TIDMAZO
RNS Number : 4419S
Azonto Petroleum Ltd
07 July 2015
To: Company Announcements Office
ASX Limited, Exchange Centre
20 Bridge Street
Sydney NSW 2000
7(th) July 2015
ASX Code: APY
AIM Code: AZO
Azonto Petroleum Limited
("Azonto" or the "Company")
Disposal of interest in Vioco Petroleum Limited,
and
Cancellation of Admission to Trading on AIM
The Company announces that the Company's subsidiary, Azonto
Petroleum Holdings Limited (the Vendor), has entered into a
conditional sale and purchase agreement (the Agreement) for the
sale of the Vendor's entire shareholding in Vioco Petroleum Limited
(Vioco) and certain wellhead drilling equipment in Côte d'Ivoire to
Vitol E&P Ltd (the Purchaser) (the sale of the shares in Vioco
and the drilling equipment, together the Disposal).
The Vendor holds 35% of the shares in Vioco, which holds an 87%
working interest in, and is operator of, the CI-202 Block in Côte
d'Ivoire, within which the Gazelle project is located. The
Purchaser owns the remaining 65% of the shares in Vioco. A summary
of the key terms of the Agreement is set out below.
The Company's interest in CI-202 Block is its main undertaking.
Consequently, under ASX Listing Rule 11.2 and under AIM Rule 15,
the Disposal is conditional on approval of Shareholders. A Notice
of Meeting will be sent to shareholders shortly to convene an
Extraordinary General Meeting to approve the Disposal.
In addition, the Directors have decided to cancel admission to
trading of the Company's shares on AIM (AIM Cancellation). Further
details on the AIM Cancellation are set out below.
The Board of Azonto is in unanimous agreement that the Disposal
is in the best interest of all of its shareholders. It is intended
to enable the Company to realise value for its interest in Block
CI-202 in excess of its market capitalisation and removes
significant financial obligations for which Azonto would be
committed in the next 18 months. The Board believes that the
Disposal will allow shareholders to retain value in the Company
which, post completion will be considering new investment
opportunities.
Reasons for the Disposal
In recent months, the Gazelle project has experienced cost
growth, leading to delays, all against the backdrop of a wider
sector environment which has become increasingly challenging. In
the circumstances, the Company and the Board have engaged in an
intense effort to secure a strategic solution that would result
either in:
(i) securing additional funds to ensure the further development
of the Company's interests in CI-202 Block, or
(ii) a potential sale or merger of the Company or a sale of the Company's assets.
Through this exercise, it has become increasingly clear to the
Board that the combination of challenging conditions in the oil and
gas sector currently, including low and volatile oil prices and
weak equity market sentiment on the sector, have significantly
increased the risk that the Company would not be able to secure
further funds or agree one or more alternative transactions, before
its existing cash resources run out.
More recently, Vioco, at the instigation of Vitol, together with
its partner Petroci has engaged with the Direction Generale des
Hydrocarbures in Cote d'Ivoire to explore a cluster development of
Gazelle and adjacent fields in an integrated manner which would
significantly increase the robustness of the gas-to-power project
proposed for Gazelle. However, implementation of such a strategy
would require the Company to fund an exploration well in the next
18 months on the Hippo North prospect, before an integrated project
is potentially sanctioned. Furthermore, the Company would have to
commit to the exploration well in October 2015.
As a consequence, and based on the information available,
including the financial advice that the Company has received from
its financial advisors Evercore Partners International LLP
(Evercore) solely in relation to the Disposal, all of the Directors
consider that the proposed Disposal is in the best interests of the
Company and will recommend that Shareholders vote in favour of the
Disposal.
The Directors believe that the following are the advantages of
the proposed Disposal:
(a) the Disposal will allow the Company to realise value for its
interest in Block CI-202 following delay to the Gazelle Project and
in the wider context of an oil and gas market which has experienced
significant deterioration over the past year;
(b) the Disposal will allow the Company to exit its ongoing
expenditure obligations under the PSC, which would otherwise
require the Company to spend substantial funds on exploration
drilling over the next 18 months. These obligations, which would
need to be committed to from October 2015, constitute expenditure
which the Company currently does not have the funds to meet and
which the Board feels there is a very high risk the Company will
not be able to obtain before October 2015; and
(c) the Disposal will enable the Company to consider alternative
asset acquisitions that the Directors believe will add value to
Shareholders.
Summary of Agreement
The key terms of the Agreement are as follows:
(a) Sale and Purchase: The Vendor agrees to sell to the
Purchaser its holding of 35% of the shares in Vioco and certain
wellhead drilling equipment in Côte d'Ivoire owned by the
Vendor.
(b) Consideration for the sale of shares in Vioco and certain
wellhead drilling equipment: In consideration for the sale of the
shares in Vioco and the wellhead equipment, the Purchaser will pay
to the Vendor:
(i) US$4,000,000 less an amount up to four hundred thousand
United States Dollars (US$400,000) of certain net liabilities
related to the period before Purchaser's acquisition of 65% of
Vioco in November 2013.
(ii) US$1,100,000 in Consideration for the sale of certain
wellhead drilling equipment currently owned by Azonto and located
in Cote d'Ivoire, subject to Vioco's commitment to an exploration
well, required to retain CI-202 licence.
(iii) upon the occurrence of a commercially viable hydrocarbon
discovery in the aforementioned well, US$2,000,000, payable within
10 business days thereof.
