Nostrum back for Tethys...at lower price

The battle for control of Tethys Petroleum has taken another twist, with the London-listed player now reviewing its strategic options after Nostrum Oil & Gas returned with a new takeover proposal that looks less favourable that two previous instalments.

Deal, or no deal? Nostrum comes back with another proposal but no firm offer

Eoin O'Cinneide

The latest proposal from Nostrum is actually a reduction in terms of a proposed per-share purchase price from two previous expressions of interest, but would be an all-shares deal.

Nostrum first made a move on Tethys on 13 July with a proposed offer of C$0.21 (US$0.158) per share, made up of cash or shares.

This was scuppered, however, as Tethys was still in a period of exclusivity over a potential deal with AGR Energy – a US$47.7 million financing deal which subsequently fell apart.

Nostrum then nudged up its proposal to a potential C$0.2.185 per share and was granted a period of exclusivity with Tethys until 25 August.

With that date now gone, Tethys revealed late on Friday that Nostrum has come forward with a new proposed offer – though once again not a firm offer.

Tethys has, however, branded the non-binding proposal “highly conditional” and, at C$0.147 per share, has now decided to explore strategic alternatives. Nostrum is also prepared to provide Tethys with $5 million of interim funding as part of the proposal, while it has also requested a period of exclusivity ending just before midnight on 14 September – something which Tethys does not appear minded to grant.

Tethys said it “has received expressions of interest from several other parties,” which it did not name, “in relation to a variety of potential corporate transactions”.

“The board of Tethys is evaluating and considering the proposal and has indicated to Nostrum that it has a number of questions and clarifications, particularly given the non-binding and highly conditional nature of the proposal and the lack of any firm intention to make a formal offer from Nostrum at this stage.

“Tethys is continuing discussions with Nostrum in connection with a potential proposal and related financing but, as stated above, intends to pursue discussions with other interested parties at this stage.”

Shares in Tethys were up around 9.5% by 4:30pm in London on Friday, with Nostrum’s stock up around 1% at the same time.

In early June, Tethys agreed a short extension to an exclusivity period with AGR, giving the cash-strapped company more time to negotiate a potential larger financing deal. However, that deal later collapsed.

The Central Asia-focused company proposed in May a $75 million deal to sell half of its Kazakhstan assets to Beijing-based SinoHan Oil & Gas Investment, but it fell through after failing to gain official approval.

Tethys then decided to focus on “strategic alternatives, including a possible corporate sale”, it said at the time.