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Scl - Sacoil Holdings Limited - Proposed Transactions And Salient Dates And

Release Date: 03/09/2010 16:05:03      Code(s): SCL
SCL - SacOil Holdings Limited - Proposed transactions and salient dates and     
times of the proposed transactions                                              
SacOil Holdings Limited                                                         
Incorporated in the Republic of South Africa                                    
Registration number: 1993/000460/06                                             
Share code: SCL                                                                 
ISIN code: ZAE000127460                                                         
("SacOil" or "the company")                                                     
Proposed transactions and salient dates and times of the proposed transactions  
1. Proposed transactions                                                        
SacOil shareholders ("Shareholders") are referred to the detailed announcement  
published on SENS on  26 July 2010 ("the Announcement"), in which Shareholders  
were advised of the following:                                                  
- that the proposed investment by SacOil in oil concession rights (the "Block 3 
Rights") pertaining to Block 3, Albertine Graben, Democratic Republic of the    
Congo ("DRC") and oil concession rights pertaining to Block 1, Albertine Graben,
DRC has been restructured (the "Restructure"). The Restructure is a related     
party transaction;                                                              
- that Metropolitan Asset Managers Limited ("METAM"), a related party, had      
signed an irrevocable undertaking to subscribe for 46 000 000 new SacOil shares 
at an issue price of 50 cents per share ("Specific Issue to METAM"); and        
- that the date for fulfilment or waiver of the conditions precedent to the     
Farmout Agreement that SacOil concluded on 10 May 2010 ("Farmout Agreement") in 
terms of which SacOil would acquire a 55 per cent participating interest in the 
gas exploration permit for the Chaal permit area ("the Chaal Gas Permit         
Transaction") had been extended until 31 January 2011.                          
Shareholders are advised that in addition to the above, SacOil has concluded the
following transactions:                                                         
- the issue of 8 343 216 SacOil shares to GVM Metals Administration (South      
Africa) (Proprietary) Limited ("GVM"), a related party, at an issue price of 30 
cents per SacOil share ("Specific Issue to GVM"); and                           
- the conclusion of corporate finance advisory mandates with Lonsa (Proprietary)
Limited ("Lonsa Mandates") which is a related party transaction.                
The Restructure, the Chaal Gas Permit Transaction, the Specific Issue to METAM, 
the Specific Issue to GVM and the Lonsa Mandates are collectively referred to as
the Transactions.                                                               
2. Specific Issue to GVM                                                        
On 5 July 2010 SacOil signed a settlement agreement with GVM to issue 8 343 216 
SacOil shares to GVM at an issue price of 30 cents per SacOil share and an      
aggregate issue price of R2 502 964, in full and final settlement of a loan     
owing by SacOil to GVM in relation to restructuring expenses paid for on behalf 
of SacOil during 2008. The SacOil shares were issued to GVM and listed on the   
JSE on 29 July 2010 in terms of a general authority granted to the directors by 
Shareholders at the last annual general meeting held on 27 November 2009.       
2.1 Related party transaction                                                   
R Linnell, the Non-executive Chairman of SacOil, is also a director of GVM, a   
wholly owned subsidiary of Coal of Africa Limited ("Coal of Africa"), and is a  
director and a minority shareholder of Coal of Africa. Accordingly, the Specific
Issue to GVM is to a related party and qualifies as a specific issue of shares  
for cash in terms of Section 5 of the JSE Listings Requirements and requires    
ratification by Shareholders in a general meeting.                              
As the price at which the SacOil shares are being issued to GVM of 30 cents per 
SacOil share is at a 11 per cent premium to the 30-day volume weighted average  
price of the SacOil shares of 27 cents per SacOil share on 2 July 2010 (being   
the day prior to the signature date of the settlement agreement between GVM and 
SacOil) no fairness opinion is required in respect of the Specific Issue to GVM 
in terms of paragraph 5.51(f) of the JSE Listings Requirements.                 
