Toronto-listed Oando Energy Resources Inc. (OER), a company focused on oil and gas exploration and production in Nigeria, said it had entered into a new facility agreement and received a signed repayment deed from Oando Plc, the holder of 94.6 percent of the common shares of the company, and a non-arm’s length party to Oando.
The company, which is the upstream business of Oando, intends to execute the repayment deed upon the expiry of the notice period, according to release posted on PR Newswire on Monday.
The loan documentation, once effective, replaces the terms of previous loan arrangements between the company and Oando.
Pursuant to the loan documentation, Oando has agreed to loan up to $1.2 billion to OER, including amounts previously advanced of $401 million, at an annual interest rate of 4 percent from the effective date of the loan documentation.
The company has agreed to pay Oando a facility fee of 4 percent of the amount available for drawdown under the facility agreement, which fee is equal to $48 million.
The statement stated that pursuant to the loan documentation, each of Oando and OER would be permitted to elect to convert outstanding principal under the facility agreement and interest accrued to date into securities of the company, based on the terms provided in a final prospectus of the company, in which case the price for conversion and nature of securities to be received shall be as set out under the offering.
It was said that where no final prospectus has been filed, the terms provided in an arm’s length private placement, in which case the price for conversion and nature of securities to be received shall be as set out under the private placement agreement and where there has been no prospectus or private placement offering, common shares of the company based on the 5-day volume weighted average price of the shares as at the time of the completion or termination of the proposed acquisition of the Nigerian upstream oil and gas business of ConocoPhillips company and notwithstanding the foregoing, such terms as may be agreed by the company and Oando.
In addition, Oando has the sole right to also convert interest accruing under the facility after the execution date of the repayment deed, on the terms and conditions set out therein, the statement said, adding that the price for conversion is subject to compliance with applicable rules of the Toronto Stock Exchange (TSX) and prior approval by the TSX.
Assuming that the company draws down the entire principal amount on February 20, 2014 and repays it on December 31, 2015, the total consideration payable by the Company to Oando will be approximately $153.1 million, representing approximately 98.4 percent of the OER’s market capitalization (based on the closing price of the shares on February 4, 2014), which exceeds 10 percent of the company’s market capitalization, and, pursuant to Section 501(c) of the TSX Company Manual, prima facie requires shareholder approval.
The company intends to exercise its right to repay outstanding principal and interest accrued to date under the Facility through the issuance of securities, in reliance upon its rights under the repayment deed and on the basis of the terms provided in the Private Placement.
By: FEMI ASU