Nostrum Oil & Gas (LON: NOG), a London-listed energy company that operates gas processing infrastructure in north-west Kazakhstan, has agreed to sell its entire Kazakh operating business for $304.6m. The deal, announced on Monday, is designed to repay bondholders after the company defaulted on its notes, and leaves little on the table for shareholders.
NOG shares closed at 2.5p on Tuesday, unchanged on the day but down 38% from the 4p close on 14 August, the last session before the announcement. The stock, near the bottom of its 52-week range of 1p to 4.5p, fell to an intraday low of 2p on Monday as the news broke.
Nostrum’s senior secured and unsecured notes matured on 30 June and went unpaid, leaving the group unable to meet its obligations. On Monday it signed a binding agreement to sell its interests in Zhaikmunai LLP and POSITIV Invest LLP, its principal Kazakh subsidiaries, to Altaris Holding Ltd, a buyer owned by Fincraft Energy Holding Limited and Alturion Holding Limited. The sale, worth $304.6m before completion adjustments, covers effectively all of Nostrum’s operating assets.
If completed, proceeds are expected to repay the senior secured notes in full and hand unsecured noteholders an initial repayment of around $150m, with only materially smaller amounts possible after that. An ad hoc group representing more than half of unsecured noteholders has backed the sale and wind-down plan. Completion needs Kazakhstan merger clearance and government consent, and carries a long-stop date of 15 September, extendable by two months.
Following completion, Nostrum expects to begin an orderly wind-down, a planned closure of the company rather than a disorderly collapse. It has said it does not currently expect any residual proceeds available for ordinary shareholders to be material, though it has not entirely ruled out a final distribution.
On Tuesday, Nostrum Oil & Gas Finance B.V., the note issuer, extended a related tender offer for the senior secured notes to 2 September in New York, citing the sale.