TIDMSLE
RNS Number : 0440Q
San Leon Energy PLC
24 June 2022
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information for the purposes of Regulation 11 of the Market Abuse
(Amendment) (EU Exit) Regulations 2019/310. With the publication of
this announcement, this information is now considered to be in the
public domain.
24 June 2022
San Leon Energy plc
("San Leon" or the "Company")
Further update on the Potential Transaction
San Leon, the independent oil and gas production, development
and exploration company focused on Nigeria, provides the following
update in relation to the Potential Transaction, as described in
the announcement made by the Company on 29 April 2022.
Considerable progress has been made by the Company in
progressing the Potential Transaction and the Company is now
expecting to publish an AIM admission document (the "Admission
Document") in respect of the Potential Transaction by 8 July 2022,
following which point the Company intends to seek the restoration
of trading of its ordinary shares on AIM.
However, certain components of the Potential Transaction are
required to be completed in the coming weeks and certain key
elements, upon which the Potential Transaction is predicated upon,
remain outside of the direct control of the Company also need to be
progressed. The Board of San Leon (the "Board") considers that the
key items still to be finalised include: (i) documentation of the
Proposed Eroton Debt Facilities in relation to the Proposed Eroton
Transaction; (ii) the progression and documentation of the Proposed
New San Leon Loan Facility; and (iii) the preparation of historical
financial information for the year ended 31 December 2021 in
respect of ELI, MLPL and the Company. Further details of these
matters can be found below.
Following the publication of an Admission Document, the
Potential Transaction would still be subject to a number of
conditions and other actions, details of which are set out
below.
Proposed Eroton Transaction
San Leon has been provided with an update on the progress of the
funding for the Proposed Eroton Transaction and has been advised
that significant progress has been made with the financing
syndicate in relation to the Proposed Eroton Debt Facilities that
are required for the Proposed Eroton Transaction to proceed. It is
expected by the Board that the drafting of the banking
documentation will commence shortly and will move towards agreed
form in the coming couple of weeks with execution occurring at a
point thereafter and potentially after the publication of the
Admission Document.
The Board are of the view that the Proposed Eroton Transaction
is important for several reasons, including:
(i) it underpins the valuation and rationale of the Potential
Transaction by delivering, indirectly, to San Leon a far greater
interest in OML 18 than is currently held by Eroton;
(ii) it resolves a series of disputes that have arisen between
Eroton and its OML 18 joint venture partner, OML 18 Energy Resource
Limited (formerly known as Sahara Field Production Limited)
("Sahara"). Several of these disputes have developed into legal
actions, although none are currently being actively pursued, and
all legal actions between Eroton and Sahara will be extinguished as
part of the Proposed Eroton Transaction, thereby enabling Eroton to
focus on the commercial development of this world class oil &
gas field; and
(iii) the Proposed Eroton Debt Facilities enable Eroton's
existing term loan facility agreement (the "Existing Eroton Debt
Facility") with Guaranty Trust Bank Plc to be refinanced.
Accordingly, the Board believe that the Proposed Eroton
Transaction is important to Eroton and to the Company.
Potential Transaction update
As previously announced in relation to the Potential
Transaction, progress has been made by the Company and its advisers
in preparing the necessary transaction documentation, including
work on progressing the Admission Document, given that the
Potential Transaction will be classified as a reverse takeover
under the AIM Rules.
The Admission Document will include audited historical financial
information for the three years to 31 December 2021 in relation to
MLPL and ELI and will incorporate, by reference, audited historical
financial information for the three years to 31 December 2021 for
the Company. Substantial progress has been made in respect of
compiling this audited historical financial information and the
respective auditors and reporting accountants have advised that
they expect to finalise their review of the historical financial
information in around a week. It is the Company's intention to
publish its audited accounts for the year ended 31 December 2021
(the "SLE 2021 Accounts") alongside the publication of the
Admission Document in early July 2022.
Separate to the Proposed Eroton Debt Facilities, on 29 April
2022, San Leon announced that it was engaging with prospective
lenders in respect of the Proposed New San Leon Loan Facility. San
Leon is pleased to announce that the Company has since received an
indicative proposal for a loan facility which is required to fund
certain of its proposed further debt and equity investments in ELI
and working capital requirements. The Company is now working to
convert this into a fully documented and executed loan.
At present the publication of the Admission Document remains
subject to a number of factors, including, inter alia, the
execution of binding contractual documentation, including
progressing and competing the Proposed New San Leon Loan Facility,
and the completion of the preparation of the historical financial
information. Among other things, when executed, completion of the
Potential Transaction is also expected to be subject to various
regulatory consents, the approval of San Leon's shareholders and,
in relation to ELI, reorganisation of Midwestern's indirect equity
and debt interests in ELI.
There can therefore be no guarantee that the Potential
Transaction will occur.
A number of actions that are important to the Potential
Transaction and the timescales for the execution and completion of
such actions, such as the Proposed Eroton Transaction and the
Proposed Eroton Debt Facilities are outside of the control of the
Company.
