San Leon Energy PLC Resumption of Trading (6982L)
23 April 2018 - 4:00PM
UK Regulatory
TIDMSLE
RNS Number : 6982L
San Leon Energy PLC
23 April 2018
23 April 2018
San Leon Energy plc
("San Leon" or the "Company")
Termination of discussions and Resumption of Trading in its
Ordinary Shares
San Leon, the AIM listed company focused on oil and gas
development and appraisal in Africa and Europe, received an
indicative proposal from Midwestern Oil and Gas ("Midwestern") on
11 September 2017 for San Leon to acquire Midwestern's shares in
Midwestern Leon Petroleum Limited ("MLPL"). Such an acquisition
could have constituted a reverse takeover under AIM Rules for
Companies (the "AIM Rules") and accordingly, following press
speculation on 03 November 2017 concerning these discussions, the
Company's ordinary shares ("Shares") were suspended from
trading.
Discussions with Midwestern have continued since that date and,
whilst there were some clear attractions of increasing San Leon's
indirect ownership in OML 18, after careful consideration the board
of San Leon (the "Board") has determined that a combination with
MLPL is not in the best interests of San Leon's shareholders at
this time as it does not provide a sufficient balance of added
value for San Leon shareholders and certainty of near-term cash
flow. The Company has therefore notified Midwestern of its decision
to terminate discussions regarding a potential merger and has
requested the lifting of the suspension of trading of its Shares on
AIM. Trading in its Shares will recommence on AIM with effect from
07.30 on 23 April 2018.
The Company continues to have a good relationship with
Midwestern. The Board believes that the discussions have themselves
strengthened the working relationship between the two companies and
looks forward to working with Midwestern, as its partner, and
jointly advancing production at OML 18.
San Leon has now received $58.6 million in quarterly payments,
and since its Shares were suspended in November 2017 has settled
its dispute with Avobone and repaid material outstanding
liabilities. As at 19 April 2018, San Leon had a cash balance of
approximately $13.5 million. The Company is now in a strong
financial position, with the benefit of an expected regular future
income stream from its ongoing quarterly loan note repayments (of
approximately US$19 million).
Accordingly, the Company is now able to progress with the
capital reduction, subject to the confirmation of the High Court in
Ireland, which has already been approved by the shareholders, to
allow capital returns to shareholders.
Oisin Fanning, CEO of San Leon, commented:
"The Company has worked hard with Midwestern over the recent
months to see if there was a transaction that would be beneficial
to existing San Leon shareholders. Whilst the Company received an
interesting proposal from Midwestern, the Board does not feel the
structure of the combination (which would have included the Loan
Notes being deemed to have been repaid) reflected the true value of
the Company's portfolio. Accordingly, we have elected to terminate
discussions with Midwestern.
Our financial position is much stronger than when discussions
with Midwestern commenced. We are pleased to report that the first
three quarterly payments have been received. Consequently, San Leon
is now on a solid financial footing with a cash balance of $13.5
million and all material problems with creditors and litigation are
behind us. I am therefore pleased to say that the Company is
progressing its capital reorganisation in order to allow
shareholder distributions. I thank all shareholders, and in
particular, our largest shareholder, Toscafund for their patience
and support during this period.
The Company has experienced a number of positive developments
across its business over the last few months (as described below),
whilst the backdrop of improving oil prices is encouraging. I look
forward to updating shareholders with continued progress."
Notable Additional Developments during the period of temporary
suspension
A number of important events occurred during the period of
suspension, each of which has been already announced.
Repayment of Midwestern Leon Petroleum Limited Loan Notes
As previously stated, San Leon entered into an arrangement in
September 2016 with MLPL, whereby SLE would be repaid $174.5
million plus an annual coupon of 17% through to 2020. The
Instrument had an inbuilt grace period as historically explained
(see the Half year results announced on 29 September 2017). This
grace period has now lapsed and, as announced on 03 April 2018, a
payment of US$19 million was received, being the third such
quarterly payment of the outstanding Loan Notes, with payments
received now totalling $58.6 million. A further $168.6 million of
principal and interest remains outstanding and payable, along with
future interest, in similar quarterly instalments to those received
to date.
In the event of default of any of the future quarterly payments,
SLE may demand immediate repayment of the full outstanding
principal amount of the Loan Notes, all unpaid accrued interest and
any other sum then payable from MLPL. SLE also has the benefit of a
security package including guarantees from Midwestern Oil & Gas
Company Limited (60% shareholder in MLPL) and Mart Resources
Limited to guarantee the obligations of MLPL under the Instrument,
as well as a share pledge.
Settlement of Outstanding Material Creditors
At the time of suspension, San Leon was involved in a legal
dispute with Avobone N.V. over outstanding payments and their
timing to Avobone N.V. The Company announced on 19 December 2018
that all outstanding payments to Avobone (totalling EUR11.53
million) had been settled.
Barryroe Farm Out
On 28 March 2018, Providence Resources Plc announced it had
entered into a farm out agreement on the Barryroe Field, offshore
Ireland, with a Chinese consortium who would fund the cost of
drilling three wells and associated side-tracks. San Leon regards
this as a positive development in a material asset in which the
Company holds a 4.5% Net Profit Interest across the whole field and
is not required to pay any further appraisal or development costs
on the licence.
Enquiries:
San Leon Energy plc + 353 1291 6292
Oisin Fanning, Chief Executive
SP Angel Corporate Finance LLP (Nominated
Adviser) +44 20 3470 0470
Richard Morrison
Ewan Leggat
Whitman Howard Limited (Financial adviser
and Joint broker) +44 20 7659 1234
Nick Lovering
Francis North
Brandon Hill Capital Limited (Joint broker
to the Company) +44 20 3463 5000
Oliver Stansfield
Jonathan Evans
Vigo Communications (Financial Public Relations) +44 20 7830 9700
Chris McMahon
Kate Rogucheva
Plunkett Public Relations +353 1 280 7873
Sharon Plunkett
This information is provided by RNS
The company news service from the London Stock Exchange
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