Wrap Text
Acquisition of a Viable Asset and Withdrawal of Cautionary Announcement
RENERGEN LIMITED
(previously Dominica Trade Proprietary Limited)
Incorporated in the Republic of South Africa
(Registration number: 2014/195093/06)
Share code: REN ISIN: ZAE000202610
(“Renergen” or “the Company”)
ACQUISITION OF A VIABLE ASSET AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
- First and only South African onshore petroleum production right
enabling Renergen first mover advantage in the local natural gas
sector;
- Exploration assets developed to production status and now close
to production;
- Anticipated first revenue to be generated from 1st half 2016;
- Proven reserves and value as indicated in the independent Form 1
Report; and
- Significant attractive upside for Renergen shareholders as the
resource is further developed.
"The proposed Molopo transaction is a an attractive renewable
energy opportunity for Renergen with its vertically integrated
business model that aims to generate returns across the
beneficiation curve and lower the carbon footprint as its natural
gas is used as a fuel substitute.
As a Board we are pleased to have delivered this transaction
within three months of listing on the JSE. Another significant
milestone will have been achieved once Molopo starts generating
revenue in the first half of 2016" said Renergen's Chairman Brett
Kimber.
Enquiries to investorrelations@renergen.co.za.
1. MOLOPO ACQUISITION
1.1. Shareholders are referred to the SENS announcement released
by the Company on 10 July 2015 wherein the Company advised
that it was in negotiations to acquire a viable asset
pursuant to the Special Purpose Acquisition Company (“SPAC”)
requirements of the Listings Requirements of the JSE Limited
(“JSE”).
1.2. Renergen is pleased to announce that it has entered into an
agreement to acquire 90% of the issued share capital and
claims of Molopo South Africa Exploration and Production
Proprietary Limited (“Molopo”) from Windfall Energy
Proprietary Limited (“Windfall”) (the “Molopo Acquisition”)
for a purchase consideration to be settled by the issue of
70 million ordinary Renergen shares (“Renergen Shares”) and
the cash payment of R5 million, implying a deal value of
approximately R650 million, based on Renergen’s Net Asset
Value (“NAV”).
1.3. Windfall owns 90% of Molopo which in turn possesses the only
onshore petroleum production right in South Africa. Venmyn
Deloitte has been appointed as the competent person to the
Company. Venmyn Deloitte has provided the Company with a
Form 1 Report in compliance with the JSE Listings
Requirements on Molopo. According to the Form 1 Report, the
net present value of Molopo’s total proved reserves (P1) has
been estimated at R2.2 billion.
1.4. The effective date of the Molopo Acquisition shall be the
fifth business day after the fulfilment of the conditions
precedent to the Molopo Acquisition agreement (“Effective
Date”).
1.5. Windfall has undertaken to effect a distribution of the
Renergen Shares immediately upon the receipt thereof to
Windfall shareholders (“the Distribution”) pro rata to their
shareholding in Windfall.
2. INFORMATION ON MOLOPO
Molopo, a company registered in South Africa, is building a
vertically integrated business model aimed at offering
“Wellhead to tank” solutions for clients in the Free State
province of South Africa. It was acquired in 2013 by Windfall
and developed to its current state as part of a portfolio of
assets, which include farm-in rights to two other natural gas
assets in South Africa (held by White Rivers Exploration (Pty)
Limited).
The major focus is on the natural gas sector in compressed
form, or compressed natural gas (“CNG”), and Molopo is ready
to earn revenue within the first half of 2016. Molopo’s
current valuation performed by Venmyn Deloitte, which based
their valuation on this single production right and Molopo’s
access to market, vis a vis:
- Provision of CNG to the auto market;
- Provision of CNG to the industrial market;
- Provision of CNG to specialised thermal applications; and
- Sale of liquefied helium.
Molopo’s business plan is focused on processing the natural
gas from the Production Right, and distributing it to a number
of large scale users in the area, and having the only onshore
petroleum production right granted by the Department of
Mineral Resources (“DMR”) (officially regulated by the
Petroleum Agency of South Africa (“PASA”)) gives Molopo a
major advantage in rolling out its business plan since access
to gas means Molopo can offer customers certainty of supply.
This certainty of supply is a major selling point in the
context of the current scenario where interruption of energy
supply is becoming the norm.
The production right spans circa 187 000 hectares in the Free
State near Virginia, Theunissen and Welkom, surrounded by a
further circa 98 000 hectares of exploration rights in the
same area, with a second field located in Evander, Mpumalanga,
consisting of exploration rights spanning roughly a further 52
000 hectares.
3. RATIONALE FOR THE ACQUISITION
Renergen aims to capitalise on the current undersupply of
alternative and renewable energy and to maximise returns to
shareholders by acquiring viable alternative and renewable
energy businesses which are integral to their vertical
integration in the supply chain in South Africa and sub-
Saharan Africa in particular.
The Molopo Acquisition fits perfectly as the first viable
asset for Renergen, including inter alia:
- first and only onshore petroleum production right enabling
Renergen first mover advantage in the local natural gas
sector;
- Molopo’s assets have been brought up from initially an
exploration asset to production status and are close to
production;
- anticipated first revenue to be generated from 1st half
2016;
- proven reserves and value as indicated in the independent
Competent Persons Report; and
- the Molopo Acquisition provides attractive upside for
Renergen shareholders as the resource is further developed.
4. PURCHASE CONSIDERATION
The purchase consideration for the Molopo Acquisition of
approximately R 650 million will be settled by the issue of 70
million Renergen Shares to Windfall and the cash payment of R5
million (“the Purchase Consideration”), payable on the
Effective Date or such later date as may be agreed to between
the parties.
