Mast Energy Developments (LON: MAST) shares have slumped 35% this morning. The problem is that the hyped JV deal with Proventure seems to have run into problems. Like, say, Proventure hasn’t bothered to cough up the money necessary to complete the deal. This is, of course, something of a problem for Mast Energy.
The announcement: “Mast Energy Developments PLC, the UK-based multi-asset owner, developer and operator in the rapidly growing flexible power market, announces that further to its previous announcements dated 23 October 2023 and 13 November 2023 respectively, under the terms of the binding JVA, Proventure is required to make an initial interim payment of £2m (the 'Interim Payment') as well as payment of the balance of the investment of c. £3.9m to the Joint Venture SPV, in order to complete the transaction by the contractually agreed completion long-stop date of 30 November 2023. Proventure has not met the abovementioned conditions under the JVA and unless or until the JVA has been completed, Proventure remains contractually bound under the JVA and is yet to perform its obligations thereof. As a result of Proventure not performing such obligations, MED has given Proventure formal notice of enforcement and Proventure now has seven (7) days to remedy the position.”
Now, of course, it’s possible to say this is all just a banking snafu and so on and it’ll be sorted. But think again for a moment - do you really want to be in a JV with people who cannot pay on time?
Mast Energy Developments share price from Google Finance
Our point is not that this means the JV will or will not go ahead. We are not clairvoyant after all. Rather, the point to make here is that the very idea of the JV itself is now less valuable. Simply because if Proventure can’t keep up with the starting point of the JV then what are they going to be like later on? It’s not a good precedent, is it?
