SacOil Holdings Limited Conversion of Gairloch loans to equity (7405F)
May 29 2013 - 2:00AM
UK Regulatory
TIDMSAC
RNS Number : 7405F
SacOil Holdings Limited
29 May 2013
SACOIL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE share code: SCL AIM share code: SAC
ISIN: ZAE000127460
("SacOil" or the "Company")
Conversion of Gairloch loans to equity
1. Background
Shareholders are referred to the Circular issued on 8 May 2013
and the announcement made on the same date. Capitalised terms in
this announcement shall have the same meaning given to them in the
Circular unless the context requires otherwise. This further
announcement to Shareholders is in response to a number of comments
and questions which have been received by the Board in relation to
the matters contained in the Circular.
The Circular calls a General Meeting of the Shareholders to
consider and, if deemed fit, approve the Resolution authorising the
conversion of US$17.6m of debt and accrued interest held by
Gairloch to equity in SacOil at a price of R0.32037 per Share (the
"Specific Issue").
2. Consequences of a "No" vote
SacOil was introduced to Rencap Securities (Pty) Limited
("Rencap") some years ago, and entered into a number of loan
agreements with the financier. The loan raised from Rencap, and
subsequently novated to Gairloch, was on broadly comparable terms
with previous Rencap loans taken on by the Company.
Over the past few years private equity and capital markets have
proved extremely difficult for small resources companies to raise
substantial funding due to a lack of investor appetite. With no
operating income to cover interest expense, and a high risk profile
due to the nature of the company, financiers, who have been
prepared to lend monies, have been able to demand onerous funding
returns through high interest rates, raising fees, rollover fees
and equity structured upside.
The Gairloch loan and related terms emanated from the previous
Rencap loan. The details of the novation of the Rencap loan to
Gairloch were announced to Shareholders on 31 December 2012. The
funds raised by the Rencap loan are still held as part of a US$10m
cash deposit with Ecobank and utilised as collateral for the US$25m
performance bond posted.
Shareholders should be aware that failure to vote in favour of
the Resolution to approve the Specific Issue and the resultant
conversion of the Gairloch loans into Shares will (in the Board's
view) have a detrimental effect on the Company as in the absence of
this approval the Company may have a material uncertainty regarding
going concern due to the inability to settle the abovementioned
loans and to secure the funding required for the future development
of the Company and its projects. On the basis of advice from the
Company's auditors it is the board's clear view that this may
consequently result in a modification of the audit report on the
going concern of the Company in the annual financial statements for
the year ended 28 February 2013, if the Company is unable to secure
sufficient alternative funding. The Company does continue to
consider alternatives. It is also the Board's view that any future
issue of Shares to raise funds to enable the repayment of the
Gairloch loans, may result in a greater dilution to Shareholders
than what is proposed in terms of the Specific Issue.
3. Benefits of a "Yes" vote
The Specific Issue, if approved by Shareholders, would make
SacOil debt free with the accompanying improved ability to raise
significant further funds for investment in its projects. Following
the Specific Issue, Gairloch would hold a 33.89% interest (pre the
sell-down detailed in the paragraph below) in the total issued
Shares of SacOil. Gairloch is a private company with material
interests in infrastructure and manufacturing in Nigeria. Gairloch,
also holds a 25% interest in EER and thus the introduction of
Gairloch into the Company as a substantial shareholder will provide
the Company with greater alignment with its Nigerian joint venture
partner and also position the Company to better grow its Nigerian
business.
4. Proposed sell-down by Gairloch
Gairloch have notified the Company that they will, subject to
the Specific Issue being approved by Shareholders at the General
Meeting, procure that their nominees offer to the market (by way of
sale order within one week of the Shares being admitted to trade on
the Johannesburg Stock Exchange), 200,375,423 Shares (representing
13.89% of SacOil's enlarged issued share capital, post the Specific
Issue) for cash at the same Share price as the Specific Issue,
primarily in order to enable existing Shareholders to clawback a
portion of the Shares being issued to Gairloch as a result of the
Specific Issue. The sale order will be for a period of atleast 2
trading days beginning at the time the offer is made.
5. Board's recommendation
Accordingly, the majority of the Board of SacOil believes that
the Specific Issue is in the best interests of the Company and its
Shareholders. The Board therefore recommends that Shareholders vote
in favour of Special Resolution Number 1 to approve the Specific
Issue.
Board of Directors
SacOil Holdings Limited
29 May 2013
ENDS
JSE Sponsor
Nedbank Capital
For further information please contact:
finnCap Limited (Nominated Adviser and
Broker) +44 (0) 20 7220 0500
Matthew Robinson / Christopher Raggett
FirstEnergy Capital (Joint Broker UK)
Majid Shafiq
Travis Inlow +44 (0) 20 7448 0200
GMP Securities Europe LLP (Joint Broker
UK)
James Pope
Chris Beltgens +44 (0) 20 7647 2800
Keyter Rech Investor Solutions (SA)
Vanessa Ingram
Lynne Bothma +27 (0) 11 447 2993
Pelham Bell Pottinger (UK)
Philip Dennis +44 (0) 20 7861 3919
Nick Lambert +44 (0) 20 7861 3936
Rollo Crichton-Stuart +44 (0) 20 7861 3918
This information is provided by RNS
The company news service from the London Stock Exchange
END
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