LONDON (Alliance News) - Max Petroleum PLC Tuesday said its application to conduct a rehabilitation process for its Kazakhstan-based subsidiary in order to protect it from its creditors has been accepted by authorities.
Toward the end of July, the company said it has started a rehabilitation process under Kazakh law for its Samek International LLP subsidiary.
The process in the country is similar to the Company Voluntary Arrangement in the UK and provides the company with protection against creditors and will provide a framework for Samek to reach an agreement with its creditors on a repayment timetable.
On Tuesday, Max Petroleum said the subsidiary's application to the Kazakh courts for rehabilitation has been accepted and the rehabilitation case has now been opened by the Specialised Inter-District Economic Court of Almaty.
Therefore, all existing court decisions and arbitration awards that have been previously issued against the subsidiary have been suspended and creditors can only claim under the framework established within the rehabilitation process, it said.
Max said outstanding claims that have been suspended include ones sought by trade suppliers and a contractor.
"The court will in due course hear the case and decide whether rehabilitation will be approved, thereby commencing the process to agree and implement the rehabilitation plan," it said in a statement.
The rehabilitation, if approved by the court, will involve a moratorium on creditors' claims, cessation of accrual of penalties and interest on any outstanding debts, as well as suspension of execution of any court and arbitrary judgements.
A rehabilitation plan will then be established between the subsidiary and its creditors within three months of a court decision which will set out a fixed timetable for payment of amounts owing to all creditors.
Earlier in July in a separate issue, Max reached a deal with well construction and upstream engineering service company AGR Energy Group which would result in AGR owning around 63% of the company. Max said the deal would "alleviate its severe immediate financial stress".
Max Petroleum said it had conducted a conditional cash subscription with AGR to raise GBP9.0 million by issuing AGR with 3.83 billion new shares at 0.2341 pence per share, which will result in AGR holding 63.8% of the enlarged issued share capital of the company. As part of the subscription, AGR also will provide Max with a GBP1.3 million convertible loan comprised of two tranches of GBP162,623 and GBP1.1 million.
AGR Energy Group is a special purpose vehicle that has been set up by the Assaubayev family established for the purpose of the subscription. The family are long-term investors in natural resources and metals and mining, according to Max Petroleum.
On Tuesday, Max said the "National Bank for the subscription has been obtained" and that the two companies continue to "work to ensure that all relevant remaining conditions" are met to complete the deal "as quickly as possible."
In addition, Max said its auditor, PricewaterhouseCoopers LLP, has agreed to resign after the company conducted a review that determined it would be "in the best interests of the company to change auditors". Max has appointed BDO LLP as its new auditor with immediate effect.
Max shares are currently suspended and the company said it aims to publish its results for the year ended March 31, before the end of September.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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