3. Lonsa Mandates                                                               
SacOil entered into corporate finance advisory mandates dated 22 February 2008  
and 17 May 2010 in terms of which Lonsa acts as corporate finance adviser to    
SacOil in respect of the proposed acquisition by SacOil of the entire issued    
share capital and shareholder loan accounts of SacOil (Proprietary) Limited     
("Initial SacOil Transaction"), details of which were contained in the circular 
that was posted to Shareholders on 24 October 2008 ("Initial Circular"), the    
Restructure and the Chaal Gas Permit Transaction. Lonsa introduced, structured, 
negotiated and project managed the Initial SacOil Transaction, the Restructure  
and the Chaal Gas Permit Transaction on behalf of SacOil and has charged a cash 
fee for its services. Lonsa is entitled to a contingent success fee equivalent  
to 2 per cent of the proposed transaction value of assets acquired and 2.5 per  
cent of the gross value of the equity raised.                                   
Shareholders were advised in the Initial Circular of Lonsa`s role and the fees  
payable, when the Initial SacOil Transaction was approved by Shareholders in    
general meeting on 21 November 2008.                                            
3.1 Related party transaction                                                   
R Vela, the Chief Executive Officer of SacOil, is also a director and the       
controlling shareholder of Lonsa and the Lonsa Mandates are, therefore, related 
party transactions in terms of Section 10 of the JSE Listings Requirements.     
A fairness opinion is required in respect of the Lonsa Mandates.                
4. Fairness opinions                                                            
The board appointed Mazars Corporate Finance (Proprietary) Limited as the       
independent expert to consider whether the Restructure and the Lonsa Mandates   
are fair to Shareholders. Mazars Corporate Finance (Proprietary) Limited opined 
that the Restructure and the Lonsa Mandates are fair to Shareholders.           
5. Pro forma financial effects                                                  
The table below sets out the unaudited pro forma financial effects of the       
Transactions on SacOil`s basic earnings, headline earnings, net asset value and 
tangible net asset value per SacOil share.                                      
The unaudited pro forma financial effects have been prepared to illustrate the  
impact of the Transactions on the audited, published financial information of   
SacOil for the year ended 28 February 2010, had the Transactions occurred on  1 
March 2009 for income statement purposes and on 28 February 2010 for balance    
sheet purposes.                                                                 
The pro forma financial effects have been prepared using accounting policies    
that comply with International Financial Reporting Standards and that are       
consistent with those applied in the audited, published financial statements of 
SacOil for the year ended 28 February 2010.                                     
The pro forma financial effects of the following have been shown separately in  
the table below as these transactions are separate resolutions and are being    
voted on by shareholders separately:                                            
- the Restructure;                                                              
- the Chaal Gas Permit Transaction;                                             
- the Specific Issue to METAM; and                                              
- the Specific Issue to GVM.                                                    
The pro forma financial effects of the Lonsa Mandates are incorporated into the 
pro forma financial effects of each of the Restructure, the Chaal Gas Permit    
Transaction and the Specific Issue to METAM as the Lonsa Mandates form part of  
the transaction costs relating to the Restructure, the Chaal Gas Permit         
Transaction and the Specific Issue to METAM and therefore cannot be shown       
separately.                                                                     
For purposes of the pro forma financial effects set out below, Shareholders are 
specifically referred to the definitions included in the Announcement.          
The unaudited pro forma financial effects set out below are the responsibility  
of the Directors and have been prepared for illustrative purposes only and      
because of their nature may not fairly present the financial position, changes  
in equity, results of operations or cash flows of SacOil after the Transactions.
