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Oao - Oando Plc - Acquisition, Re-organisation And Cautionary Announcement

Release Date: 06/06/2007 14:55:01      Code(s): OAO
OAO - Oando Plc - Acquisition, re-organisation and cautionary announcement      
Oando Plc                                                                       
(Incorporated in Nigeria and                                                    
registered as an external company in South Africa)                              
Registration number: RC 6474                                                    
(External company registration number: 2005/038824/10)                          
Share code on the JSE Limited: OAO                                              
Share code on the Nigerian Stock Exchange: UNTP                                 
ISIN: NG00000UNTP0                                                              
("Oando" or "the Company")                                                      
Acquisition of minority interests in certain subsidiaries, re-organisation of   
marketing business and cautionary announcement                                  
1.    Introduction                                                              
Shareholders are advised that Oando will be posting shareholder documentation on
7 June 2007 relating to proposals in terms of which Oando will:                 
-     acquire the interests Ocean and Oil Investments Limited ("OOI"), Oando`s  
major shareholder, in certain jointly held subsidiaries;                        
-     acquire the interests of certain minority shareholders in Gaslink         
Nigeria Limited ("Gaslink").                                                    
Shareholders are further advised that Oando will post shareholder documentation 
relating to an internal re-organisation of the Company`s downstream petroleum   
marketing business on or about 13 June 2007.                                    
Under Nigerian law the acquisitions and the internal re-organisation will be    
effected by way of two separate schemes of arrangement.                         
2.    Scheme of arrangement involving OOI and Gaslink                           
2.1   Rationale                                                                 
The Board and management of Oando are committed to achieving world-class        
standards of corporate governance. To this end, the ownership structure and     
management of Oando`s subsidiaries was reviewed to identify areas in which      
conflicts of interest might arise. The following subsidiaries, which are 51%    
held by Oando and 49% held by OOI (save for Oando Production and Development    
Company Limited which is 39% held by OOI), Oando`s single largest shareholder   
with a 23.66% equity holding, were identified as having the potential to        
generate conflicts of interest:                                                 
-     Oando Supply and Trading Limited;                                         
-     Oando Trading (Bermuda) Limited;                                          
-     Oando Production and Development Company Limited;                         
-     Oando Energy Services Limited; and                                        
-     Oando Exploration and Production Company Limited.                         
Potential conflicts could arise for the following reasons:                      
-     OOI owns a direct equity stake in Oando as well as in the jointly held    
subsidiaries;                                                                   
-     four directors of OOI sit on the board of Oando as well as the boards of  
the jointly held subsidiaries; and                                              
-     Oando has management control of the jointly held subsidiaries and         
transacts a considerable amount of business with said subsidiaries.             
Accordingly, it is the view of the Board that, under the current structure OOI`s
interests are not 100% aligned with the interests of Oando`s other shareholders 
as OOI disproportionately receives the benefits that arise out of business      
decisions pertaining to the jointly held subsidiaries where Oando and its other 
shareholders bear a disproportionate share of the associated costs.             
It has therefore been proposed that Oando acquire the entire equity holding of  
OOI in each of the jointly held subsidiaries such that upon conclusion of the   
scheme of arrangement such subsidiaries will be wholly owned by Oando.          
Similarly, Oando holds a 59.96% equity stake in Gaslink and has been in         
discussions with the other shareholders of Gaslink to acquire the entire issued 
share capital of Gaslink. Gaslink operates in a high margin sector of the energy
spectrum and revenue from its operations will provide a diversified, increased  
and sustainable profitability for shareholders of Oando. Twelve of the minority 
shareholders have agreed to dispose of their equity stakes in Gaslink which will
be acquired by Oando thereby increasing the Company`s equity holding in Gaslink 
to 98% on implementation of the scheme of arrangement.                          
2.2   Consideration                                                             
Under the scheme of arrangement, it is proposed that that Oando acquire from    
OOI:                                                                            
-     2 450 000 ordinary shares of Naira 1.00 each in Oando Supply and Trading  
Limited in exchange for the issue of 9 102 864 ordinary shares of 50 kobo each  
in Oando ("Oando shares");                                                      
-     5 880 ordinary shares of US$1.00 each in Oando Trading (Bremuda) Limited  
in exchange for the issue of 33 671 408 Oando shares;                           
-     4 410 000 ordinary shares of Naira 1.00 each in Oando Production and      
Development Company Limited in exchange for the issue of 42 350 579 Oando       
shares;                                                                         
-     2 450 000 ordinary shares of Naira 1.00 each in Oando Energy Services     
Limited in exchange for the issue of 6 998 870 Oando shares; and                
-     2 450 000 ordinary shares of Naira 1.00 each in Oando Exploration and     
Development Company Limited in exchange for the issue of 26 054 272 Oando       
shares.                                                                         
Pursuant to the scheme of arrangement OOI will hold approximately 34% of Oando`s
enlarged issued share capital.                                                  
In addition, Oando will acquire 635 916 333 ordinary shares of 50 kobo each from
the twelve transacting minority shareholders of Gaslink in exchange for the     
issue of 63 591 633 Oando shares.                                               
Application for the listing of the additional ordinary shares will be made in   
due course.                                                                     
2.3   Conditions precedent to the scheme of arrangement                         
The scheme of arrangement is subject, inter alia, to the following conditions   
precedent:                                                                      
-     the ratification, with or without modification, by the holders of Oando   
shares, which ratification shall be evidenced by a resolution of a majority     
representing (75%) in value of the votes exercisable by holders of Oando shares 
present and voting either in person or by proxy at a Court convened meeting; and
-     the Court sanctioning the scheme.                                         
2.4   Other proposals                                                           
At the Court convened meeting Oando shareholders will also be asked to approve: 
-     an increase in the authorised share capital of Oando by the creation of   
200 000 000 Oando shares;                                                       
-     amend the articles of association of Oando to reflect the increased       
authorised share capital;                                                       
-     amend the articles of association of Oando to enable the Company to       
receive consideration for the issuance of shares in either cash and/or valuable 
consideration, other than cash.                                                 
Such resolutions will need to registered by the Registrar of Companies in South 
Africa in order to be effective.                                                
3.    Scheme of arrangement involving Oando Marketing Limited                   
3.1   Rationale and terms                                                       
Oando`s downstream marketing unit, unlike its other lines of business, does not 
exist as a separate legal entity that is 100% owned by Oando. This limits       
Oando`s options for accessing the capital markets to raise capital for its      
marketing operations. Oando therefore wishes to undertake an internal re-       
organisation in terms of which it will transfer its downstream petroleum        
marketing business to a newly created legal entity, Oando Marketing Limited     
("Oando Marketing"), in exchange for the entire issued share capital of Oando   
Marketing. Following implementation of the scheme of arrangement, Oando         
Marketing will commence business as a wholly-owned subsidiary of Oando.         