(c) Conditions precedent: The sale of shares in Vioco is subject
to satisfaction of certain conditions precedent prior to 21 August
2015, including:
(i) the Company obtaining shareholder approval for the Disposal
as required under the listing rules of ASX and AIM;
(ii) Satisfactory settlement of liabilities of Vioco relating to
the period prior to 7 November 2013 including liabilities in
relation to a claim by the Cote d'Ivoire Ministry of Finance in
respect of withholding tax; and
(iii) There being no material breach of any warranty or term of
the Agreement by the Vendor.
(d) Completion of sale of shares in Vioco: Completion of the
sale of shares in Vioco will occur not more than five business days
after satisfaction of the conditions precedent.
A more detailed description of the Disposal terms will be
included in a notice of meeting that will be sent to shareholders
as soon as regulatory reviews are complete.
Financial Effect of the Disposal on the Company
A pro-forma Balance Sheet based on the Company's unaudited
management accounts as at 31 May 2015 and including the effect of
proceeds expected to be received at closing less principal
liabilities estimates Azonto's net cash in the amount of AUD $6.8m.
This calculation excludes ongoing corporate overhead for the period
from 1 June 2015. Should Vitol acquire the wellhead equipment a net
increase in cash balance in the amount of AUD $1.2m will occur in
November 2015. These calculations exclude the potential future
payment of USD $2 million in the event of a commercial hydrocarbon
discovery.
Investing Policy
The Directors will adopt an Investing Policy, which shall be
submitted to shareholders for approval via a Notice of Meeting and
which will consider other potential investment opportunities that
have potential to generate shareholder return following the
Disposal. The investment opportunities may not be within the
resources sector.
In the event Shareholder approval for the Disposal is not
obtained and completion of the Disposal is unable to occur, there
is a high risk that the Company will not be able to meet its near
to medium term commitments in respect of its interest in Vioco, the
PSC and CI-202 Block, which would in such circumstances lead to the
loss of the Company's interests in the PSC and CI-202 Block.
Cancellation of Admission to Trading on AIM
Having undertaken a review of both the advantages and
disadvantages of maintaining admission on both of ASX and AIM, the
Directors have decided to cancel admission of the Company's shares
to trading on AIM.
In reaching this decision, the Directors have taken the
following factors into account:
a) the Company's desire to reduce ongoing costs to preserve cash
whilst it pursues new opportunities; and
b) that Shareholders will retain the ability to trade their shares on the ASX.
Following careful consideration, the Board believes that it is
in the best interests of the Company and Shareholders to effect the
AIM cancellation. In accordance with rule 41 of the AIM Rules, the
Company has notified the London Stock Exchange of the proposed AIM
cancellation and the effective date of the AIM cancellation will be
24 August 2015. The last day of trading on AIM will be 21 August
2015.
The principal effects of the proposed AIM cancellation include,
amongst others:
(a) that there will be no public stock market in the United
Kingdom on which Shareholders can trade their Shares;
(b) the Company will no longer be required to comply with the
AIM Rules (including to have a nominated adviser). The Company will
continue to be subject to the ASX Listing Rules; and
(c) the Company's CREST facility will be cancelled and, although
Shares will remain listed on the ASX, they will cease to be
transferable through CREST. Instead, following cancellation,
depository interest holdings in the Company will be transferred to
the Australian based share register maintained by Computershare and
an updated holding statement of the Company shares will be issued
to depository interest holders.
The ASX listing will not be affected by the AIM cancellation and
the Company will maintain its ASX listing and, as such,
cancellation is not conditional upon shareholder consent pursuant
to Rule 41 of the AIM Rules. The Company will continue to comply
with all regulatory requirements for the ASX Listing.
Shareholders are recommended to speak to their brokers about the
procedures (and any associated costs) for trading (or enabling the
ability to trade) on the ASX to assess whether such procedures may
be available to Shareholders.
Shareholders are also advised to seek advice from a stockbroker,
solicitor, accountant, or other appropriate independent
professional adviser authorised under the Financial Services and
Markets Act 2000 (UK), as amended, if you are in the United Kingdom
or, if not, from another appropriately authorised independent
professional adviser in relation to your Shares.
Extraordinary General Meeting
The notice of meeting to approve inter alia the Disposal and the
Investing Policy will be posted to shareholders as soon as
regulatory reviews are complete.
Indicative timetable
The Company anticipates completion of the Disposal will occur in
accordance with the following timetable:
Event Date
------------------------------ ------------------
Extraordinary General Meeting Anticipated 17
to approve the Disposal August 2015
------------------------------ ------------------
Completion of sale of shares Anticipated 21
in Vioco August 2015
------------------------------ ------------------
Last day of trading on AIM 21 August 2015
------------------------------ ------------------
Cancellation of admission 7.00 am on 24
to trading on AIM August 2015
------------------------------ ------------------
Completion of sale of wellhead Anticipated 15
drilling equipment October 2015
------------------------------ ------------------
The above timetable, with the exception of the cancellation of
admission to trading on AIM, is indicative and is subject to
change.
Azonto Petroleum Limited Gregory Stoupnitzky or Jeff Durkin
Telephone: +44 (0)20 7042 8500
Email: IR@azpetro.com
RFC Ambrian Limited Samantha Harrison
(Nomad and Joint Broker) Telephone: +44 (0)20 3440 6800
GMP Securities Europe LLP Rob Collins or Emily Morris
(Joint Broker) Telephone: +44 (0)20 7647 2816
Buchanan Ben Romney or Gordon Poole
(Financial PR London) Telephone: +44 (0)20 7466 5000
Email: azonto@buchanan.uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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