Suspension of trading
As previously announced, as part of the Potential Transaction,
San Leon would increase its initial indirect economic interest in
Eroton from 39.2% to 98.0% and, taking into account the completion
of the Proposed Eroton Transaction, San Leon's initial indirect
economic interest in OML 18 would increase from the current 10.58%
to 44.1%.
In accordance with the AIM Rules, the Company's ordinary shares
will remain suspended from trading on AIM until such time as: i)
the Admission Document and the SLE 2021 Accounts have been
published ; or (ii) the admission of the Ordinary Shares to trading
on AIM is cancelled; or (iii) the Company announces that the
Potential Transaction is no longer proceeding and the SLE 2021
Accounts have been published.
Should the Company not be in a position to publish the Admission
Document by 8 July 2022 then it is possible that trading in the
Company's shares on AIM will be cancelled. If trading in the
Company's shares on AIM is cancelled the Board intends to complete
the Potential Transaction and seek to have the enlarged group's
shares admitted to trading on AIM later this year.
Further extension of the Conditional Payment Waiver in relation
to the MLPL Loan Notes
In relation to the outstanding loan notes due from MLPL, further
to the announcement on 29 April 2022 (and previously), San Leon has
agreed with MLPL, Midwestern and Martwestern (as defined below) to
a further extension of the Conditional Payment Waiver to 8 July
2022 or, if sooner, the termination of discussions or the signing
of agreements to effect the Potential Transaction (but otherwise on
the same terms as the waiver announced on 7 July 2021), in relation
to three instalments that were originally due to be repaid on 5
July 2021, 30 September 2021 and 31 December 2021 (the "June 2022
Conditional Payment Waiver"). Interest continues to accrue on the
principal amounts waived whilst the June 2022 Extended Conditional
Payment Waiver is in effect. As at 23 June 2022, the June 2022
Conditional Payment Waiver relates to US$105.6 million, being a
principal amount due of US$82.2 million and total accrued interest
due of US$23.4 million, which will be payable 90 days after such
expiry, save for, inter alia, if there is an event of default.
MLPL is part of the structure through which San Leon holds its
current 10.58% indirect economic interest in OML 18. San Leon
currently has a 40% equity interest in MLPL with the remaining
interest in MLPL currently being owned by Midwestern. Midwestern is
also the guarantor of the Loan Notes. MLPL has a 100% equity
investment in Martwestern which in turn has a 98% economic interest
in Eroton, which currently holds a 27% working interest in OML 18
and is its operator.
As previously announced, it is expected that, inter alia, as
part of the Potential Transaction, the amounts owed to San Leon by
MLPL pursuant to the Loan Notes will be taken into account in the
overall structure and eliminated from the resulting structure.
Midwestern and MLPL are related parties of the Company for the
purposes of the AIM Rules by virtue of Midwestern holding more than
10% of the existing Ordinary Shares in the Company and the level of
Midwestern's current interest in MLPL. The June 2022 Conditional
Payment Waiver is therefore a related party transaction under the
AIM Rules. The Directors of San Leon (excluding Adekolapo Ademola
who is not considered to be independent as he is a representative
of Midwestern on the Company's board) consider, having consulted
with the Company's nominated adviser, Allenby Capital Limited, that
the terms of the June 2022 Conditional Payment Waiver are fair and
reasonable insofar as the Company's shareholders are concerned.
Unless otherwise defined herein, the capitalised defined terms
used in this announcement have the same meaning as those used in
the Company's announcement on 29 April 2022.
Oisin Fanning, CEO of San Leon, commented:
"OML 18 has an excellent production history as well as a vast
amount of, to date, unrealised potential. The above series of
proposed transactions that we, Eroton and ELI have been progressing
for the past year have the ability to be transformational not only
for OML 18 but also for San Leon itself and its shareholders. The
Potential Transaction is expected to deliver to San Leon a far
greater interest in this world class asset as well as pave the way
for better infrastructure enabling more efficient production from
the field. It would be no understatement to say this has been a
very challenging and complex undertaking, but I am delighted to say
that we have made considerable progress with the Potential
Transaction and we now expect to be in a position to publish our
Admission Document alongside our report and accounts by 8
July."
Enquiries:
San Leon Energy plc +353 1291 6292
Oisin Fanning, Chief Executive
Julian Tedder, Chief Financial Officer
Allenby Capital Limited
(Nominated adviser and joint broker to the Company) +44 20 3328 5656
Nick Naylor
Alex Brearley
Vivek Bhardwaj
Panmure Gordon & Co
(Joint broker to the Company) +44 20 7886 2500
Nick Lovering
James Sinclair-Ford
Tavistock
(Financial Public Relations) +44 20 7920 3150
Nick Elwes
Simon Hudson
Plunkett Public Relations +353 1 230 3781
Sharon Plunkett
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END
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