Sound Energy has announced it has entered into a binding Sale and Purchase Agreement for the divestment of the Company’s interests in the Tendrara Exploitation Concession (20%), onshore Morocco, by way of the disposal of the entire share capital of Sound Energy Merijda Limited (SEML) to Managem SA. The Company will receive aggregate proceeds of US$57 million (subject to working capital adjustments) comprising a nominal consideration of one USD for the shares in SEML together with the repayment of shareholder loans advanced by the Company to SEML.<\/p>\n\n\n\n
In addition, the Company announces the relinquishment of its 27.5% interest in the Anoual Exploration Permit and the waiving of any subsisting rights in the Grand Tendrara Exploration Permit. A proposal for the early redemption of its outstanding Eurobonds is also announced; using the proceeds from the disposal of SEML to repurchase the EUR 28.8 million 5.0% Senior Secured Notes and strengthen the Company’s balance sheet.\u00a0 \u00a0<\/p>\n\n\n\n
Highlights<\/strong><\/p>\n\n\n\n \u00a7 Sound Energy’s sale of SEML to Managem marks an exit from its long-standing involvement in the Tendrara onshore gas development project;<\/p>\n\n\n\n \u00a7 Relinquishment of the Company’s 27.5% non-operated interest in the Anoual Exploration Permit;<\/p>\n\n\n\n \u00a7 Waiving of any subsisting rights in the Grand Tendrara Exploration Permit;<\/p>\n\n\n\n \u00a7 Proposed Eurobond restructuring to repurchase the Notes prior to their December 2027 redemption date offers an opportunity to pay down corporate debt and strengthen the Company’s balance sheet; <\/p>\n\n\n\n \u00a7 The redemption of the Eurobonds is conditional on the completion of the sale of SEML, which inter alia<\/em> is conditional on shareholder approval;<\/p>\n\n\n\n \u00a7 Post the elimination of balance sheet debt and assuming the transaction completes on 31 July 2026 the Company is expected to be left with a cash balance of USD 11 million;<\/p>\n\n\n\n \u00a7 A debt free balance sheet will enable the Company to pursue new ventures within the energy transition space and upstream hydrocarbon opportunities outside of Morocco.<\/p>\n\n\n\n Background and Rationale for the Sale of SEML<\/strong><\/p>\n\n\n\n On 12 June 2024 Sound Energy announced that the Company had farmed out a 55% operating interest in the Tendrara Exploitation Permit to Managem with the development of the concession being split into two distinct phases:<\/p>\n\n\n\n \u00a7 Phase I:<\/strong> A micro-LNG (mLNG) development for gross 54 Bcf of gas with a 10-year “take or pay” contractual agreement with Afriquia Gaz for gross production of 10 mmscfd;<\/p>\n\n\n\n \u00a7 Phase II:<\/strong> A 120 km pipeline development for an additional gross 128 Bcf of gas via a Gas Sales Agreement (GSA) with ONEE. <\/p>\n\n\n\n Notwithstanding the material progress that the Operator, Mana Energy Ltd (55%), a wholly owned subsidiary of Managem, has made with respect to Phase I of the development, including conversion of the ItalFluid Geoenergy S.r.l (“ItalFluid”) contract from a vendor financing contract to a traditional Engineering, Procurement and Construction (EPC) contract, the timetable for first gas has evolved as the project has progressed through the construction and commissioning phase. First gas from the project, originally anticipated in October 2025, is now expected in Q3 2026. During this period the project has also experienced broader industry inflationary pressures affecting both capital and operational expenditure and the Final Investment Decision (FID) on Phase II of the development remains subject to further evaluation by the joint venture partners.<\/p>\n\n\n\n Against this backdrop, and following a strategic review of its portfolio and capital allocation priorities, the Board of Sound Energy concluded that the proposed sale of SEML, together with the Company’s exit from the Anoual and Grand Tendrara exploration permits, represents an attractive opportunity to realise value from the Company’s Moroccan exploration and production portfolio while significantly reducing future funding requirements and allowing the Company to focus on its next phase of growth, including energy transition opportunities in Morocco and internationally.