TIDMSAVP
RNS Number : 5081W
Savannah Petroleum PLC
15 November 2017
15 November 2017
Savannah Petroleum PLC
("Savannah" or the "Company")
Seven Energy Transaction Update
Update regarding the proposed acquisition of certain of the
Nigerian oil and gas assets of Seven Energy International Limited
("Seven") (the "Agreed Transaction")
Lock-up Agreement effective and provision of short term
liquidity facility to Seven
Savannah is pleased to announce that it has entered into a lock
up agreement with, inter alia, Seven, Seven Energy Finance Limited
("SEFL"), certain other subsidiaries of Seven (together, the "Seven
Group") and certain of the creditors of the Seven Group (the
"Lock-up Agreement"). The Lock-up Agreement relates to the proposed
acquisition by Savannah of certain of the Seven Group's assets (the
"Agreed Transaction") and the associated proposed financial
restructuring of the Seven Group.
Agreed Transaction
The Agreed Transaction will involve the acquisition by Savannah
of the following Seven Group interests:
-- 40 per cent. participating interest in the Uquo oil & gas field;
-- 62.5 per cent. interest in Universal Energy Resources Limited
("UERL"), which holds a 51 per cent. participating interest in the
Stubb Creek oil & gas field; and
-- An interest in the Accugas Limited ("Accugas") midstream
business, a c.260km gas pipeline network and associated gas
processing infrastructure, potentially in conjunction with certain
third-party investors.
The Lock-up Agreement envisages consideration of US$87.5m in
cash and US$52.5m in newly issued Savannah shares being paid to the
holders of Seven's current 10.25 per cent. Senior Secured Notes
("SSNs") for the release of the SSNs. In addition, the SSNs will
have the right to participate, on a pro rata basis, in a US$20m new
capital contribution in exchange for the right to share, on a pro
rata basis to the new capital contribution, in a US$25m new
Savannah share issuance and a US$20m new facility issued at the
Accugas level. Savannah may choose in certain circumstances to
exchange the above equity interests offered to the SSNs into
additional cash consideration, as described in more detail in the
relevant term sheet in the Lock-Up Agreement.
The Lock-up Agreement also envisages the following:
-- the US$24.1m first bilateral facility agreement to SEFL being
exchanged into a US$20m facility to be reinstated at the Accugas
level, on a non-recourse basis to the Company;
-- US$7.3m in cash and US$4.4m in newly issued Savannah shares
being paid to the lender of the second bilateral facility agreement
to SEFL as consideration for the release of this loan; and
-- the exchange of the Seven Group's 10.50 per cent. senior
secured notes due 2021 into US$15m of notes to be issued at the
Accugas level and US$85m of notes to be issued at a Savannah
subsidiary company level, both on a non-recourse basis to the
Company.
SAA
Seven remains in ongoing discussions with the Nigerian Petroleum
Development Company ("NPDC") about the potential reinstatement of
the Strategic Alliance Agreement entered into in 2010 between Seven
Exploration & Production Limited and NPDC relating to OMLs 4,
38 and 41 (the "SAA"), which was subject to a purported termination
notice dated 31 January 2017. Whilst discussions are still ongoing,
and there can be no certainty that a satisfactory resolution is
reached, Seven Energy anticipates that reinstatement of the SAA,
which is held by Seven Exploration & Production Limited, would
require, inter alia, a substantial front-end cash payment with
respect to accrued legacy costs and a working capital injection.
The quantum of this is still subject to negotiation and agreement
with NPDC, however it is likely that the net investment required,
including working capital, will be up to US$200 million.
Savannah and Seven Energy have agreed that the Agreed
Transaction will proceed on the basis that the SAA is not acquired
by Savannah. However, were a resolution to be reached in relation
to the reinstatement of the SAA, Savannah would have the right to
acquire the SAA. It should be noted that Savannah will not be
acquiring Seven Exploration & Production Limited as part of the
Agreed Transaction.
