PetroNeft Resources PLC (LON:PTR) has confirmed that legal documents for the first tranche of a US$35mln loan for the Licence 61 joint venture has now been executed.
Oil India, PetroNeft’s partner in Licence 61, has released U$10mln to the joint venture company that ultimately owns the asset in the Tomsk Region of Western Siberia.
“The fact that Oil India has agreed to provide this loan, providing essential development funds for Licence 61 in a very difficult market, is a strong vote of confidence in the current management team and the potential of Licence 61," said Dennis Francis, PetroNeft chief executive.
The cash injection will cover the planned work programmes for Licence 61, which will include up to four wells at the South Arbuzovskoye oil field, drilling at the Sibkrayevskoye oil field, and optimisation studies to bring Sibkrayevskoye towards development.
Principle debt repayments are due to begin in the fourth quarter of 2019.
The development of Sibkrayevskoye has been budgeted at US$25mln, and PetroNeft has highlighted that Oil India has indicated a willingness to fund the work programmes with a further loan tranche on the similar terms.
Oil India’s financial support for Licence 61 comes amid recent uncertainties surrounding the composition of PetroNeft’s management team. And, the loan facility is conditional upon the current PetroNeft management team remaining in place.
Furthermore, and a change of management subsequent to draw downs of the loan would constitute a default event which would require immediate repayment and would require PetroNeft to provide its 50% share of funding.
Activist investor Natlata Partners, which owns 29.47% of the company’s shares, called for an extraordinary general meeting and proposed to remove Dennis Francis, chairman David Golder, chief financial officer Paul Dowling and executive director David Sanders.
Natlata also proposed to appoint Anthony Sacca, David Sturt and Maxim Korobov as directors of the company.
PetroNeft confirmed on Monday that it had sent an investor circular to convene an EGM in Dublin on Monday April 18.
It is the second time that Natlata has sought to replace the PetroNeft board. At an EGM in May 2014, around 75% of votes were against Natlata proposals to replace the management team.
At the same meeting, more than 99% of votes approved the proposed farm out of 50% of Licence 61 to Oil India.
In regards to the most recent Natlata proposals, PetroNeft on Monday said: “A single shareholder, Natlata has proposed the ordinary resolutions as a means by which it can seek control of the board and therefore the company without paying shareholders a fair price for obtaining control of the company.”
“Natlata has provided insufficient disclosure regarding its plans and proposed strategy for the company, including in relation to proposed funding, and key long term executive management.”
“The passing of the Natlata resolutions would cause material risks for PetroNeft and its shareholders.”