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Alliance News


New World Oil To Receive Escrow Funds After Breaking Ties With Niel (ALLISS)

Mon, 1st Dec 2014 09:16


LONDON (Alliance News) - New World Oil and Gas PLC Monday said it has decided to terminate numerous agreements with Niel Petroleum SA after Niel breached a contract with New World, signalling the end of the relationship between the two companies.

New World has entered into a deed of termination, waiver and release with Niel Petroleum which will see a subscription agreement, relationship agreement, debt-facility commitment letter, and escrow agreement terminated, said the company in a statement.

As a consequence of the deed, Niel has agreed that New World will receive the funds held in the escrow account as a final settlement of all liabilities that Niel owes to New World for breaching the contract between the two parties, New World said.

Just under USD2.5 million will be transferred to New World from the escrow account.

"This agreement brings the current Niel relationship to a close, but does not preclude future cooperation between our companies. Niel has acted in good faith in this matter, and New World has been provided with adequate working capital allowing us to pursue other sources of funding in the short term," said New World Chairman Chris Einchcomb.

In September 2013, Niel Petroleum agreed to invest USD25 million in New World in return for a 75% stake in the oil and gas explorer which operates in Belize and Denmark. Niel Petroleum planned to buy the 2.19 billion shares in New World for USD25 million, while also providing a USD25 million debt facility. Earlier this year, Niel Petroleum made an initial USD4.8 million payment to New World.

On October 8, New World said that Niel had failed to secure funding from Al Maram Trading & Contracting Ltd to progress its equity investment in New World, which caused New World shares to plummet by 48%.

The deal was subject to Kuwaiti businessman Muaaz Alfahaid, representing Al-Maram Trading & Contracting Ltd, acquiring a 20% stake in Niel Petroleum for USD20 million. Niel Petroleum was to use the cash proceeds for the final subscription payment to New World. The agreed deadline, which was delayed, for Al Maram to transfer the required funds to Niel Petroleum expired, and New World said Niel Petroleum had not received the funds.

"In the meantime, we remain in discussions with potential farm-in partners for our Blue Creek Project in Belize and Danica Jutland and Danica Resources projects in Denmark where we have successfully re-negotiated and extended our work programme deadlines with the aim of further unlocking the value in these assets," Einchcomb said.

New World shares dropped 18% to 0.265 pence per share on Monday morning.

By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance

Copyright 2014 Alliance News Limited. All Rights Reserved.

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