Re-Admission of Savannah's Ordinary Shares to Trading
The Company continues to progress the documentation necessary to
implement the Agreed Transaction, including, inter alia, an AIM
admission document and associated reports with regard to the
Enlarged Group. The Agreed Transaction and the issue of the new
Savannah shares referred to above is subject to, inter alia,
Savannah shareholder approval.
Accordingly, the Company's ordinary shares remain suspended from
trading on AIM and will remain suspended until the earlier to occur
of: (i) publication of an AIM admission document; or (ii)
confirmation being given that the discussions concerning the Agreed
Transaction have ceased. Further updates will be provided as and
when appropriate.
Lock-up Agreement Effective
The Lock-up Agreement, which is now effective, has been executed
by: (1) the holders of (i) approximately 40 per cent. of the total
principal amount of SSNs (who have locked-up approximately 90 per
cent. of their debt), and (ii) 100 per cent. of the holders of the
Seven Group's 10.50 per cent. senior secured notes due 2021; (2)
the lenders of the first bilateral facility agreement to SEFL; (3)
the lender of the second bilateral facility agreement to SEFL
(together, the "Locked-up Lenders"); (4) the Seven Group; and (5)
Savannah (together with the Locked-up Lenders, the "Locked-up
Parties").
The Locked-up Parties have agreed, inter alia, to the following
key terms for the duration of the Lock-up Agreement:
-- to use reasonable endeavours to support, facilitate and
implement the Agreed Transaction, including exercising any voting
powers or rights available to the Locked-up Parties in favour of
the Agreed Transaction;
-- not to accept, solicit or investigate any alternative to the Agreed Transaction; and
-- not to acquire or dispose of any ordinary shares in the Company.
In addition, the Locked-up Lenders have agreed, inter alia:
-- not to take any steps to recover or enforce their debt, or
support any proposed winding up, dissolution, administration or
reorganisation of any member of the Seven Group except as required
to implement the Agreed Transaction; and
-- subject to certain carve outs, not to transfer any interests
in any debt held by the Locked-up Lenders in the Seven Group
without the transferee first agreeing to be bound by the terms of
the Lock-up Agreement.
Unless terminated earlier in accordance with its terms, the
Lock-up Agreement will remain in force until the earlier to occur
of: (i) the date on which the trustee under the indenture in
relation to the SSNs accedes to an implementation agreement which
will set out the detailed agreed terms for implementing the Agreed
Transaction (the "Implementation Agreement"); or (ii) the date the
Implementation Agreement terminates in accordance with its terms;
(iii) the date that any enforcement action is taken by Savannah
under the liquidity facility referred to below; or (iv) where the
Implementation Agreement has not been executed, the long-stop date
on 31 January 2018, which can be extended by up to a further two
months by mutual agreement of the relevant parties.
Lock-Up Fee
If the Agreed Transaction is implemented, a fee of 0.75% of the
total principal amount of the SSNs (the "Lock-Up Fee"), will be
paid rateably to the holders of the SSNs that are party to the
Lock-up Agreement on the Record Date (being the date shortly before
the creditor meetings for the schemes of arrangement for the SSNs
(the "Schemes") as described in the explanatory statement for the
Schemes which will be sent to all holders of the SSNs) in respect
of all SSNs that were locked-up by 5pm London time on 12 December
2017 (the "Lock-Up Fee Deadline") held by such holders of the SSNs
as at the Record Date (provided certain conditions set out in the
Lock-Up Agreement are complied with including voting in favour of
the Schemes).
Each holder of the SSNs that is not already a party to the
Lock-Up Agreement is encouraged to accede to the Lock-Up Agreement
as soon as possible and in any event before the Lock-Up Fee
Deadline to ensure that the SSNs held by such holder qualify as
Lock-Up Fee eligible SSNs for the purpose of calculating holders of
SSNs' entitlements to the Lock-Up Fee as described above and in
accordance with the Lock-Up Agreement. The Lock-Up Fee is payable
from the US$87.5m cash consideration allocated to be paid to the
holders of the SSNs in accordance with the Lock-Up Agreement, as
described above.
