TomCo Energy PLC (AIM:TOM, OTC:TMCGF)’s wholly-owned subsidiary Greenfield Energy has entered into an agreement regarding the proposed redemption of its 10% membership interest in Tar Sands Holdings II (TSHII).
The redemption is set at a total consideration of $1.58 million (£1.23 million).
Formalised on August 12, the agreement includes a side agreement with TSHII and Endeavor Capital Group, which holds the remaining 90% of TSHII's membership interests.
The arrangement facilitates a potential buyout of TSHII by Integrated Rail and Resources Acquisition Corp, a blank check company focused on natural resources and rail logistics.
As part of the side agreement, TSHII and IRRX have agreed not to terminate an existing lease between AC Oil, a Greenfield subsidiary, and TSHII.
Additionally, the parties committed to negotiating in good faith for an additional lease that would allow Greenfield to continue its tar sands development project, contingent on securing further funding and necessary permits.
The proposed redemption is conditional on the approval of TomCo's shareholders at an upcoming general meeting.
TomCo chairman Malcolm Groat said: "Whilst it is clearly disappointing that we have been unable to secure funding to procure 100% of TSHII, despite a number of extensions to our previously agreed option arrangement with Endeavor, the proposed redemption, if successfully concluded, will enable us to exit our minority investment and provide funds to settle outstanding trade creditors and sufficient working capital to finalise and release the group's 2024 Interim Results.
“Furthermore, the planned negotiation and entry into of the additional lease will enable us to continue to pursue our tar sands development project and potential in-situ well programme subject to securing the requisite additional funding and permitting in due course."
Trading in TomCo's ordinary shares on AIM will remain suspended pending the successful completion of the proposed redemption and the publication of its 2024 interim results.