Following on from a non-binding agreement announced in late-February, the Kazakhstan-focused oil and gas junior confirmed that Olisol would provide it with a $15mln convertible debt facility.
First there will be a conversion of all but $1mln of Tethys's existing debt under an interim financing into Tethys shares.
Olisol has committed to working with a bank in Kazakhstan to secure a $10mln loan for the Tethys Aral Gas subsidiary within 60 days.
The Kazak investor agreed to recapitalise Tethys via a placing of new shares, and in the meantime as the equity raise is being worked on it has committed to providing Tethys with working capital to ensure it can continue operations.
Pricing for the share placing has yet to be agreed, though it is envisaged that a total of 181.2mln new shares will be issued.
It is expected that Oilsol will subsequently own about 42% of Tethys Petroleum.
Once the funding deal completes, key members of the current Tethys Petroleum board - including executive chairman John Bell - will step down from current positions.
In a statement, Bell highlighted that Tethys would now have “a strong in-country strategic partner” to help in its objective to supply the growing energy demand in China.
“Upon completion of the transactions under the facility amendment agreement, David Henderson, David Roberts, Jim Rawls and myself will all step down from the board,” Bell said.
“During our tenure we have reduced G&A from US$19.5mln in 2014 to US$9.5mln in 2015 and to a target of $6mln on an annualised basis.
“We have closed seven offices, achieved certain vital exploration & production licence extensions, as well as overseen an increase in production.
“We leave the board having steered Tethys into a company focused on capital efficiency and cost discipline, well placed to become a strong platform for future growth."