Next steps
Implementation of the Agreed Transaction is expected to take
around 4-5 months, allowing for, inter alia:
-- completion by Savannah of a successful equity marketing
process to raise the cash to effect the Agreed Transaction;
-- signing of the Implementation Agreement with all relevant stakeholders;
-- sanction of the Schemes; and
-- receipts of governmental and regulatory consents.
The Locked-Up Parties have been provided with a cleansing
presentation (the "Presentation") by Seven, which can be found on
Seven's website at www.sevenenergy.com. This Presentation contains
certain forecast information which has been prepared solely by the
management of Seven, and does not reflect Savannah's current view
of the business. Accordingly, Savannah takes no responsibility for
these forecasts.
Treatment of Other Creditors
Savannah and Seven continue to be in constructive discussions
with certain other of the Seven Group's financial creditors as
regards amendments to their financing arrangements with the Seven
Group, including the lenders under the Accugas term facility.
Savannah Liquidity Facility
Savannah has also agreed to provide to the Seven Group a super
senior secured revolving credit facility (the "Liquidity Facility")
of up to $20m to be made available in three tranches as
follows:
-- firstly, $1.5m which has been pre-funded to a client account
of legal counsel to the Seven Group (and is held subject to an
undertaking provided by such legal counsel) and which shall be
transferred to an account of Seven upon signing of the Liquidity
Facility and the satisfaction of all conditions precedent
thereunder and which is only permitted to be withdrawn to finance
projected costs in connection with any insolvency, liquidation or
administration proceedings involving any member of the Seven
Group;
-- secondly, $3.5m available from signing of the Lock-Up
Agreement, subject to all conditions precedent to the Liquidity
Facility having been satisfied; and
-- thirdly, the remaining $15m available from signing of the
Implementation Agreement (subject to all conditions precedent to
the Liquidity Facility having been satisfied).
Any drawings under the Liquidity Facility (other than the $1.5m
that has to be pre-funded) are subject to approval by Savannah of
the payments to be made from such drawings unless such payments are
pre-agreed. Loans under the Liquidity Facility are subject to PIK
interest at 6 per cent. p.a. and are repayable in full upon
completion of the Agreed Transaction or, if earlier, on termination
of either the Lock-up Agreement or the Implementation
Agreement.
It is intended that the Liquidity Facility will be used to part
fund the advisory and legal fees incurred by Seven as part of the
Agreed Transaction. Savannah intends to fund the first and second
tranches of the Liquidity Facility from existing cash resources and
its revolving loan facility with Oragroup SA. The third tranche is
expected to be financed from the proceeds of the proposed equity
fundraise.
Seven Energy Operational Update
Savannah notes the following operational updates provided by
Seven in its Presentation:
-- average first nine months' 2017 Accugas gas sales, all
supplied by Uquo gas, has been at a rate of 78 MMcfd, delivering
gas to the Calabar power station, Ibom Power station and Unicem
cement plant (nine months 2016: 80 MMcfd);
-- all conditions precedent to the long-term sales agreement for
the supply of gas by Accugas to Calabar (the "Calabar GSA") were
satisfied and the start date on the Calabar GSA was confirmed as 22
September 2017;
-- the Calabar GSA is supported by a World Bank Partial Risk
Guarantee which guarantees payments to Accugas for gas supply and
is backed by the Federal Government of Nigeria and the
International Development Agency of the World Bank; and
-- average first nine months 2017 gross oil production from the
Stubb Creek and Uquo fields has been 3,100 bopd (first nine months'
2016: 1,900 bopd), with net entitlement to Seven Energy of 900 bopd
(first nine months' 2016: 600 bopd).
Andrew Knott, CEO of Savannah Petroleum, said:
"We are pleased to have reached this milestone in the Agreed
Transaction with the signature of the Lock-up Agreement, which
represents the culmination of many months of hard work by Savannah,
Seven, its stakeholders and the respective advisory teams. The work
relating to Savannah's Admission Document remains ongoing and we
look forward to providing more detailed updates in the coming
weeks."
