Savannah Announces Proposed Placing & Subscription to Raise $65M

Source: www.gulfoilandgas.com 12/30/2021, Location: Africa

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter in Africa, announces its intention to conduct an accelerated bookbuild (the "Bookbuild") by way of a placing (the "Placing") with institutional and other investors (the "Placees") and subscription by certain of the directors ("Subscription") to raise gross proceeds of approximately US$65 million through the issue of new ordinary shares of 0.001 each in the Company ("Ordinary Shares").

It is intended that as part of the Subscription five of the Board's six directors will subscribe for an aggregate amount of 2.8 million, including a subscription of 2.2 million by the Company's CEO, Andrew Knott (via a wholly-owned entity).

Up to approximately 258,397,932 new Ordinary Shares (the "Placing Shares") will be placed at the pre-suspension share price of 19.35 pence per Ordinary Share (the "Placing Price") and, at this price, are expected to represent approximately 20.6 per cent. of the Company's issued share capital, as enlarged by the Placing and Subscription;

The Bookbuild will open with immediate effect following the release of this announcement and is expected to close by no later than 4.00 p.m. GMT today. A further announcement confirming the closing of the Bookbuild, the number of new Ordinary Shares to be issued as part of the Placing and Subscription and the amount raised will then be issued by the Company;

The Company intends to publish its AIM admission document (the "Admission Document") in respect of, inter alia, the Exxon Acquisition and the PETRONAS Acquisition as defined in its announcements of 13 December 2021, and the Placing and Subscription, on or around 31 December 2021, following which the Company will seek restoration to trading on AIM;

finnCap Ltd and Panmure Gordon (UK) Limited are acting as joint bookrunners (together, the "Joint Bookrunners") in relation to the Placing. Strand Hanson Limited is acting as Nominated and Financial Adviser to the Company.

Andrew Knott, CEO of Savannah, said:
"The US$65 million we are raising is intended, inter alia, to allow Savannah to progress our planned acquisitions of ExxonMobil's and PETRONAS's assets in Chad and Cameroon. I am delighted by the support we have received from our shareholder base for these transactions and look forward to providing further updates in due course."

Summary of the Proposed Acquisitions
On 13 December 2021, the Company announced that it had entered into agreements to acquire ExxonMobil's and PETRONAS's interests in the Doba Oil Project and the Chad-Cameroon ETS for considerations of US$360 million (with a further oil price contingent payment of up to US$50 million), subject to other adjustments, and US$266 million, subject to working capital and customary adjustments, respectively.

Completion of the Exxon Acquisition and the PETRONAS Acquisition are each conditional upon, inter alia, shareholder approval at a general meeting (notice of which will be sent to shareholders upon publication of the Company's Admission Document), the waiver of pre-emption rights by other participants in the Doba Consortium and approval by the Ministry of Petroleum and Energy of the Republic of Chad. Completion of the PETRONAS Acquisition also requires receipt of merger approval from the CEMAC Council for Competition. The Exxon Acquisition and the PETRONAS Acquisition are not inter-conditional.

Under the terms of the sale and purchase agreement in respect of the Exxon Acquisition, the Company will acquire a 40 per cent. operated interest in the Doba Oil Project, a 40.19 per cent. interest in the Chad Pipeline Company and a 41.06 per cent. interest in the Cameroon Pipeline Company. Under the terms of the sale and purchase agreement in respect of the PETRONAS Acquisition, the Company will acquire a 35 per cent. interest in the Doba Oil Project, a 30.16 per cent. interest in the Chad Pipeline Company and a 29.77 per cent. interest in the Cameroon Pipeline Company.

In aggregate, Savannah will acquire, assuming Completion of both the Exxon Acquisition and the PETRONAS Acquisition:
a 75.00 per cent. participating interest in the Doba Oil Project which comprises seven producing oil fields with 186.5 MMstb of 2P Reserves and 2C Resources and which produced an average gross daily production of 33.7 Kbopd (net 25.3 Kbopd) in 2020;
a 70.34 per cent. equity interest in the company which owns the 178 km section of the Chad-Cameroon ETS that runs from the Doba Oil Project to the Cameroon border (the "Chad Pipeline Company"); and
a 70.83 per cent. equity interest in the company which owns the 903 km section of the Chad-Cameroon ETS that runs from the border, through Cameroon and the associated export facilities, including the Kome Kribi 1 FSO (the "Cameroon Pipeline Company").

