San Leon Energy PLC Termination of the proposed transactions (4648P)
October 09 2023 - 12:00PM
UK Regulatory
TIDMSLE
RNS Number : 4648P
San Leon Energy PLC
09 October 2023
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.
9 October 2023
San Leon Energy plc
(" San Leon " or the " Company ")
Termination of the proposed transactions with Midwestern
San Leon, the independent oil and gas production, development
and exploration company focused on Nigeria, announces the
termination of its proposed transactions with Midwestern Oil &
Gas Company Limited ("Midwestern") and the Company's further
conditional investments in Energy Link Infrastructure (Malta)
Limited ("ELI") (together the "Proposed Transactions"). The
Proposed Transactions were announced by the Company on 8 July 2022
and set out in an admission document published by the Company on
the same date (the "Admission Document"). The Company remains in
early-stage discussions with Midwestern regarding a revised
transaction in relation to Midwestern Leon Petroleum Limited
("MLPL") and Midwestern's indirect shareholding in ELI.
Termination of the Proposed Transactions and a new strategic
direction for San Leon
As previously announced, the board of San Leon (the " Board ")
has , in recent weeks, been considering the Proposed Transactions
and t he Board has now concluded that it is no longer in the
Company's best interest to proceed with the MLPL Reorganisation
Agreement and ELI Reorganisation Agreement (both as defined in the
Admission Document). The Company has, with the consent of
Midwestern, terminated both these agreements and as a consequence
the Proposed Transactions will now not proceed .
The Board's reasons for terminating the Proposed Transactions
are as follows: i) the New Eroton Debt Facilities and the Sahara
OML 18 Acquisition (both as defined in the Admission Document)
continue to be delayed for reasons outside of the Company's control
; and ii) the legal challenges in Nigeria to Eroton Exploration
& Production Company Limited 's (" Eroton ") ongoing operation
of the Oil Mining License (OML) 18 (" OML 18 ") in Nigeria, which
the Board believe will not be resolved in the short term. Details
of these legal challenges were announced by San Leon on 7 March
2023 and 13 March 2023.
In light of the Proposed Transactions being terminated t he
Company and Midwestern are discuss ing suitable alternative
transaction structures to align the interests of Midwestern, San
Leon and Eroton, noting the US$ 120 million of outstanding loan
notes (the " MLPL Loan Notes ") due from M idwestern L eon P
etroleum L imited to San Leon (the " Potential Transaction ") .
Although the discussions are at an early stage at this time the
Board anticipates that the Potential Transaction may involve
swapping a proportion of the MLPL Loan Notes into new assets in
MLPL. In addition, San Leon remains interested in acquiring
Midwestern's indirect interests in ELI. The Board believe that, due
to the amount outstanding on the MLPL Loan Notes, the Potential
Transaction, as with the previous agreements with Midwestern, w
ould constitute a reverse takeover under R ule 14 of the AIM Rules
for Companies and will therefore be subject, inter alia, to the
publication of a new AIM admission document by the Company and the
approval of San Leon's shareholders before binding contracts are
entered into. At this time there can be no certainty that any
agreement will be reached with Midwestern in relation to the
Potential Transaction. Should no agreement be reached on the
Potential Transaction San Leon will seek the repayment of the
outstanding US$120 million of loans from MLPL (which have been
guaranteed by Midwestern). A further announcement in this regard
will be made in due course.
T he Company's ordinary shares of EUR0.005 each in the Company
(the " Ordinary Shares ") are currently suspended from trading on
AIM because the Company has not published: i) its audited accounts
for the year ended 31 December 2022 (the " 2022 Accounts ") , as
required by Rule 19 of the AIM Rules for Companies ; and ii) its
unaudited interim results for the six months ended 30 June 2023
(the " 2023 Interim Accounts ") , as stipulated by Rule 18 of the
AIM Rules for Companies .
San Leon remains committed to publishing the 2022 Accounts and
the 2023 Interim Accounts as soon as it is able to do so and the
Board believes that the investments being made in ELI, and
described below, will enable this process to be accelerated. The
Board currently expects that, following the publication of the 2022
Accounts and the 2023 Interim Accounts, trading in the Ordinary
Shares on AIM will remain suspended until such time as either a n
ew AIM admission document in connection with the Potential
Transaction is published or an announcement is released confirming
that the Potential Transaction is not being progressed and the
Company is no longer contemplating undertaking a reverse
takeover.
Discussions with the Company's major shareholders
Over the last couple of months, the Board has reappraised the
strategic opportunities for the Company. This exercise has resulted
in the Company terminating the Proposed Transactions and entering
to discussion with Midwestern on the Potential Transaction. The
Board believe that the Company's existing and proposed further
investment in ELI has potential to generate significant value for
shareholders, as announced on 8 August 2023, but it will only do so
once ELI is refinanced. This will be achieved by using the proceeds
of an alternative loan facility which, as announced earlier this
morning, the Company is putting in place and is now at a very
advanced stage.
The Board has engaged with the Company's three largest
shareholders, being: i) funds managed by Toscafund Asset Management
LLP (75.00 per cent. shareholding in the Company); ii) Midwestern
(13.18 per cent. shareholding); and iii) Oisin Fanning, the
Company's Chief Executive Officer (2.11 per cent. shareholding).
All three shareholders (who together own 90.29 per cent. of the
Company's issued shares) have confirmed in writing that they are
supportive of the Company's revised strategy, and they support the
renegotiation of the transaction with Midwestern, including the
termination of the Proposed Transactions and the Company exploring
the Potential Transaction with Midwestern.
The Company will make further announcements as required.
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
James Sinclair-Ford
John Prior
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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October 09, 2023 12:00 ET (16:00 GMT)
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