TomCo subsidiary agrees to sell TSHII membership interest

14th Aug 2024 14:59

(Sharecast News) - US-focussed oil development group TomCo Energy announced a proposed agreement for its wholly-owned subsidiary Greenfield Energy to sell its 10% membership interest in Tar Sands Holdings II for $1.575m.

The AIM-traded firm said the sale was part of a broader agreement involving TSHII, Greenfield, and Endeavor Capital Group, which holds the remaining 90% of TSHII, to facilitate a potential merger of TSHII with Integrated Rail and Resources Acquisition Corporation (IRRX).

It said the proposed redemption was contingent on the approval of TomCo's shareholders, which was required under the AIM rules.

On successful completion, the proceeds from the sale would be used to settle outstanding trade creditors and provide additional working capital for TomCo.

The agreement also ensured that Greenfield retained its lease rights on 320 acres of TSHII's site in Uintah County, Utah, allowing the company to continue its tar sands development and potential in-situ well programme.

As part of the agreement, TSHII and IRRX had committed not to terminate the existing lease and to negotiate an additional lease for further mining rights on TSHII's land, excluding an area intended for refinery optimization by IRRX.

TomCo's board said it believed that IRRX's plans for the site would not conflict with Greenfield's existing operations, allowing for potential collaboration.

The transaction would be subject to shareholder approval, with a general meeting to be convened shortly.

If the proposal was not approved, TomCo said it would need to seek alternative funding to meet its working capital needs.

In the meantime, trading in TomCo's shares on AIM remained suspended pending the completion of the transaction and the publication of the company's interim results for the six months ended 31 March.

"Whilst it is clearly disappointing that we have been unable to secure funding to procure 100% of TSHII, despite a number of extensions to our previously agreed option arrangement with Endeavor, the proposed redemption, if successfully concluded, will enable us to exit our minority investment and provide funds to settle outstanding trade creditors and sufficient working capital to finalise and release the group's 2024 interim results," said chairman Malcom Groat.

"Furthermore, the planned negotiation and entry into the additional lease will enable us to continue to pursue our tar sands development project and potential in-situ well programme subject to securing the requisite additional funding and permitting in due course."

Reporting by Josh White for Sharecast.com.