Natural gas and helium producer Renergen and Mahlako Gas Energy (MGE) are involved in a commercial dispute relating to the intention by MGE to exercise a put option over its stake in Tetra4.
In December 2023, Renergen announced that MGE had invested in Tetra4 by providing an injection of R550m. MGE would own 5.5% of the equity in Tetra4 once all the proceeds had been fully invested for the development of Phase 2.
Renergen granted MGE owner Mahlako Energy Fund an option to sell the shares to Renergen on the occurrence of certain events, including an unremedied material breach of the agreement.
Renergen on Wednesday advised shareholders that MGE had given notice that it elected to exercise the put option “pursuant to a purported put option event” that Renergen disputed had occurred, at a price yet to be determined.
This results in a share transaction that requires that Renergen repurchase MGE’s stake in Tetra4.
“Renergen categorically disputes that the put option has been lawfully or validly exercised and that it has consequently given rise to the aforementioned share transaction,” Renergen said.
“Further to this, and resulting from the invalidity of the exercise of the put option, Renergen also disputes that the option transaction agreement has validly come into existence and will be challenging same,” it said.
Renergen said it was confident that MGE’s purported and premature exercise of rights, that had not arisen in the circumstances and that may never come to fruition, was devoid of legal merit, based on advice received.
“The transaction agreement contains comprehensive dispute resolution mechanisms to address such matters, and the company expects this dispute to be resolved through those prescribed processes in due course.”
Renergen said while it could take some time for the dispute to be resolved, it had, in the interests of transparency, opted to inform shareholders of the development.
Renergen’s core business operations and strategic direction remained unaffected by this commercial dispute, it said.
The company remained focused on the successful execution of its business plan and the development of the Tetra4 project, it said.
Renergen’s share price closed 4.5% higher on the JSE on Wednesday at R11.08.
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