Russian oil company Urals Energy (LON:UEN) said it would conduct a short-term capital review after an unauthorised US$1.5mln loan made with its funds left it short of working capital, sending its shares plummeting.
The oil explorer and producer on Tuesday said it would appoint an independent firm of accountants shortly to conduct a working capital review and a review of any transactions by its subsidiary, JSC Petrosakh, that are outside of the ordinary course of business.
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In a recent update to an October 10 statement, AIM-quoted Urals said Sergey Kononov, president of JSC Petrosakh, made the loan to an employee of JSC Petrosakh. The board said repayment of the loan, among other actions, will restore its “significantly constrained” current working capital position.
The company said the capital review would be crucial in determining its financial requirements as its working capital position is highly constrained.
Earlier this month, Urals warned that unless a solution to its working capital deficit was in place by the end of the month, it would be forced to take steps to protect its creditors' interests.
Urals warned that if the review failed to find a solution to its funding needs, one outcome could be all or part of the group entering into insolvency.
The company said that even after the expected cash inflow from an upcoming tanker shipment – expected next month - it will still face a working capital deficit of some $US3mln.
Shares in the company were 43.9% lower at 30.0p in mid-afternoon trade.