After the                                                                 
                                                                        Chaal   
                                                                          Gas   
                               Before the             After            Permit   
Transactions 1     Restructure 2     Transaction 3   
Earnings/(loss) and diluted                                                     
earnings/(loss) per SacOil                                                      
share (cents)                         0.72            (1.54)            (0.17)  
Headline and diluted headline                                                   
earnings/(loss) per SacOil                                                      
share (cents)                         0.95            (1.41)              0.06  
Net asset value per SacOil                                                      
share (cents)                        13.83             66.80             12.94  
Tangible net asset value per                                                    
SacOil share (cents)                 13.83              1.72           (14.37)  
Weighted average number of                                                      
SacOil shares in issue (`000)      313 292           522 748           313 292  
Number of SacOil shares in                                                      
issue (`000)                       313 292           522 748           313 292  
                                                 After the                      
Specific          After the   
                                                  Issue to     Specific Issue   
                                                   METAM 4           to GVM 5   
Earnings/(loss) and diluted                                                     
earnings/(loss) per SacOil share (cents)               0.42               0.70  
Headline and diluted headline                                                   
earnings/(loss) per SacOil share (cents)               0.62               0.93  
Net asset value per SacOil share (cents)              18.25              14.25  
Tangible net asset value per SacOil share (cents)     18.25              14.25  
Weighted average number of                                                      
SacOil shares in issue (`000)                      359 292            321 635   
Number of SacOil shares in issue (`000)             359 292            321 635  
After the                
                                                  Transactions 6     % Change   
Earnings/(loss) and diluted                                                     
earnings/(loss) per SacOil share (cents)                   (2.02)        (379)  
Headline and diluted headline                                                   
earnings/(loss) per SacOil share (cents)                   (1.89)        (299)  
Net asset value per SacOil share (cents)                    64.31          365  
Tangible net asset value per SacOil share (cents)          (9.46)        (168)  
Weighted average number of SacOil shares in issue (`000)  577 091           84  
Number of SacOil shares in issue (`000)                   577 091           84  
1. The "Before the Transactions" basic earnings, diluted earnings, headline     
earnings and diluted headline earnings per SacOil share have been extracted     
without adjustment from the audited, published results of SacOil for the year   
ended 28 February 2010. The "Before the Transactions" net asset value and net   
tangible asset value per SacOil share have been calculated from the financial   
information presented in the audited, published results of SacOil for the year  
ended 28 February 2010.                                                         
2. The "After the Restructure" assumes:                                         
a. The consolidation of SacOil (Proprietary) Limited into SacOil in terms of    
IFRS 3: Business Combinations (previously announced and consolidated in terms of
IFRS 6: Exploration for and Evaluation of Mineral Resources) and the raising of 
the non-controlling interest of 50 per cent of SacOil (Proprietary) Limited     
(held by DIG);                                                                  
b. The revaluation of the Block 3 Rights to fair value in terms of IFRS 3:      
Business Combinations.                                                          
c. The issue of the 209 456 000 SacOil shares to the vendors of SacOil          
(Proprietary) Limited at an assumed issue price of R0.74 per SacOil share ,     
being the share price of SacOil`s shares on the JSE on 25 July 2010 (in terms of
IFRS3: Business Combinations, being the share price on the day before the       
detailed terms announcement in respect of the Restructure on 26 July 2010)      
(previously announced and issued at R2.10 in terms of IFRS 6: Exploration for   
and Evaluation of Mineral Resources);                                           
d. Settlement of an effective consideration totalling USD811 364 (with a Rand   
equivalent of R6 182 594, assuming an exchange rate of R7.62 to USD1) in        
exchange for the Block 1 Interest, being an assignment fee of USD1 (with a Rand 
equivalent of R7.62, assuming an exchange rate of R7.62 to USD1) and an         
additional amount of USD811 363 (with a Rand equivalent of R6 182 586, assuming 
an exchange rate of R7.62 to USD1). The additional amount is calculated as the  
