Tethys Petroelum: Enters into Binding C$9,787,003 Private Placement with Olisol

Tethys Petroleum Limited announces that is has entered into a binding investment agreement (the “Investment Agreement”) with Olisol Investments Limited (“Olisol”) setting out the terms and conditions upon which Olisol Petroleum Limited, a wholly-owned subsidiary of Olisol (“OPL”), has agreed to purchase 181,240,793 new ordinary shares in Tethys (“Shares”) at a price of C$0.054 per Share, for total proceeds of C$9,787,003, by way of a private placement (the “Placing”) and to commit to backstop a further equity fundraising of 50 million Shares at C$0.054 per Share (the “Further Financing”, together the “Transaction”). The Further Financing will generate proceeds of C$2,700,000 for a total of C$12,487,003 under the Transaction. The Investment Agreement amends and restates the investment agreement that was signed by the Parties on December 7, 2015.

Currently, there are 400,004,848 Shares outstanding, of which, Olisol owns 63,044,461 Shares or approximately 15.8% of the outstanding Shares. All of the Shares held by Olisol were issued on the previously announced conversion at US$0.10 per Share of US$6,304,446 of the outstanding indebtedness under the Facility Agreement entered into with Olisol on November 19, 2015, as amended on March 2, 2016 (as amended, the “Facility Agreement”).

Following the Placing (181,240,793 Shares) there will be 581,245,641 Shares in issue, of which Olisol will own 244,285,254 Shares or approximately 42.0% of the outstanding Shares. In addition, Olisol has the right to convert the remaining US$1 million aggregate principal amount plus accrued but unpaid interest under the Facility Agreement into Shares at a conversion price of C$0.054 per Share. As part of the Investment Agreement, Olisol is committing to fund working capital requirements of the Company until closing of the Placing and completion of a US$10 million loan, subject to certain conditions. Amounts advanced under this obligation will also convert at C$0.054 per Share.

Summary

Placing and Further Financing

– Tethys and Olisol have entered into a definitive Investment Agreement providing for the Placing, commitment by Olisol to backstop the Further Financing and a commitment by Olisol to fund working capital requirements until the closing of the Placing and when Tethys has secured a US$10 million loan, provided that certain conditions are met. Any amounts advanced as working capital indebtedness will be, subject to TSX approval, convertible, at Olisol’s option, into Shares at a conversion price of $0.054 per Share.
– An injection of C$9.8 million of new capital into Tethys by OPL by way of a subscription for 181,240,793 Shares at C$0.054 per Share.
– Following completion of the Placing, the Company proposes to undertake the Further Financing of 50,000,000 Shares to its 20 largest shareholders at C$0.054 per Share, which will be backstopped by OPL, raising C$2,700,000 or a total of C$12,487,003 together with the Placing.
– The Investment Agreement requires the Parties to enter into a Relationship Agreement on closing which will address certain conflicts of interest and related party matters. The Relationship Agreement will only apply if OPL owns 25% or more the outstanding Shares.
-The Company has called its Annual General Meeting for May 31, 2016 and the Management Information Circular and Proxy material will be available on SEDAR and mailed to shareholders in the next few days. Shareholders will be asked to vote on the Placing and associated resolutions at the meeting. The Management Information Circular will contain further details regarding the Placing, the Investment Agreement and the Relationship Agreement.
-A copy of the Investment Agreement and Relationship Agreement will be filed on SEDAR in a timely manner.
-In addition to customary closing conditions for transactions of this nature, OPL’s obligation to complete the Placing shall be subject to satisfaction or waiver of the following:
-receipt of all required approvals from the Government of Kazakhstan;
-receipt of all required shareholder, regulatory, exchange and other third party approvals; and
-aggregate debt of Tethys, net of cash, being not greater than US$40 million (excluding the US$1 million outstanding under the Facility Agreement and any working capital indebtedness advanced under the Investment Agreement).

Assuming that shareholders approve the Placing at the May 31, 2016 shareholders meeting, the Company will then be required to amend the articles of the Company (the “Articles”) to reduce the par value of the Shares from US$0.10 to US$0.01 to allow for the issuance of the Shares under the Placing. The Company anticipates that it will take approximately six to eight weeks to complete the process of amending the Articles following the shareholder meeting, and that the Placing would close very shortly thereafter. The Placing and Further Financing are subject to regulatory approvals, including approval of the Toronto Stock Exchange, and shareholder approval as required by the rules of the Toronto Stock Exchange and applicable securities laws.