5. WAIVER OF MANDATORY OFFERS
5.1. The Renergen Shares to be issued to Windfall as part of the
Purchase Consideration will constitute approximately 90.47%
of the total issued share capital of Renergen and will,
accordingly, trigger Windfall to make a mandatory offer in
terms of section 123 of the Companies Act, No. 71 of 2008,
as amended (“Companies Act”) unless same is waived by way of
an ordinary resolution adopted by more than 50% of the
independent Renergen shareholders in terms of regulation
86(4) of the Companies Regulations 2011 (“Waiver of Windfall
Mandatory Offer”).
5.2. The Distribution will result in Tamryn Investment Holdings
Proprietary Limited (“TIH”) holding in excess of 59% of the
total issued share capital of Renergen and will,
accordingly, trigger TIH to make a mandatory offer in terms
of section 123 of the Companies Act unless same is waived by
way of an ordinary resolution adopted by more than 50% of
the independent Renergen shareholders in terms of regulation
86(4) of the Companies Regulations 2011 (“Waiver of TIH
Mandatory Offer”).
6. CONDITIONS PRECEDENT
6.1. The Molopo Acquisition is subject to fulfilment of the
following conditions precedent by no later than 15 December
2015, or such later date as may be agreed to between the
parties, which conditions precedent are standard for a
transaction of this nature, which include inter alia:
6.1.1. the approval by the Company’s shareholders of a
Category 1 transaction with a related party in
terms of the JSE Listings Requirements and
Renergen’s memorandum of incorporation (“the
Renergen MOI”);
6.1.2. the approval by the Company’s shareholders of the
issue of the Renergen Shares in terms of section
41(3) of the Companies Act, the Renergen MOI and
as required by the JSE Listings Requirements;
6.1.3. the approval by the Company’s shareholders of the
Waiver of Windfall Mandatory Offer;
6.1.4. the approval by the Company’s shareholders of the
Waiver of TIH Mandatory Offer;
6.1.5. the approval of the Company’s shareholders of
Renergen utilising the residual capital raised in
the listing of Renergen to provide financial
assistance to subsidiaries of Renergen, as
required by the JSE Listings Requirements;
6.1.6. the approval of shareholders of the financial
assistance contemplated in clause 6.1.5 in terms
of section 45(3) of the Companies Act;
6.1.7. a resolution passed by the majority of the
disinterested directors of Renergen approving the
Molopo Acquisition, as required in terms of the
JSE Listings Requirements and the Renergen MOI;
6.1.8. a special resolution passed by Windfall
shareholders approving the Molopo Acquisition, as
required in terms of section 112 (read with
section 115) of the Companies Act;
6.1.9. receipt of all regulatory approvals and/or
exemptions required for the implementation of the
Molopo Acquisition including, inter alia, those
required in terms of the JSE Listings Requirements
and the Companies Act having been obtained, to the
extent required;
6.1.10. A resolution passed by the board of Molopo, and
delivered to Renergen, approving and authorising
the transfer of the shares in Molopo in terms of
the Molopo Acquisition agreement, the updating of
the securities register of Molopo, the appointment
of a new company secretary, public officer and
auditor in respect of Molopo and the acceptance of
the resignations of the current company secretary,
public officer and auditor of Molopo; and
6.1.11. Windfall delivering to Renergen the original share
certificates in respect of the shares in Molopo to
be transferred in terms of the Molopo Acquisition
agreement and written resignations of the persons
set out in paragraph 6.1.10 above.
6.2 The conditions precedent set out in paragraphs 6.1.1 to
6.1.11 above are not capable of waiver.
7. WARRANTIES
Windfall has provided warranties to Renergen that are standard
for a transaction of this nature.
8. FINANCIAL EFFECTS OF THE MOLOPO ACQUISITION
The value of all the shares in Molopo is -R20 million as at 30
June 2015. This includes the capitalised costs incurred in
bringing Molopo into production.
The above net assets resulted in a loss of R3 million for the
six month period ended 30 June 2015. These losses relate to
costs incurred during the exploration phase. This financial
information has been extracted without adjustment from the
audited consolidated results of Molopo.
9. CATEGORISATION
The Molopo Acquisition qualifies as a Category 1 acquisition
for the Company in terms of the JSE Listings Requirements and
as such, a circular, setting out full details of the Molopo
Acquisition, will be distributed to Renergen shareholders
within 60 days of the date of this announcement.
Due to the fact that Mr S Marani is the managing director of
both Renergen and Windfall and a material shareholder of
Windfall, the Molopo Acquisition is deemed to be a “related
party transaction” in terms of section 10 of the JSE Listings
Requirements.
Post the successful conclusion of the Molopo Acquisition, the
JSE will no longer classify Renergen as a SPAC and subject to
the approval of the JSE, the Company will be listed on the
AltX.
10. SUBSIDIARY COMPANIES
As a result of the Molopo Acquisition, Molopo will become a
major subsidiary of Renergen. In compliance with the JSE
Listings Requirements, Renergen confirms that there are no
provisions of Molopo’s MOI that frustrate Renergen from
compliance with the JSE Listings Requirements.
11. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Renergen shareholders are advised that, whereas the terms of
the Molopo Acquisition have now been announced, caution is no
longer required to be exercised by shareholders when dealing
in their Renergen shares.
Johannesburg
18 August 2015
Joint Transaction Adviser and transactional designated advisor
PSG Capital
Joint Corporate Adviser
Integrated Capital
Competent Person
Venmyn Deloitte
Designated Adviser
Merchantec Capital
Date: 18/08/2015 10:00:00 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.
Sharenet Sites 
