Petroleum Africa
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Friday, February 19, 2021
PetroNor announced that its net indirect interest in PNGF Sud, PetroNor’s core asset, will increase from 10.5% to 16.83% following an $18 million contingent acquisition of all of Symero shares in Hemla Africa Holding AS (HAH) (the Symero Transaction), and a court ruling in Congo related to parts of MGI International S.A.’s (MGI) indirect share in PNGF Sud (the MGI Ruling).
Symero’s shares in HAH represent 29.293% of all issued and outstanding shares in HAH, and following completion of the Symero Transaction, the Company will own 100% of all issued and outstanding shares in HAH.
Furthermore, PetroNor announced that it is considering raising $50 to 60 million of new equity (the Contemplated Equity Financing), whereof $32 to 42 million in cash and $18 million as in-kind consideration for the Symero Transaction. The Company has mandated Arctic Securities AS, Pareto Securities AS and SpareBank1 Markets AS as Joint Managers and Bookrunners to arrange a series of equity investor meetings and calls commencing on 19 February 2021. Petromal Sole Proprietorship LLC and related group companies (Petromal), the Company’s main shareholder owning 38.28% of all issued and outstanding shares in the Company, has committed to subscribe for its pro-rata share of the Contemplated Equity Financing, representing a subscription of approximately $19 to 23 million.
Eyas Alhomouz, Chairman, PetroNor: “These are value accretive transactions that materially increase PetroNor’s production, reserves and cash flow. The opportunity to obtain a greater interest in PNGF Sud is wholly in-line with our stated growth strategy in terms of getting exposure to more economically robust cash flow and low-risk upside. PNGF Sud is already the stable foundation of our Company and its therefore an asset we know intimately well. The asset is operated by Perenco, a leading operator of mid- and late life assets in emerging markets with a proven track record of continuous increase in reserves and production and cost reductions to deliver higher margin barrels. The transactions represent an exciting development for PetroNor complementing the other activities within the portfolio that are gathering momentum; notably the delayed completion of the Aje transaction, and our approval for the Guinea Bissau transaction. Post completion of these various items, we will have successfully assembled a diverse portfolio of assets in various stages of development, giving PetroNor and its shareholders exposure to multiple catalysts through a fully funded and active work programme that will begin ramping up later this year. Our major shareholders have demonstrated firm confidence in the Company, its strategy and outlook through its commitment to the equity financing, and we look forward to broadening our shareholder base and wider market appeal through that process.”
Subject to certain condition precedents, PetroNor will acquire Symero’s shares in HAH representing 29.293% of the share capital of HAH, equivalent to a 4.93% indirect interest in PNGF Sud, for a consideration of $18 million to be paid in-kind through issuance of new shares in PetroNor at a price equivalent to the price in the Contemplated Equity Financing. Following the Symero Transaction, PetroNor will own 100% of HAH.
The Symero Transaction is subject to successful completion of the Contemplated Equity Financing. Furthermore, as the Symero Transaction is a related party transaction, the transaction is subject to approval by ordinary resolution at an extraordinary general meeting of the Company (the EGM). An ordinary resolution under the Australian Corporations Act requires approval by simple majority of those persons attending the meeting (in person, proxy or representative) and being eligible to vote at the meeting.
The EGM is expected to be held on or about 5 April 2021, following the publication of an independent expert report as required pursuant to the Australian Corporations Act. The Expert Report will be attached to the calling notice for the EGM. The shareholders’ approval required will include an approval in accordance with Chapter 2E of the Australian Corporations Act of 2001 as a related party transaction and potentially a separate approval under section 611 item 7 of the Australian Corporations Act of 2001 to permit an increase in the voting power in the Company that would exceed the thresholds. As an Australian domiciled company, PetroNor has been granted an exemption from the Norwegian take-over rules from the Oslo Stock Exchange.
The Company has obtained voting undertakings for approval of the Symero Transaction from Petromal, members of the Company’s Board of Directors and executive management, representing 19.9% of the existing shares (193,361,392 shares). While additional voting undertakings cannot be provided for regulatory reasons, Petromal has further confirmed its strong support of the Symero Transaction and the Contemplated Equity Financing. As the Symero Transaction is considered a transaction with related parties, 34.8% of the shareholders are not eligible to vote.
Subject to shareholder approval and satisfaction of all conditions precedent, the Symero Transaction is expected to close by end of April 2021.
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