefore Chagala said it is considering a new placing and open offer to make up the shortfall, but must seek a review from the British Virgin Islands Commercial Court of an injunction placed on its previous attempt at a share placing.

That previous share placing was suspended by the East Caribbean Supreme Court in response to an application by TIPP Investments PCC.

The application was made on various grounds, including that the placing and open offer would prejudice TIPP’s rights as a shareholder in the company. Chagala filed an appeal to strike out the claim and discharge the temporary injunction and is still awaiting the result of a hearing.

By Adam Clark;

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