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Natlata Notes New Delay on Petroneft Farm-out Deal, Gives More Details of Financing Proposal

LONDON, April 16, 2014 /PRNewswire/ --

Natlata Partners Limited ("Natlata"), the private investment company that is the largest single shareholder in Petroneft Resources Plc ("Petroneft"), notes that Petroneft has announced a new delay in completing the deal to farm out a 50% share in Licence 61.  In January 2014 having forecast a completion by the end of Q1, then "in the coming weeks" in the 17 March announcement, Petroneft today announced that it will close "within a week", with the only outstanding item being the execution of binding legal documents.

Once again there is no concrete news in the release and shareholders are again denied any information on the proposed terms and the buyer's identity.

With the farm-out being discussed for over a year and the recent placement providing Petroneft with cash for immediate needs, Natlata questions Petroneft's sudden urgency in the completion of the farm-out when there is an EGM scheduled for the 9th of May where shareholders are considering resolutions in relation to the farm-out. What is the reason to deny shareholders' rights to have a say on such a major transaction? Why not wait a couple of more weeks to allow all shareholders to decide on what's best for Petroneft?

Furthermore, in addition to its March 2014 proposal to Petroneft, Natlata would like to give more details on the proposed financial support of Petroneft going forward. In particular there has been a number of questions from investors in relation to what would happen with Arawak's debt and what would happen after USD 10m of newly issued financing have been spent. 

As stated previously, Natlata will help Petroneft to negotiate a new debt facility with a number of  banks to cover both the repayment of Arawak's loan and a reasonable future investment programme. If, for any reason, such a debt arrangement fails and subject to agreeing contracts, Natlata would provide a three-year USD 30m credit line on terms similar to those Petroneft currently has with Macquarie Bank, to be provided to Petroneft in May 2015 when Arawak's debt comes due. This additional financing proposal is subject to the reserves, production and financial information, as currently presented on Petroneft's website, being accurate and true.

This credit line would be in addition to Natlata's other financing proposal as announced on 20 March 2014, to take over the Macquarie debt and convert this to equity at a price of GBP0.055 and to raise an additional US$10 million in the form of a share issue open to all shareholders.

We must assume that the farm-out deal allegedly being closed by the board must be a lot better than Natlata's proposal for the board to give away 50% of Petroneft's core asset and all future upside potential without proper consideration of our proposal and no discussions or even request for clarification like four times before.

Natlata urges all shareholders not to cast their votes on the EGM resolutions until Petroneft has announced the terms of the farm-out by 22 April 2014.

About Natlata Partners Limited

Natlata Partners is a private investment company that seeks out investments with a focus on Russia and CIS countries that appear to be distressed or are at an early stage of development and which will clearly benefit from effective management and proven sector experience.  For more information about Natlata and our investments please contact [email protected].  More details on our proposals for Petroneft can be found at http://www.value4Petroneft.com.

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