CALGARY, May 30, 2013 /CNW/ - Oando Energy Resources Inc. ("OER" or the "Company") (TSX: OER), a company focused on oil exploration and production in Nigeria, today
announced that it had entered into a loan agreement ("Loan Agreement") with Oando Plc ("Oando") to refinance and supplement the loan extended by Oando to OER on
December 20, 2012. OER and Oando also executed a deed of repayment ("Repayment Deed") permitting OER to repay amounts owing under the Loan Agreement by the
issuance of common shares of OER. Oando owns 94.6% of the common
shares of OER ("Shares"), on a non-diluted basis.
"This refinancing of our original loan from Oando Plc underscores the
strong financial backing and ongoing support that OER continues to
receive from its majority shareholder," said Pade Durotoye, CEO of
Oando Energy Resources. "The financial flexibility afforded to us by
this relationship is a key differentiator for OER, as it provides our
young company with the stability and means to pursue an ambitious
growth agenda within Nigeria."
Pursuant to the Loan Agreement, Oando provided a facility ("Facility") to OER of up to US$386,000,000, bearing an annual interest rate of
5%. Of the Facility, US$362,000,000 plus accrued interest is required
to be repaid by September 30, 2013 while the remainder of the Facility
is required to be repaid on or before December 31, 2013.
Pursuant to the Repayment Deed, OER is permitted to elect to repay the
Facility by the issuance of Shares, provided that all regulatory
approvals have been obtained, at the earliest of the following events:
(i) a receipt has been issued for a final prospectus ("Final Prospectus") in respect of an offering of Shares (or securities convertible into
Shares at no additional cost to the subscriber thereof);
(ii) completion of the proposed acquisition by OER of the Nigerian oil
and gas assets of ConocoPhillips Company ("Acquisition"), as announced by OER in December 2012; and (iii) termination of the
Acquisition. Should OER elect to repay the Facility by the issuance of
Shares, the price per Share will be (i) the price per Share (or
security convertible into a Share at no additional cost to the
subscriber) identified in the Final Prospectus (as adjusted, if
necessary, to comply with maximum discount rules of the TSX), provided
that the Acquisition has not been terminated; or (ii) in all other
circumstances, the 5-day VWAP at the time of election by OER that it
wishes to repay the Facility by the issuance of Shares. The election
to repay the Facility by the issuance of Shares can be exercised no
later than five business days prior to September 30, 2013. In the
event that the election by OER to repay the Facility by the issuance of
Shares would result in Oando having an ownership interest in OER that
is higher than Oando's current ownership interest of 94.6% (on a
non-diluted basis), the number of Shares to be issued by OER will be
reduced so as to ensure that Oando's stake in OER does not exceed such
current ownership interest and the balance, if any, of amounts owing
under the Loan Agreement will be payable in cash.
By way of example, if (i) the Facility had been provided, (ii) OER were
permitted to elect to repay the Facility by the issuance of Shares, and
(iii) OER made such election on today's date, OER would need to issue
approximately 263,368,815 Shares to Oando as repayment of the Facility
(based on the closing price of the Shares on the TSX on May 28, 2013
and assuming no interest had accrued). However, pursuant to the terms
of the Repayment Deed, OER would not be permitted to repay the Facility
by the issuance of Shares on today's date and would instead be required
to repay it in cash.
The Corporate Governance Committee of OER, comprising independent
directors unrelated to Oando, unanimously recommended approval of the
Loan Agreement and Repayment Deed to the board of OER who then approved
it (with directors affiliated with Oando abstaining from the vote).
Depending on the number and price of Shares issued by OER to Oando as
repayment of the Facility under the Repayment Deed, such issuance, if
any, could (i) provide consideration to OER in excess of 10% of OER's
market capitalization; and/or (ii) constitute a private placement for
an aggregate number of Shares greater than 25% of the number of OER's
current outstanding Shares, on a non-diluted basis, at a price per
Share less than the market price of Shares on the date hereof; and/or
(iii) constitute a private placement to insiders for greater than 10%
of the number of OER's current outstanding Shares, on a non-diluted
basis, each of which requires shareholder approval under
Sections 501(c), 607(g)(i) and 607(g)(ii), respectively, of the TSX
Company Manual. However, Section 604(f) of the TSX Company Manual
provides an exemption from such shareholder approval requirements where
there is a holder of at least 90% of a listed issuer's shares and the
listed issuer issues a press release at least 10 business days in
advance of the closing of the transaction disclosing the material terms
of the transaction and that the issuer has relied upon this exemption.
As Oando owns 94.6% of OER's Shares, OER intends to rely on this
exemption. The effective date of the Repayment Deed will not occur
until the expiry of 10 business days from the date hereof.
About Oando Energy Resources Inc. (OER)
OER currently has a broad suite of producing, development and
exploration properties in the Gulf of Guinea (predominantly in Nigeria)
with current production of approximately 5,205 bopd from the Abo Field
in OML 125 and the Ebendo Field in OML 56. OER has been specifically
structured to take advantage of current opportunities for indigenous
companies in Nigeria, which currently has the largest population in
Africa, and one of the largest oil and gas resources in Africa.
SOURCE: Oando Energy Resources Inc.
For further information:
Pade Durotoye, CEO
Oando Energy Resources Inc.
+1403 561 1713
Head Investor Relations
Oando Energy Resources Inc.
+1403 560 7450
Jeremy Dietz/David Feick
+1 403 218 2833