Global commodities trader Trafigura has bought a six per cent stake in oil explorer President Energy, which focuses on Latin America.
The deal, which will see Trafigura invest up to $10m (£7.7m), will help the oil firm to reduce its net debt.
According to the terms of the deal, the payment platform will take an initial $4m stake at 4.04p a share, with the option of potential further subscriptions worth $6m.
Last July Trafigura made an undisclosed advance to President whilst also buying production from the firm’s assets in Argentina.
In addition, IYA Global, which is owned by President’s chairman Peter Levine, will convert $2m worth of President’s debt into shares.
Levine is already the firm’s biggest shareholder and will control 29.99 per cent of its shares.
He said: “We welcome Trafigura as a significant stakeholder in President.
“With reduced debt and concomitant lower servicing requirements combined with a substantial and
supportive international industry partner as a significant shareholder alongside myself and other
shareholders, we are well placed to deliver on our strategy to generate growth.”
Standard and Poor analysts described the deal as “a very positive restructuring”:
“Bringing in Trafigura, already an important off-taker of the President, will bring an alignment of interests in Argentina.”
In 2019 Trafigura reported turnover of $171.5bn, trading nearly 400m tonnes of commodities.
Last week the firm announced that it would set targets to reduce the intensity of its carbon emissions in 2020, after its footprint increased 119 per cent for scope one and two emissions last year.
The two transactions will be ratified by shareholders at a general meeting on 6 February.
Shares in Leeds-based President rose over one per cent this morning.