RNS Re MAGP Transaction1 Jul 2017 15:17
Dear Magnolia Shareholders,
I am writing this letter to clarify some points concerning Nostra Terra's ("the Company") investment in Magnolia Petroleum Plc ("Magnolia" or "that Company") and to address the boardroom changes proposed at that Company's forthcoming General Meeting.
However, before I begin, I would like to assure all shareholders that if I were voted onto the board of Magnolia my primary goal as a director of that Company would be to work in the best interests of Magnolia. Just as I have helped oversee the restructuring of Nostra Terra's business model over the last year and a half, I am confident I can make a valuable contribution to the repositioning of Magnolia and restoring value to that Company.
As Nostra Terra's representative on the Magnolia board I will not take any salary from Magnolia for at least the first year of my tenure. Nostra Terra wishes to help Magnolia's position and excessive boardroom compensation is one of the first problem areas we wish to address.
It is clear from the outside that Magnolia's current business model is in danger of failing. By Magnolia's own admission that Company is "non-compliant on all (banking) covenants". Magnolia's borrowing base limit was $1,604,565 as of 31 December 2016, yet that Company's borrowings on the facility "amounted to $2,638,447". Magnolia's borrowing base limit "is due for repayment in full on 8 August 2017 and the decision to extend is at SNB Bank's (Magnolia's bank) discretion."
Magnolia's 2016 Annual Report, states that they have net current liabilities of $3,928,983, including the $2,638,447 borrowings to SNB Bank and $1,290,536 in trade and other payables. Magnolia has warned its shareholders:
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