Mast Energy Developments PLC shares fell on Friday as it and Kibo Energy PLC said joint venture partner Proventure Holdings (UK) Ltd has failed to make payments needed to complete the deal.
Shares in Mast Energy were trading 35% lower at 0.68 pence each on Friday morning in London. Shares in Kibo were down 2.2% at 0.044p.
London-based Mast is a subsidiary of Kibo Energy PLC, a Galway, Ireland-based company with energy projects in Africa and the UK. Proventure Holdings is part of the Proventure Group.
Mast Energy announced in late October that it had signed a binding joint venture agreement with Proventure Holdings. It had previously finalised a JV deal with a consortium led by Seira Capital Ltd, but the long-stop date was revised after Seira’s principal was involved in a serious road accident.
Under the new agreement’s terms, Proventure was required to make an intial interim payment of £2.0 million to a special purpose vehicle no later than November 10. On November 13, this deadline was extended to November 30.
In October, Chief Executive Pieter Krugel said Mast Energy was ‘delighted to have concluded the agreement with the replacement lead-investor, and excited to partner with a well-established and reputable institutional investor such as Proventure.’
On Friday, however, Mast Energy said Proventure has failed to make the initial £2 million payment, as well as payment of the balance of the investment of around £3.9 million, necessary in order to complete the transaction.
Mast added that unless or until the JV agreement is completed, Proventure remains contractually bound under the agreement.
Since Proventure has not fulfilled its obligations, Mast said it has given formal notice of enforcement.
Mast Energy said Proventure now has seven days to remedy the lack of payment. If it does not, Mast will consider all available options including terminating the JV agreement.
It said this course of action, however, would not terminate its right to claim damages and costs, to commence proceedings against Proventure, or to explore alternative investment opportunities.
Mast Energy said Proventure has already incurred a late payment penalty amounting to £60,000, plus liquidated damages and additional costs incurred by Mast.
Mast added that it is in advanced discussions with an alternative institutional investor, to secure the funding needed to advance its development plans without Proventure if necessary. It is also assessing short-term funding options to make sure it can meet ongoing working capital requirements.
‘We are, of course, very disappointed with Proventure’s continued inability to meet their commitments within the agreed contractual timelines,’ explained CEO Krugel. ‘MED has...done everything we possibly could to ensure successful delivery, however, Proventure’s performance is unfortunately outside of MED’s control.
‘Based on the latest assurances from Proventure, the MED Board remains cautiously optimistic that Proventure remains fully committed to and should be able to remedy the position within the remedial timeline to pave the way towards building a fruitful partnership with them.’
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