LONDON, UK: Molecular Energies (AIM: MEN), an international energy company, has announced its plan to sell its oil and gas business in Argentina to PLLG Investments Limited, a company owned by Peter Levine, for up to US$40 million.
The deal involves selling all the shares of President Energy Holding UK Limited, which owns and operates the Argentinian business through President Petroleum S.A. (PPSA). The rest of MEN’s assets and businesses, including in Paraguay and other countries, are not part of the deal.
The deal will be paid as follows:
- US$2m in cash one year after the deal is completed;
- US$13 million debt and interest that PPSA owes to MEN will be repaid by the buyer;
- Up to 20% of PPSA’s net free cashflow over the next five years, depending on certain conditions.
The total payment will not exceed US$40 million.
The deal requires the approval of MEN’s shareholders in a general meeting, which will be held at 3pm on 21 September at The RAG Army & Navy Club, 36 Pall Mall, London. The shareholders will also vote on extending the share authorities granted to the directors, which will give them more flexibility in the future as MEN pursues its business and strategy.
The buyer of PEH is a company owned by Peter Levine, who is a director and a major shareholder of MEN. This means that the deal is a related party transaction under Rule 13 of the AIM Rules for Companies.
The independent directors of MEN (all except Peter Levine), after consulting with finnCap Ltd, MEN’s Nominated Adviser, think that the deal is fair and reasonable for MEN’s shareholders.
Robert Shepherd, Financial Director, commented: “The proposals contained in the Circular represent the best interests of the Company. It is clear that the market is not appreciative of investment in Argentina and the current economic and political environment combined with the rampant inflation and severe restrictions on foreign investment have led the Independent Directors to conclude that the divestment of our Argentine business is appropriate.
“The Sale preserves potential upside for the Company from both future trading of the Argentine business as well as repayment of certain existing inter-company debt depending on the circumstances whilst removing Argentine exposure and debt from group and allows Molecular to build a substantial business free from those concerns.”