Sound Energy targets debt-free future after deal
Sound Energy has agreed to sell its remaining 20% stake in Morocco’s Tendrara Exploitation Concession to Managem SA in a transaction valued at $57 million, marking the company’s exit from one of Morocco’s most closely watched onshore gas developments.
The AIM-listed energy company signed a binding Sale and Purchase Agreement (SPA) to divest its interest through the sale of the entire share capital of Sound Energy Merijda Limited (SEML), which holds the Tendrara asset stake. The proceeds, subject to working capital adjustments, include a nominal $1 share purchase payment and the repayment of shareholder loans previously advanced by Sound Energy to SEML.
The transaction brings to a close Sound Energy’s long-standing involvement in the Tendrara gas project in eastern Morocco, while repositioning the company toward energy transition investments and upstream hydrocarbon opportunities outside the country.
Strategic exit from Moroccan exploration portfolio
Alongside the SEML disposal, Sound Energy will relinquish its 27.5% non-operated interest in the Anoual Exploration Permit and waive any remaining rights linked to the expired Grand Tendrara Exploration Permit.
Following completion of the transaction, Managem and its affiliates will hold a 75% operated interest in the Tendrara Exploitation Concession, while Morocco’s national hydrocarbons agency ONHYM will retain the remaining 25%. The deal follows Sound Energy’s June 2024 agreement to farm down a 55% operating interest in Tendrara to Managem subsidiary Mana Energy Limited. Development of the concession had been divided into two phases.
Phase I involves a micro-LNG development targeting gross production of 54 Bcf of gas under a 10-year “take-or-pay” agreement with Afriquia Gaz, while Phase II includes plans for a 120-kilometre pipeline linked to a gas sales agreement with ONEE.
Although progress has continued on Phase I, including the restructuring of the ItalFluid Geoenergy contract into a conventional EPC agreement, the project timetable shifted significantly. First gas, initially expected in October 2025, is now projected for the third quarter of 2026 amid inflationary pressure on capital and operating costs.
The Final Investment Decision for Phase II remains under evaluation by the joint venture partners.
Debt elimination and balance sheet restructuring
Sound Energy intends to use proceeds from the transaction to eliminate its outstanding debt obligations, including the repurchase of its Luxembourg-listed €28.8 million 5.0% senior secured notes due December 2027.
The company said the proposed Eurobond restructuring would allow it to redeem the notes ahead of maturity and emerge with a debt-free balance sheet. Assuming the transaction closes on 31 July 2026, Sound Energy expects to retain approximately $11 million in cash after repayment of all liabilities.
The restructuring proposal follows discussions with bondholders representing 30% of the outstanding notes and includes amendments to redemption pricing conditions.
AIM rule 15 implications
The disposal qualifies as a fundamental change of business under AIM Rule 15 due to its relative size compared with Sound Energy’s remaining operations.
Shareholder approval will therefore be required before completion, with the company expected to circulate a shareholder circular and convene a General Meeting in the coming days.
Following completion, Sound Energy will effectively become an AIM Rule 15 Cash Shell and will need to complete a reverse takeover or seek readmission as an investing company within six months to avoid suspension of trading in its shares.
Managem expands energy footprint
Managem SA, listed on the Casablanca Stock Exchange, operates across seven African countries with activities spanning cobalt, copper, zinc, silver and gold production.
Its subsidiary Mana Energy Limited currently operates both the Tendrara Exploitation Concession and the Anoual Exploration Permits in Morocco.
Majid Shafiq, CEO of Sound Energy, said: “This transaction represents a transformational milestone for Sound Energy. Following many years of involvement in the Tendrara project, the sale of our remaining interest in Tendrara to Managem accelerates the crystallisation of significant value for shareholders, while also reducing the Company’s exposure to the future funding requirements of the larger Phase II development, and enables the Company to reallocate capital and management focus towards its next phase of growth and strategic priorities. The proposed repayment of our Eurobonds will allow Sound Energy to emerge debt free and repair a capital structure which is no longer appropriate for a company of Sound Energy’s size and stage of development. The existing debt burden has materially constrained the Company’s strategic flexibility and limited its ability to engage credibly with both potential financing partners and industry counterparties.”
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