TIDMTOM
RNS Number : 8153J
TomCo Energy PLC
26 August 2021
26 August 2021
TOMCO ENERGY PLC
("TomCo" or the "Company")
Acquisition of Valkor's 50% interest in Greenfield
TomCo Energy plc (AIM: TOM), the US operating oil development
group focused on using innovative technology to unlock
unconventional hydrocarbon resources, is pleased to announce that
it has acquired from Valkor LLC ("Valkor") its 50% interest in
Greenfield Energy LLC ("Greenfield"), the 50/50 joint venture
company established by TomCo and Valkor in mid 2020, for wholly
deferred equity consideration (the "Acquisition").
Details of the Acquisition
Pursuant, inter alia, to the terms of a membership interest
purchase agreement ("MIPA"), entered into between the Company,
Valkor and Greenfield on 25 August 2021 (the "Effective Date") to
implement the Acquisition, Valkor has assigned its 50% membership
interest in Greenfield to the Company such that TomCo now owns 100%
of Greenfield and the existing joint venture ("JV") agreement
between TomCo and Valkor with respect to Greenfield has been
terminated.
The deferred consideration for the Acquisition comprises the
issue to Valkor of 592,830,258 new ordinary shares of no par value
in TomCo ("Ordinary Shares") (the "Acquisition Shares") which
currently equates, in aggregate, to 29% of the Company's issued
share capital as enlarged by the Acquisition Shares, subject to
adjustment to ensure that Valkor and any person acting in concert
with it shall not exceed a 29% ownership interest in the Company at
the time such shares are issued. Valkor currently has no
pre-existing interest in TomCo's issued share capital.
Issue of the Acquisition Shares is subject to Greenfield
receiving funds from, or drawing upon, a loan or credit facility in
connection with the construction of an oil sands processing
facility as specified in the FEED Study dated 21 July 2021 (as
amended or superseded) ("Financial Close"). In the event that
Financial Close is not achieved within 3 years of the Effective
Date no consideration is payable by the Company to Valkor and the
obligation to issue the Acquisition Shares will lapse. The value of
the maximum Acquisition Shares, based on the mid-market price of an
Ordinary Share at the close of business on 25 August 2021 (being
the latest practicable date prior to the date of this announcement)
is, in aggregate, approximately GBP3.1 million. The MIPA contains,
inter alia, certain customary representations and warranties from
Valkor in relation to the sale of its interest in Greenfield for a
transaction of this nature.
In connection with the Acquisition and shortly prior to
receiving the Acquisition Shares, Valkor has agreed to enter into a
lock-in and orderly market agreement with the Company. During the
period of 18 months from execution of this agreement, Valkor will,
subject to limited exceptions, not dispose or agree to dispose of
any Acquisition Shares or any other Ordinary Shares or interest in
Ordinary Shares from time to time acquired by or issued to it.
Thereafter, for so long as Valkor holds 10% or more of the
Company's issued ordinary share capital, Valkor has agreed not to
dispose or agree to dispose of any interest in Ordinary Shares
except with the prior written consent of the Company, with any
agreed disposal being subject to orderly market principles. The
limited exceptions include the acceptance of a recommended takeover
offer for the Company, the execution of an irrevocable commitment
to accept such an offer and a disposal pursuant to a court
order.
In addition, shortly prior to receiving the Acquisition Shares,
Valkor has also agreed to enter into a relationship and standstill
agreement with the Company and the Company's Nominated Adviser, to,
inter alia, regulate the ongoing relationship between itself and
the Company on arm's length terms and a normal commercial basis
and, save with the Nominated Adviser's prior written consent,
prohibit any acquisition of any interest in Ordinary Shares, other
than the Acquisition Shares, or making of any offer for all or any
of the Ordinary Shares, either by Valkor itself or by any person
with whom it may be acting in concert from time to time. Following
its execution, such agreement shall terminate and cease to apply
upon Valkor ceasing to hold 10% or more of the Company's issued
ordinary share capital.
Background to the Acquisition
The Acquisition follows the successful completion of all of the
planned trial work utilising Petroteq Energy Inc.'s existing oil
sands plant at Asphalt Ridge, Utah (the "POSP"), as announced by
the Company on 2 July 2021, the commencement of requisite due
diligence on Tar Sands Holdings II LLC ("TSHII") and its site as
announced on 9 June 2021 and, most recently, the receipt of the
finalised FEED (Front-End Engineering and Design) study for
production facilities, together with the associated third-party
technical verification report on the proposed process, as announced
on 27 July 2021 .
TSHII owns approximately 760 acres of land and certain
non-producing assets (the "Site") in Uintah County, Utah, USA.
Subject to securing the requisite funding and satisfactory due
diligence, Greenfield plans to use the Site, if ultimately acquired
via TSHII, for the future mining of oil sands and construction of a
commercial scale processing plant utilising the findings of the
FEED study, and other knowledge and experience gained from
Greenfield's operation of the POSP. The Site has existing
infrastructure, plant and equipment, together with an existing
Large Mine Permit No. M0470032, that could facilitate any future
development by Greenfield.
The FEED study covers the production facilities for a 5,000
barrels of oil per day ("bopd") oil sands project (the "Greenfield
Plant"). The Greenfield Plant is currently intended to be located
at the Site. The proposed plant is planned to consist of an initial
5,000 bopd train but configured for possible expansion to 10,000
bopd via a second future train.
The FEED study will be utilised as the basis for the EPC phase
of the project and TomCo's directors continue to believe that the
completed FEED study, together with the supporting third-party
technical verification report and recently completed testing
operations at the POSP, serve to provide a high level of confidence
in both the potential economics and the technical feasibility of
Greenfield's plans. The Acquisition enables TomCo to assume full
control of Greenfield and, the TomCo directors believe, should
facilitate discussions with potential debt and equity funders with
respect to the potential acquisition of TSHII and future plant
construction and achieve greater alignment with Valkor.
As at 31 March 2021, Greenfield had unaudited total assets of
approximately US$4.67 million and incurred an unaudited loss before
tax for the period from incorporation to 31 March 2021 of
approximately US$0.11 million.
Related Party Transaction
As a JV partner, Valkor is considered to be a related party of
the Company (as defined in the AIM Rules for Companies) and,
accordingly, the Acquisition constitutes a related party
transaction pursuant to AIM Rule 13. The TomCo directors, having
consulted with Strand Hanson Limited, the Company's Nominated
Adviser, consider that the terms of the Acquisition are fair and
reasonable insofar as the Company's shareholders are concerned.
Commenting, John Potter, CEO of TomCo, said : "We are delighted
to have reached agreement with Valkor to acquire their 50% interest
in Greenfield and look forward to welcoming Valkor as a substantial
shareholder in TomCo as and when Financial Close for construction
of the proposed Greenfield Plant is achieved within the next three
years.
"We are very excited by the future potential of Greenfield. The
due diligence undertaken so far on the Site has been positive such
that it appears ideally suited for the construction, subject to
funding, of Greenfield's first commercial scale plant, with
significant resources for potential exploitation. Additionally, the
recent results of the FEED study were most encouraging.
"Greenfield's focus remains on completing the requisite due
diligence on TSHII and the Site and progressing the necessary
funding package in order to, inter alia, pursue construction of an
initial 5,000 bopd facility at the earliest opportunity. We now
have full control of Greenfield which affords TomCo's shareholders
the opportunity to fully benefit from Greenfield's significant
potential."
Enquiries :
TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Matthew Chandler +44 (0)20 7409 3494
Novum Securities Limited (Broker)
Jon Belliss / Colin Rowbury +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Florence Chandler +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com .
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
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