Gulfsands Petroleum plc has provided an update with respect to its relationship with Arawak Energy International Ltd. concerning their strategic cooperation agreement for the acquisition and development of new business opportunities in the Middle East and North Africa (MENA) region, along with a $20 million convertible loan facility that was announced Nov. 19, 2014.
Late Jan. 22, Arawak advised Gulfsands that, as a result of its dialogue with Gulfsands over recent days and corporate developments over the last few weeks including public statements made by certain Gulfsands shareholders and non-executive directors, Arawak has determined that it should terminate the strategic cooperation agreement.
Further, Arawak has confirmed that, in view of these events, it reserves all of its rights under the facility agreement. Arawak’s rights under the facility agreement may, in certain circumstances, include the right to terminate the loan facility and to require repayment of all moneys advanced under the loan facility.
Arawak has also advised that, if Gulfsands removes CEO and President Mahdi Sajjad and Commercial Director Kenneth Judge as executive directors, whose removal as directors of the company are part of the subject of resolutions to be considered at Gulfsands’ General Meeting on Feb. 3, then Arawak will not hesitate to act to enforce its rights under the loan facility.
At the present time, $10 million has been advanced by Arawak under the loan facility. In the event the loan facility is canceled and repayment is required in the circumstances to which Arawak has referred, Gulfsands would be obligated to repay all moneys advanced by Arawak together with additional fees and expenses estimated at $1 million, within 90 days of the date of receiving Arawak’s notice of demand for repayment.
In light of these developments, Gulfsands will have to examine its options to ensure the availability of funding to repay moneys owing under the Arawak loan facility and to continue to finance the group’s corporate activities, should Arawak move to demand repayment of advances under the loan facility.
Source: Penn Energy