LONDON (Alliance News) - Oilex Ltd on Wednesday said it will vigorously defend itself after shareholder Zeta Resources Ltd alleged that the company "failed to disclose material information" before Zeta's initial investment in the company, which was announced in July.
Oilex also said that in light of the change in its funding arrangement, it is likely that the beginning of the approved two-well drilling programme will be delayed. In addition, its joint venture partner on the Cambay project in India has "formally indicated" to Oilex that it wishes to "vary the approved work programme" by flowing Cambay-77 for six continuous months before embarking on the approved two-well drilling campaign.
"This variation has not been agreed by Oilex and discussions are ongoing in relation to this matter," the company said. Changes to the approved work programme would require approval from the Indian government.
"Therefore, should Oilex's funding arrangements be resolved it is possible that the commencement of the approved two-well drilling campaign may be further delayed as a result of the change to the work programme, subject to the approval of the government of India," Oilex said in a statement.
Oilex said that talks are continuing on the cash calls owed by Oilex's joint venture partner, which amounted to USD7.7 million at the end of October, an increase from the USD1.6 million at the end of June.
"Consideration is being given to a range of proposals that have been put forward by both parties. These discussions are incomplete at this time. However, the board is focussed on finding a solution that will enable the approved work programme to move forward," Oilex said.
Earlier Oilex had said: "Zeta has alleged that the company has failed to disclose material information to it prior to its initial investment and has contravened statutory provisions relating to misleading or deceptive conduct and continuous disclosure and rights issue disclosure requirements."
Under an agreement between the companies, Zeta was to subscribe for AUD4.2 million of 20-year, zero-coupon unsecured convertible loan notes, convertible into Oilex shares at Zeta's option at any time. That was subject to a conversion price of AUD0.0418 per share, by no later than Wednesday this week. In addition, Zeta was to subscribe for 124.0 million new shares at the same price, to enable the issue of those shares to be settled by no later than Thursday.
"As at the date of this announcement, Zeta has failed to settle the subscription for the convertible notes. Oilex will be considering, together with its external legal counsel, the remedies available to it arising out of Zeta's failure to settle the convertible notes," Oilex said.
Zeta currently owns 10.3% of Oilex.
"Whilst Zeta has at this stage only provided limited information to the company regarding the basis of these allegations, Oilex considers them to be without merit and they will be vigorously defended," Oilex said.
Shares in Oilex were down 59% at 0.590 pence late Wednesday afternoon.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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