OANDO PLC - Oando Energy Resources amends loan agreement with Oando PLC

Oando Energy Resources amends loan agreement with Oando PLC

Oando PLC
(Incorporated in Nigeria and registered as an external company in South Africa)
External Registration number: RC 6474
Company registration number: 2005/038824/10
Share Code on the JSE Limited: OAO
Share Code on the Nigerian Stock Exchange: UNTP
ISIN: NGOANDO00002
(“Oando” or the “Company”)



 OANDO ENERGY RESOURCES AMENDS LOAN AGREEMENT WITH OANDO
                           PLC

Quote
Oando Energy Resources Inc. (“Oando Energy Resources” or the “Company”) (TSX:
OER), a company focused on oil and gas exploration and production in Nigeria, today
announced that it has further amended the US$401 million loan agreement and associated
repayment deed (as amended, the “Loan Documentation”), each dated May 30, 2013, as
amended, with Oando, the holder of 94.6% of the shares of Oando Energy Resources and a
non-arm’s length party to the Company, to (i) extend the repayment date from
December 31, 2013 until January 31, 2014; (ii) permit the US$15 million loaned by Oando to
Oando Energy Resources pursuant to the amendment to the Loan Documentation made on
November 28, 2013 (plus interest) to be repayable in common shares of the Company
(“Shares”), at the election of the Company and provided certain conditions are met (as is the
case with the rest of the loan from Oando to Oando Energy Resources); and (iii) amend the
price at which amounts owing under the Loan Documentation may be repaid by way of the
issuance of Shares, as well as the mechanics of such repayment. Prior to the recent
amendment, the amount permitted to be converted into Shares was US$386 million plus
interest.

Pursuant to the Loan Documentation (and as a result of the amendments), Oando Energy
Resources is permitted to elect to repay amounts owing under the loan agreement (“Facility”)
through the issuance of Shares, provided that all regulatory approvals have been obtained, at
the earliest of the following events: (a) the date on which a receipt has been granted for a
final prospectus in respect of an offering of Shares or securities convertible into shares at no
additional cost to the holder thereof; (b) the date on which a binding agreement (“Private
Funding Agreement”) with a party other than Oando (“Third Party”) has been signed
pursuant to which such third party has agreed to subscribe for Shares (or securities
convertible into Shares at no additional cost to the third party) or to loan money to Oando
Energy Resources which can be repaid through the issuance of Shares to the third party; (c)
the date of completion of the proposed acquisition by the Company of the Nigerian upstream
oil and gas business of ConocoPhillips Company (as previously announced in December
2012 and as most recently updated on November 28, 2013); and (d) the date of termination of
the Acquisition. The election to repay the Facility by the issuance of Shares can be exercised
no later than three business days prior to January 31, 2014.
                                              -2-


Should the Company elect to repay the Facility through the issuance of Shares, the price per
Share will be (i) where, on the date of delivery of a notice (“Issue Exercise Notice”) from the
Company electing to repay the Facility by the issuance of Shares, a receipt has been granted
for a final prospectus and the proposed acquisition by the Company of the Nigerian upstream
oil and gas business of ConocoPhillips Company (as previously announced in December
2012 and as most recently updated on November 28, 2013) (the “Acquisition”) has not been
terminated, the price per Share (or securities convertible into Shares at no additional cost to
the holder thereof) identified in the final prospectus; or (ii) where, on the date of delivery of
an Issue Exercise Notice and provided that a receipt for a final prospectus has not been
granted and the Acquisition has not been terminated, Oando Energy Resources has entered
into a Private Funding Agreement, the price per Share (or securities convertible into Shares at
no additional cost to the Third Party) agreed between the Company and the Third Party in the
Private Funding Agreement; or (iii) in all other cases, the volume weighted average price of a
Share on the Toronto Stock Exchange (“TSX”) for the 5 trading days immediately preceding
(but not including) the date on which the Company delivers an Issue Exercise Notice;
provided that if the price per Share resulting under (i) or (ii) is lower than the lowest price
permissible under the rules of the TSX, then the price per Share will be the lowest price
permissible under the rules of the TSX. The price per Share must be pre-approved by the
TSX and, based on the current price of the Shares on the TSX, the maximum permitted
discount that may be offered pursuant to Section 607(e) of the TSX Company Manual is
20%, absent shareholder approval.