net amount of the cession by SacOil to DIG of SacOil`s right to receive payment 
from SacOil (Proprietary) Limited of the Rand equivalent of USD1 000 000 (with a
Rand equivalent of R7 620 000, assuming an exchange rate of R7.62 to USD1) under
the Cession Agreement and an agreed interest payment of USD188 637 (with a Rand 
equivalent of R1 437 414, assuming an exchange rate of R7.62 to USD1) due and   
payable by DIG to SacOil on monies previously loaned and advanced by SacOil to  
DIG as reflected in the Amended and Restated DIG Loan Agreement;                
e. The payment to the DRC Government of an additional signature bonus of   USD2 
000 000 on execution of the amendment to the Block 3 Production Sharing         
Agreement; and                                                                  
f. Transaction costs of R10 330 000 (including R9 500 000 payable to Lonsa in   
terms of the Lonsa Mandates).                                                   
3. The "After the Chaal Gas Permit Transaction" assumes:                        
a. Payment of USD5 000 000 to Falcan Chaal Petroleum Limited ("Falcan") and     
Societe de Maintenance D`Installations Petrolieres ("SMIP"), the vendors, in    
respect of the Chaal Gas Permit Transaction, converted at R7.50 to USD1, being  
the closing rate at 10 May 2010, the date of signature of the Farmout Agreement,
which has been capitalised in terms of IFRS 6: Exploration for and Evaluation of
Mineral Resources as this is a refund of past incurred recoverable back costs of
Falcan and SMIP;                                                                
b. The assumption of a contractual obligation of up to USD6 400 000, converted  
at R7.50 to USD1, as above, in respect of SacOil`s 55 per cent share of the     
costs of the work programme relating to the Chaal permit area and which have    
been capitalised in terms of IFRS 6: Exploration for and Evaluation of Mineral  
Resources; and                                                                  
c. Transaction costs of R2 805 000 (including R1 800 000 payable to Lonsa in    
terms of the Lonsa Mandates).                                                   
4. The "After the Specific Issue to METAM" assumes:                             
a. Issue of 46 000 000 new SacOil shares at 50 cents per SacOil share in terms  
of the Specific Issue to METAM;                                                 
b. Transaction costs of R760 000 (including R575 000 payable to Lonsa in terms  
of the Lonsa Mandates).                                                         
5. The "After the Specific Issue to GVM" assumes:                               
a. Issue of 8 343 216 new SacOil shares at 30 cents per SacOil share in terms of
the Specific Issue to GVM in settlement of a liability owning by SacOil to GVM; 
6. The "After the Transactions" assumes all of the adjustments detailed in notes
2 to 5 above.                                                                   
6. Documentation                                                                
A circular containing the information required in terms of the JSE Listing      
Requirements and incorporating a notice convening a SacOil general meeting to   
approve the implementation of the Transactions will be posted to beneficial     
Shareholders on or about 4 September 2010. The Restructure and the Chaal Gas    
Permit Transaction collectively comprise a reverse take-over as defined in the  
JSE Listings Requirements and the circular will incorporate revised listing     
particulars as though SacOil were a new applicant.                              
7. Salient dates and times                                                      
2010   
Last day for receipt of forms of proxy for the general                          
meeting of                                              Thursday, 16 September  
Shareholders by no later than 10:00 on                                          
General meeting of Shareholders to be held at 10:00 on    Monday, 20 September  
Results of the general meeting of Shareholders                                  
published on SENS on                                      Monday, 20 September  
Results of the general meeting of Shareholders                                  
published in the press on                                Tuesday, 21 September  
SacOil Transaction Consideration Shares issued and                              
listed, subject to Shareholder approval on             Wednesday, 22 September  
Specific Issue Ordinary Shares to Metropolitan Asset                            
Managers issued and listed, subject to Shareholder                              
approval on                                            Wednesday, 22 September  
Midrand                                                                         
3 September 2010                                                                
Sponsor                         Corporate financial advisor                     
BDO Corporate Finance           Lonsa (Proprietary) Limited                     
Corporate legal advisor         Independent expert                              
Deneys Reitz Inc.               Mazars Corporate Finance (Proprietary) Limited  
Independent Reporting accountants and auditors                                  
Moore Stephens MWM Inc                                                          
Date: 03/09/2010 16:05:02 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
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