Zoltav, the Russia-focused oil and gas exploration and production company, announced on 14 July 2020 that it had entered into a loan agreement with ARA Capital Holdings under which ARA Capital Holdings provided a revolving loan facility for up to US$9,000,000.

As announced on 29 December 2020, the final repayment date was extended to 31 March 2021. The Company currently has insufficient amounts of cash, other sources of liquidity or alternative sources of finance to repay the Loan and, as a result, ARA Capital Holdings has agreed to extend the repayment date to 30 September 2021 and increase the Loan facility up to a maximum principal amount of US$19,000,000.

The Loan Extension has been granted so as to enable the Company and ARA Capital Holdings additional time to determine the options available in respect of the settlement of the Loan which may include the conversion of the Loan into equity. 

Management has been in discussions with prospective providers of project finance for developing East Bortovoy. While discussions are ongoing, the Company has been unable to secure project finance within the timeframe previously anticipated. Accordingly, the Facility Increase has been granted in order to provide the Company with the necessary liquidity to continue East Bortovoy project development by meeting short-term liabilities and for other general corporate purposes.

The Loan continues to be interest-free save for in the event of a failure to repay on time, in which circumstances the Loan will accrue interest from the date of the Loan disbursement at a reduced rate of 10 percent per annum rather than the 15 percent per annum that was defined in the original Loan agreement announced on 14 July 2020.

It has further been agreed that should the Loan not be repaid by 30 September 2021 or be subject to a further extension by mutual agreement, ARA Capital Holdings will be entitled to request that the Loan (including accrued interest) be converted into new ordinary shares in the Company at the lower price of 27 pence per share or the volume weighted average price of the Company's shares between 1 September 2021 and 29 September 2021, with such conversion taking place no later than 31 December 2021.

All other terms of the Loan remain unchanged.

ARA Capital Holdings Limited is the parent company of ARA Capital Limited - both entities combined own 49.8 percent of the issued share capital of the Company. ARA Capital Holdings Limited and ARA Capital Limited are therefore regarded as related parties as defined by the AIM Rules for Companies. The Loan Extension and the Facility Increase are related party transactions for the purposes of Rule 13 of the AIM Rules for Companies. The directors of Zoltav consider, having consulted with the Company's nominated adviser, SP Angel Corporate Finance LLP, that the terms of the related party transactions are fair and reasonable as far as shareholders are concerned.

KeyFacts Energy: Zoltav Resources Russia country profile