Due to their size and nature, both the Exxon Acquisition and the PETRONAS Acquisition individually constitute reverse takeover transactions pursuant to AIM Rule 14.

Funding the Exxon Acquisition and the PETRONAS Acquisition
The considerations payable for the Exxon Acquisition and the PETRONAS Acquisition will be funded by a combination of the Debt Financing, Placing, Subscription and the Junior Loan Facility, further details of which are set out in the appendices of this announcement and in the Company's Admission Document to be published.

The Placing is not conditional on the Exxon Acquisition or the PETRONAS Acquisition completing.

Completion of the Acquisitions
Completion of the Exxon Acquisition is conditional upon, inter alia, shareholder approval at a general meeting (notice of which will be sent to shareholders upon publication of the Company's Admission Document) and Ministerial Consent, which is expected to be received by March 2022. The Exxon Acquisition is also conditional upon an IT systems transition process, which is expected to take approximately six months from the signature of the Exxon SPA. Therefore, completion of the Exxon Acquisition is expected to take place during or around June 2022.

Assuming completion of the Exxon Acquisition (such that all conditions precedent are satisfied), the Company's existing quotation on AIM will be cancelled and re-admission of the then group (including the entities acquired pursuant to the PETRONAS Acquisition to the extent the PETRONAS Acquisition has completed), as enlarged by the Exxon Acquisition, will become effective.

Completion of the PETRONAS Acquisition is conditional upon, inter alia, Shareholder approval at a general meeting (notice of which will be sent to shareholders upon publication of the Company's Admission Document) and Ministerial Consent, which is expected to be received by March 2022. Completion of the PETRONAS Acquisition also requires receipt of merger approval from the CEMAC Council for Competition, and such approval can take up to six months to be determined, following submission of the notification by Savannah Energy Chad Limited, which is expected to be made shortly after publication of the Company's Admission Document. Therefore, should the CEMAC Council for Competition take the full six months to provide its approval, completion of the PETRONAS Acquisition would be expected to take place during or around June 2022.

Assuming Completion of the PETRONAS Acquisition (such that all conditions precedent are satisfied), the Company's existing quotation on AIM will be cancelled and re-admission of the then group (including the entities acquired pursuant to the Exxon Acquisition, to the extent the Exxon Acquisition has completed), as enlarged by the PETRONAS Acquisition, will become effective.

On completion of each of the Exxon Acquisition and the PETRONAS Acquisition, the Company shall be required to publish a supplementary admission document pursuant to the AIM Rules.

Current Trading
The Nigerian Assets year-to-date cash collections for the period ended 13 December 2021 amount to US$201.3 million. This is 7 per cent. higher than FY 2020 cash collections of US$187.4 million and 20 per cent. higher than FY 2020 cash collections when an adjustment is made for the non-recurring US$20 million contract re-negotiation payment received from Lafarge Africa in FY 2020.

Shareholder Returns Policy
The Directors view Savannah as a high cashflow growth company and expect to re-invest the majority of internally generated post-debt service cashflows in organic and in-organic growth projects consistent with the Company's corporate strategy. However, the Directors also recognise the importance of paying a regular and growing dividend to Shareholders. Over the course of the next 12 months, the Company expects to formalise and announce a dividend policy centred around its underlying free cashflow generation, with the anticipation being that a minimum dividend of US$10 million would be paid in H1 2023 in respect of full year 2022.

Additional Information on the Placing and the Bookbuild
The Bookbuild will open with immediate effect following this announcement. The Placing Shares will be placed at the Placing Price. The final number of Placing Shares will be determined following the close of the Bookbuild. The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares. It is expected that the Placing Shares will be admitted to trading on AIM on or around 7 January 2022.

The timing of the closing of the Bookbuild and allocations of Placing Shares is at the discretion of the Joint Bookrunners and the Company. The details of the results of the Placing will be announced as soon as practicable after the close of the Bookbuild. Your attention is drawn to the detailed terms and conditions of the Placing described in Appendix I and the risk factors detailed in Appendix III (the "Risk Factors") (which both form part of this announcement).

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this announcement in its entirety (including the Appendices) and to be making such offer on the terms and subject to the conditions in it, and to providing the representations, warranties and acknowledgements contained in the Appendices.

Please note that Appendices II, III and IV of this announcement, together with the Definitions and Glossary sections which follow, are extracts from the Pathfinder Admission Document, which has been shared with certain investors, and, therefore, remains in draft form and will be subject to finalization upon close of the Bookbuild.


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