For further information contact:
Savannah Petroleum +44 (0) 20 3817 9844
Andrew Knott, CEO
Jessica Hostage, Corporate
Communications
Strand Hanson (Nominated
Adviser) +44 (0) 20 7409 3494
James Spinney
Rory Murphy
Ritchie Balmer
Hannam & Partners (Financial
Adviser)
Neil Passmore
Chris Byrne
Sam Merlin +44 (0) 20 7907 8500
PJT Partners (Financial Adviser) +44 (0) 20 3650 1100
David Riddell
Matthew Slaffer
Brad Knudtson
Mirabaud (Joint Broker) +44 (0) 20 7878 3362
Peter Krens
Rory Scott
Celicourt Communications
(Financial PR) +44 (0) 20 7520 9266
Mark Antelme
Jimmy Lea
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Any securities referred to herein have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), or any U.S. state securities laws, and may not
be offered or sold within the United States except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. No public offering
of any securities referred to herein is being made in the United
States. This announcement may not be distributed, directly or
indirectly, in or into or from any jurisdiction where to do so
would constitute a violation of the relevant laws of such
jurisdiction. This announcement does not constitute or form part of
an offer to sell or issue, or any solicitation of an offer to buy
or subscribe for, any securities referred to herein in the United
States or in any other jurisdiction. The offer and the distribution
of this announcement and other information In connection with the
offer in certain jurisdictions may be restricted by law and persons
into whose possession any document or other Information referred to
herein comes should inform themselves about and observe any such
restriction. Any failure to comply with these restrictions may
constitute a violation of the securities laws of any such
jurisdiction. This announcement is directed only at (I) persons who
are outside the United Kingdom or (ii) persons with professional
experience in matters relating to investments falling within
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the "Order") or (iii)
high net worth entities, and other persons to whom it may lawfully
be communicated, falling within Article 49(2) of the Order (all
such persons together being referred to as "relevant persons"). Any
investment activity to which this communication relates will only
be available to and will only be engaged with, relevant persons.
Any person who is not a relevant person should not act or rely on
this document or any of its contents.
Forward-looking statements
This announcement contains statements that constitute
forward-looking statements, beliefs or opinions, including
statements relating to business, financial condition and results of
operations of Savannah. These statements may be identified by words
such as "expectation", "believe", "estimate", "plan", "target",
"intend," "may," "will," "should" or "forecast" and similar
expressions or the negative thereof; or by the forward-looking
nature of discussions of strategy, plans or intentions; or by their
context. All statements regarding the future involve known and
unknown risks and uncertainties and various factors could cause
actual future results, performance or events to differ materially
from those described or implied in these statements. Such
forward-looking statements are based on numerous assumptions
regarding Savannah's present and future business strategies as well
as the environment in which Savannah expects to operate in the
future. Further, certain forward-looking statements are based upon
assumptions of future events which may not prove to be accurate and
Savannah does not accept any responsibility for the accuracy of the
opinions expressed in this announcement or the underlying
assumptions. Past performance Is not an indication of future
results and past performance should not be taken as a
representation that trends or activities underlying past
performance will continue in the future. The forward-looking
statements in this document speak only as at the date of this
announcement and Savannah and its affiliates expressly disclaim any
obligation or undertaking to review or release any updates or
revisions to these forward-looking statements to reflect any change
in Savannah's expectations with regard thereto or any change in
events, conditions or circumstances on which any statement is based
after the date of this announcement or to update or to keep current
any other information contained in this document or to provide any
additional information in relation to such forward-looking
statements, unless required to do so by applicable law.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQEAEFLFDEXFAF
(END) Dow Jones Newswires
November 15, 2017 02:00 ET (07:00 GMT)
Savannah Energy (LSE:SAVE)
Historical Stock Chart
From Apr 2024 to May 2024
Savannah Energy (LSE:SAVE)
Historical Stock Chart
From May 2023 to May 2024