(MENAFN- ProactiveInvestors - N.America) Madagascar Oil (LON:MOIL) is set to leave the AIM market as part of a short term rescue funding deal.
The company has been in talks with its lenders - a group comprising its own major shareholderswho have refused to pay-out the full amount of funds due under a prior funding arrangement which was agreed in September.
That deal which released an initial $8.9mln in September gave the lenders discretion over the second $8mln due from February 1 depending upon the MOIL's ability to deliver a farm-out transaction to bring in a new partner for the Tsimiroro heavy oil project.
But as yet no deal is in place so the lenders won't release all of the proposed funding.
Instead the company is now discussing terms for a new funding arrangement with lenders.
MOIL said any new financing would be conditional on the company calling an EGM at which shareholders would be asked to vote on a proposed delisting from AIM.
In a stock market statement is added: 'In the absence of alternative funding being made available the board believes that it is probable that the company would become insolvent and would need to seek a winding-up order in the Bermudan Courts in the very near term.'
MOIL also today revealed that it has shown the project to some 140 organisations - including E&P companies oil services companies private equity firms and private investors - during a partnering process assisted by Jefferies International.
A number of discussions are ongoing with third parties but no talks have yet led to actionable proposals and MOIL cautions that there is no predictable timeframe by which talks can be converted into an executable deal.
A report to MOIL's lenders earlier this month informed them specifically that three separate parties were currently conducting due diligence which could take up to between two and three months to complete.
MOIL also confirmed it had now received an environmental permit for Tsimiroro. And that it is currently scaling down operations at the site due to a lack of storage capacity and because of low oil prices.
Some 150000 barrels of crude is currently in storage on Madagascar. The company has the permission to sell oil domestically and it has been in negotiations to supply local power suppliers; including advanced talks relating to the Mandroseza power station but no sales have been made to date.
no sales have been made date.
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