The TomCo Energy Plc (LON: TOM) share price fell 13.3% after issuing an update regarding its right to acquire the remaining 90% stake in the Tar Sands Holdings II LLC (TSHII). The company has negotiated an extension of the deadline to acquire the remaining 90% interest in the TSHII project up to 31 December 2022.
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However, the extension came at a cost since the amount payable by the company to acquire the 90% stake rose by US$1 Million from US$16.25 million to US$17.25 million. The extension also came with the caveat that the counterparty would now actively market the 90% stake to other interested parties who may make an offer for the stake.
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If a third party makes an offer for the remaining 90% stake in the TSHII project, TomCo Energy, through its wholly-owned subsidiary Greenfield Energy, would have to make a counteroffer that matches or exceeds the offer and pay at least $100,000 towards the purchase price within 30 days of the notice.
Greenfield has been given a firm deadline of 31 December 2023 to complete the transaction failure, to which they would have to forfeit the deal. So TomCo Energy has to find a way to raise the much-needed funds to close the transaction or risk losing out on the deal entirely.
The company is currently considering several funding options, including disposing of a significant stake in Greenfield LLC to a partner that would then invest funds in the TSHII project or maintaining a minority interest in Greenfield without the need for further investment.
TomCo finds itself at a critical juncture as it seeks funding for the TSHII project, which has so far evaded it. As a result, the company may have to take drastic measures to secure funding for the project or have no choice but to let go of it and remain a minority shareholder with its current 10% stake.Â
The company’s prospects are not promising, which explains today’s decline following the project update.
*This is not investment advice.
TomCo Energy share price.
The TomCo Energy share price fell 13.33% to trade at 0.117p, from Monday’s closing price of 0.135p.
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