REG - San Leon Energy PLC - Update on potential transaction

San Leon EnergyAnnouncement

29/11/2021 07:00

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RNS Number : 8507T  San Leon Energy PLC  29 November 2021

 

 

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.

 

29 November 2021

San Leon Energy plc

("San Leon" or the "Company")

 

Update on potential transaction

 

San Leon, the independent oil and gas production, development and exploration
company focused on Nigeria, is pleased to provide the following update on the
proposed reorganisation to consolidate Midwestern Oil and Gas Company
Limited's ("Midwestern") holding in the Company and Midwestern Leon
Petroleum Limited ("MLPL") into a single holding in the Company (the
"Potential Transaction").  The Potential Transaction also includes, inter
alia, proposed further debt and equity investments to be made by San Leon in
Energy Link Infrastructure (Malta) Limited ("ELI").

 

San Leon has been informed that Eroton Exploration and Production Company
Limited ("Eroton"), in which San Leon currently has an indirect 39.2% economic
interest, has signed a non-binding term sheet with Africa Import Export Bank
("Afrexim") for a prospective US$750,000,000 senior secured reserve-based
lending facility. The purpose of the proposed facility, in addition to
refinancing Eroton's current senior bank debt (of approximately US$196
million), is to provide funding which will be used by Eroton to acquire an
additional 18% interest in OML 18 from two of the other partners in OML 18,
subject to agreeing documentation and relevant consents, thereby taking
Eroton's interest in OML 18 to 45% (the "Proposed Eroton Transaction"). Eroton
is also the operator of OML 18.

 

San Leon currently has a 40% equity interest in MLPL with the remaining
interest in MLPL being owned by Midwestern. MLPL has a 100% equity investment
in Martwestern Energy Limited ("Martwestern"), which in turn has a 98%
economic interest in Eroton.

 

As part of the Potential Transaction San Leon would increase its indirect
economic interest in Eroton from 39.2% to 98% and, following completion of the
Proposed Eroton Transaction, San Leon's indirect economic interest in OML 18
would increase from the current 10.58% to 44.1%. Given that the Proposed
Eroton Transaction is to be financed through a debt facility, it is not
expected that the consideration payable under the Potential Transaction (being
an issue of new shares in the Company to Midwestern), will be impacted. As
previously announced, it is expected that, inter alia, as part of the
Potential Transaction, the amounts currently owed to San Leon by MLPL
(pursuant to the loan notes) will be eliminated.

 

The heads of terms for the Potential Transaction (the signing of which was
announced on 12 July 2021) are being updated to reflect a proposed
restructuring of Midwestern's indirect holding in ELI (which is currently held
through a joint venture) to facilitate the proposed transfer of this holding
to San Leon as part of the Potential Transaction. There is expected to be no
economic impact on the Potential Transaction from San Leon's perspective in
respect of Midwestern's restructuring of its holding in ELI.

 

The parties continue to work with their respective advisers to prepare the
necessary transaction documentation in relation to the Potential Transaction
(including publishing an AIM admission document, given that the Potential
Transaction will be classified as a reverse takeover under the AIM Rules for
Companies (the "AIM Rules")) and to carry out due diligence.

 

In accordance with Rule 14 of the AIM Rules, the Company's ordinary shares
will remain suspended from trading on AIM until such time as either an AIM
admission document is published or an announcement is released in the event
that the reverse takeover in contemplation is not proceeding.

 

Given the need for binding contractual documentation and applicable regulatory
consents, there can be no guarantee at this stage that the Potential
Transaction (including the proposed debt and equity investments by San Leon in
ELI) or the Proposed Eroton Transaction will be entered into or, if entered
into, that they will complete.

 

The Company will release further announcements as and when appropriate.

 

Oisin Fanning, CEO of San Leon Energy, commented:

 

"Eroton's new loan term sheet and its consequential proposed acquisition of an
additional interest in OML 18 demonstrates the widespread and ongoing support
for OML 18 as a world class oil and gas asset.  We stand to be a further
beneficiary of this following the conclusion of San Leon's proposed
acquisition of 100% of MLPL.  Our advisers are continuing to work on the
transaction documentation and Eroton's planned refinancing marks an important
milestone."

 

 

Enquiries:

 

 San Leon Energy plc                                   +353 1291 6292
 Oisin Fanning, Chief Executive
 Allenby Capital Limited                               +44 20 3328 5656

 (Nominated adviser and joint broker to the Company)
 Nick Naylor

 Alex Brearley

 Vivek Bhardwaj
 Panmure Gordon & Co                                   +44 20 7886 2500

 (Joint broker to the Company)
 Nick Lovering

 James Sinclair-Ford
 Brandon Hill Capital Limited                          +44 20 3463 5000

 (Joint broker to the Company)
 Oliver Stansfield

 Jonathan Evans
 Tavistock                                             +44 20 7920 3150

 (Financial Public Relations)
 Nick Elwes

 Simon Hudson
 Plunkett Public Relations                             +353 1 230 3781
 Sharon Plunkett

 

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