In the event that the election by Oando Energy Resources to repay the Facility by the
issuance of Shares would result in Oando having an ownership interest in the Company 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 Oando Energy Resources will be reduced so as to ensure
that Oando’s stake in the Company does not exceed such current ownership interest and the
balance, if any, of amounts owing under the Loan Documentation will be payable in cash.
Any issuance of Shares to Oando pursuant to the Loan Documentation will not result in an
increase in control by Oando over the Company.

As a result of the extension of the maturity date of the loan agreement from
December 31, 2013 to January 31, 2014 and assuming that the Company repays the Facility
on January 31, 2014, the total interest payable will be approximately US$13.07 million,
representing approximately 10.5% of the Company’s market capitalization (based on the
closing price of the Company’s shares on December 12, 2013), which exceeds 10% of the
Company’s market capitalization, and, pursuant to Section 501(c) of the TSX Company
Manual, requires shareholder approval. In addition, depending on the number and price of
Shares issued by the Company to Oando as repayment of the Facility, such issuance, if any,
could (i) provide consideration to the Company in excess of 10% the Company’s market
capitalization; and/or (ii) constitute a private placement for an aggregate number of Shares
greater than 25% of the number of Oando Energy Resources’ current outstanding Shares, on
a non-diluted basis, at a price per Share less than the market price of a Share 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 the
                                              -3-


Company’s Shares, the Company intends to rely on this exemption. The effective date of the
amendments to the Loan Documentation will not occur until the expiry of 10 business days
from the date hereof.

The independent directors of Oando Energy Resources unrelated to Oando unanimously
recommended approval of execution of the Loan Documentation to the board of the
Company who then approved them (with directors affiliated with Oando abstaining from the
vote).

Forward Looking Statements:

This news release contains forward-looking statements and forward-looking information
within the meaning of applicable securities laws. The use of any of the words “expect”,
“anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”,
“should”, “believe”, “plans”, “intends” and similar expressions are intended to identify
forward-looking information or statements. In particular, this news release contains forward-
looking statements relating to intended acquisitions.

Although the Company believes that the expectations and assumptions on which such
forward-looking statements and information are reasonable, undue reliance should not be
placed on the forward-looking statements and information because the Company can give no
assurance that such statements and information will prove to be correct. Since forward-
looking statements and information address future events and conditions, by their very nature
they involve inherent risks and uncertainties.

Actual results could differ materially from those currently anticipated due to a number of
factors and risks. These include, but are not limited to: risks related to international
operations, the actual results of current exploration and drilling activities, changes in project
parameters as plans continue to be refined and the future price of crude oil. Accordingly,
readers should not place undue reliance on the forward-looking statements. Readers are
cautioned that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect the Company’s financial
results are included in reports on file with applicable securities regulatory authorities and may
be accessed through the SEDAR website (www.sedar.com) for the Company. The forward-
looking statements and information contained in this news release are made as of the date
hereof and the Company undertakes no obligation to update publicly or revise any forward-
looking statements or information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.

Unquote

Contact Information:

Pade Durotoye, CEO
Oando Energy Resources Inc.
pdurotoye@oandoenergyresources.com
+1 403-561-1713

Tokunboh Akindele
Head Investor Relations
Oando Energy Resources Inc.
                                           -4-


takindele@oandoenergyresources.com
+1 403-560-7450

Jeremy Dietz/David Feick
Investor Relations
+1 403-218-2833
jdietz@tmxequicom.com
dfeick@tmxequicom.com

Lagos
17 December 2013


JSE Sponsor
Macquarie First South Capital Proprietary Limited

Date: 17/12/2013 02:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
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.