3.2   Conditions precedent to the scheme of arrangement                         
The scheme of arrangement is subject, inter alia, to the following conditions   
precedent:                                                                      
-     the ratification, with or without modification, by the holders of Oando   
shares, which ratification shall be evidenced by a resolution of a majority     
representing (75%) in value of the votes exercisable by holders of Oando shares 
present and voting either in person or by proxy at a Court convened meeting; and
-     the Court sanctioning the scheme.                                         
4.    Requirements of the JSE Limited                                           
Shareholders are advised that the documentation relating to the two schemes of  
arrangement have not been approved by the JSE Limited ("JSE"). At the time of   
the secondary listing of Oando on the JSE, Oando undertook to comply in full    
with the Listings Requirements of the JSE ("Listings Requirements"), save where 
such requirements are in direct contravention of the Companies and Allied       
Matters Act requirements or any associated legislation or regulation. The scheme
of arrangement involving Oando and OOI and certain shareholders of Gaslink      
comprises transactions which require compliance with the Listings Requirements, 
as follows:                                                                     
-     OOI holds 23.66% of the issued shares in Oando and is accordingly a       
related party to Oando;                                                         
-     one of the twelve transacting shareholders, Forte Properties and          
Investments Limited, holds 12.59% of Gaslink and is accordingly a related party 
to Oando; and                                                                   
-     the consideration shares to be issued to OOI by Oando represent 20.65% of 
Oando`s current issued share capital and accordingly this portion of the        
transaction is a Category 2 transaction.                                        
     Accordingly, the JSE has ruled that:                                       
-     the scheme document relating to a scheme of arrangement involving Oando   
and OOI and certain shareholders of Gaslink must be submitted to the JSE for    
review prior to the scheme meeting;                                             
-     the JSE may require Oando to post a supplementary circular to shareholders
containing such additional Category 2 and related party information as it may   
deem necessary;                                                                 
-     Oando remain under cautionary until pro forma financial statements        
together with a reporting accountants` report thereon produced in accordance    
with the Listings Requirements has been submitted to the JSE and the financial  
effects have been published, which must occur prior to the scheme meeting;      
-     OOI be precluded from voting on the resolution pertaining to the to the   
acquisition by Oando of OOI`s stake in the jointly held subsidiaries;           
-     any Gaslink minority shareholders who are also shareholders of Oando be   
precluded from voting on the resolution pertaining to acquisition by Oando of   
their interests in Gaslink;                                                     
-     Oando appoint an independent expert acceptable to the JSE to provide a    
fair and reasonable opinion on the related party transactions which opinion must
be submitted and approved prior to the implementation of the scheme of          
arrangement;                                                                    
-     Oando comply with the working capital requirements of the JSE; and        
-     should any matter come to the attention of the JSE in addressing the above
matters that in the opinion of the JSE warrant it, the JSE reserves it right to 
require a further shareholder meeting to approve the transaction prior to       
implementation of the scheme of arrangement.                                    
The scheme of arrangement involving Oando Marketing is an internal re-          
organisation and does not require JSE approval.                                 
5.    Salient dates and times                                                   
                                                                     2007       
Last day to lodge forms of proxy for the Court                                  
ordered meetings by close of business                   Wednesday, 27 June      
Court ordered meetings to be held                                               
at 13h00 and 14h00, respectively                         Thursday, 28 June      
Registration of special resolutions with the Registrar                          
of Companies                                               Friday, 29 June      
Results of Court ordered meetings released on SENS         Friday, 29 June      
Results of Court ordered meetings published in                                  
the South African press                                     Monday, 2 July      
Court to sanction schemes of arrangement                 Wednesday, 4 July      
Oando Marketing shares issued to Oando                   Thursday, 26 July      
Listing of new Oando shares on the JSE                 Wednesday, 8 August      
Notes:                                                                          
1.     These dates and times are subject to change. Any such change will be     
released on SENS and published in the South African press.                      
2.     All dates and times referred to in this announcement are South African   
dates and times.                                                                
6.     Financial effects and cautionary announcement                            
Oando is currently working on the financial effects of the transaction and will 
make a further announcement setting out such financial effects in due course.   
Shareholders are advised to exercise caution when trading in their Oando shares 
until a further announcement is made in this regard.                            
Lagos                                                                           
6 June 2007                                                                     
Sponsor:                                                                        
Deutsche Securities (SA) (Proprietary) Limited                                  
Date: 06/06/2007 14:55:00 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  



                                        
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