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Banking regulators in Mexico recently revoked the banking license of Accendo Banco S.A. (“Accendo Bank” or the “Bank”), and consequently, in accordance with Mexican financial regulation applicable to Accendo Bank, initiated a liquidation process of the Bank.
Electromagnetic Geoservices ASA (“EMGS” or the “Company”) had funds deposited with the Bank. As a result of the initiation of the liquidation process, these funds are no longer immediately available to the Company. Based on the information currently available, EMGS expects to recover at least part of the amount in the form of dividends from the liquidation process. It is, however, not possible at this point in time to assess neither the recovery amount nor when such dividend, if any, will be paid to the Company.
Accendo Bank is not EMGS’ main bank in Mexico, but was used to facilitate certain day-to-day intra group transactions. At the opening of the liquidation process, EMGS had deposits with the Bank totalling approx. USD 2.1 million.
Based on the highly limited information available to the Company, and the uncertainty pertaining to the amount and timing of liquidation dividends, if any, EMGS will make an impairment of approx. USD 2 million. The impairment equals the full amount deposited with Accendo Bank, less a relative limited payment from the Mexican Bank Savings Protection Fund, which the Company currently expects to receive within the relatively near future.
The unaudited free cash position of EMGS at the end of September 2021, excluding the cash held with Accendo Bank, was approx. USD 14.8 million.
Management and the board of directors of EMGS are working closely with the Company’s advisors, including Mexican legal counsel, to safeguard the Company’s interests.
Additional details and updates will be published in due course and when available.
Anders Eimstad, CFO, +47 948 25 836
This information is published in accordance with the Norwegian Securities Trading Act § 5-12.
EMGS, the marine EM market leader, uses its proprietary electromagnetic (EM) technology to support oil and gas companies in their search for offshore hydrocarbons. EMGS supports each stage in the workflow, from survey design and data acquisition to processing and interpretation. The Company's services enable the integration of EM data with seismic and other geophysical and geological information to give explorationists a clearer and more complete understanding of the subsurface. This improves exploration efficiency and reduces risks and the finding costs per barrel. CSEM technology can also be used to detect the presence of marine mineral deposits (primarily Seabed Massive Sulphides) and EMGS believes that the technology can also be used to estimate the mineral content of such deposits. The Company is undertaking early-stage initiatives to position itself in this future market.