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 consid- eration 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 suffi- cient 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 re- garding 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 com- panies 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 out- standing 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 approxi- mately 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 sharehold- ers, 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 re- paid) 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. Conse- quently, 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 encourag- ing. I look forward to updating shareholders with continued progress.”
Source: Press Release
The post San Leon rejects merger plans with Midwestern over OML 18 appeared first on Energy News | Oil and Gas News.