LONDON (ShareCast) - (Sharecast News) - Molecular Energies announced the proposed sale of its Argentinian oil and gas operations to PLLG Investments, a company beneficially owned by Peter Levine, on Tuesday.
The AIM-traded firm said the total potential consideration for the sale could reach up to $40m.

It said the sale would include the entire issued share capital of President Energy Holding UK, which is the beneficial owner of President Petroleum (PPSA).

PPSA oversees Molecular Energies' business and assets in Argentina.

The deal would leave all other Molecular Energies businesses and assets unaffected, including those in Paraguay and other parts of the world.

Molecular said the terms for the potential $40m sale included an initial $2m cash payment due 12 months after the sale was complete, as well as PLLG Investments committing to cover $13m in debt and interest owed by PPSA to Molecular Energies.

A contingent consideration of up to 20% of PPSA's net free cash flow over the next five years was also included.

The agreement remained subject to certain conditions, and would require shareholder approval due to its significant scale and its impact on the company's business model.

Both the independent directors and Peter Levine were intending to vote in favour of the resolutions, collectively representing around 29% of the entire issued share capital of the company.

"The proposals contained in the Circular represent the best interests of the company," said financial director Robert Shepherd.

"It is clear that the market is not appreciative of investment in Argentina and the current economic and political environment combined with the rampant inflation and severe restrictions on foreign investment have led the independent directors to conclude that the divestment of our Argentine business is appropriate.

"The sale preserves potential upside for the company from both future trading of the Argentine business as well as repayment of certain existing intercompany debt depending on the circumstances whilst removing Argentine exposure and debt from the group and allows Molecular to build a substantial business free from those concerns."

At 0820 BST, shares in Molecular Energies were up 9.31% at 133.9p.

Reporting by Josh White for Sharecast.com.

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