<\/p>\n\n\n\n Proceeds from the sale of SEML facilitates the elimination of the Company’s balance sheet debt and re-positions Sound Energy as a debt free company in the energy transition space, better able to access the equity and debt capital markets to pursue cash generative deals in the renewables energy sector and hydrocarbon production opportunities outside of Morocco. <\/p>\n\n\n\n Should the deal complete on 31 July 2026, it is anticipated that post repayment of all its debts, the Company will have a cash balance of $11 million. <\/p>\n\n\n\n Details of the Disposal of SEML<\/strong><\/p>\n\n\n\n Sound Energy has entered into a binding SPA with Managem for the sale of the Company’s remaining 20% interest in the Tendrara Exploitation Concession, through the acquisition of the entire share capital of SEML. The Company will receive aggregate proceeds of US$57 million (subject to working capital adjustments) comprising a nominal consideration of one USD for the shares in SEML together with the repayment of shareholder loans advanced by the Company to SEML. Following completion of the transaction, Managem and its affiliates, will hold a 75% operated interest in the Tendrara Exploitation Concession with the remaining 25% interest being held by ONHYM.<\/p>\n\n\n\n As part of Sound Energy’s revised strategic orientation, Sound Energy’s wholly owned subsidiary, Arran Energy Holdings Limited (AEHL), will relinquish its 27.5% non-operating interest in the Anoual Exploration Permit and, following the expiry of the Grand Tendrara Exploration Permit on 30 September 2024, waive any rights in connection with the Grand Tendrara Exploration Permit.<\/p>\n\n\n\n The Company has provided customary warranties and undertakings to Managem and, whilst the terms of the SPA are binding on the parties, the SPA remains conditional inter alia<\/em> upon the following key provisions:<\/p>\n\n\n\n \u00a7 Notification to the Moroccan Minister of Energy and the absence of receipt of a refusal or objection from the Moroccan Minister of Energy by not later than the date of satisfaction of the last of the other conditions precedent;<\/p>\n\n\n\n \u00a7 Receipt of the written authorisation of the Foreign Exchange Office (Office des Changes) relating to Managem’s payment obligations and all necessary antitrust clearances, as applicable, have been obtained;<\/p>\n\n\n\n \u00a7 No Material Adverse Change has occurred;<\/p>\n\n\n\n \u00a7 The despatch by the Seller to its shareholders of a circular seeking the consent of its shareholders to the transaction for the purposes of Rule 15 of the AIM Rules and the passing, at a duly convened general meeting of the Seller, of the resolutions in the form set out in such circular; and<\/p>\n\n\n\n \u00a7 The approval of Managem’s board of directors.<\/p>\n\n\n\n If the conditions precedent are not satisfied or waived within three (3) months from the Signature Date or such later date as the Parties may agree in writing (the Longstop Date<\/strong>), then the Longstop Date shall be automatically extended by a period of one (1) month.\u00a0\u00a0 If the conditions precedent are not satisfied or waived by the Longstop Date as so extended, then the SPA shall terminate.<\/p>\n\n\n\n The loss attributable to the assets being disposed in the year ended 31 December 2025 was approximately \u00a31.0 million.<\/p>\n\n\n\n Majid Shafiq, Chief Executive Officer, commented:<\/strong><\/p>\n\n\n\n “This transaction represents a transformational milestone for Sound Energy. Following many years of involvement in the Tendrara project, the sale of our remaining interest in Tendrara to Managem accelerates the crystallisation of significant value for shareholders, while also reducing the Company’s exposure to the future funding requirements of the larger Phase II development, and enables the Company to reallocate capital and management focus towards its next phase of growth and strategic priorities. The proposed repayment of our Eurobonds will allow Sound Energy to emerge debt free and repair a capital structure which is no longer appropriate for a company of Sound Energy’s size and stage of development. The existing debt burden has materially constrained the Company’s strategic flexibility and limited its ability to engage credibly with both potential financing partners and industry counterparties. The transaction provides the financial flexibility to pursue a renewed growth strategy focused on energy transition opportunities, including renewable energy developments in Morocco and selected upstream production opportunities internationally. We would like to thank our partners, shareholders, bondholders and the Moroccan authorities for their continued support and we look forward to positioning Sound Energy for its next phase of growth.”<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"