Coro Energy PLC - Disposal and Notice of General meeting
("Coro", the "Company" and together with its subsidiaries the "Group")
Disposal of Italian Portfolio and Notice of General Meeting
The Disposal follows confirmation by the Company, in its H1 2019 interim results published on
Completion of the Disposal is conditional on, inter alia, the passing of the Resolution at the General Meeting and the approval of the
A circular, which provides further details of the Disposal and includes a notice convening the General Meeting (the "Circular") will be sent to Coro Shareholders later today. A copy of the Circular will be available shortly from the Company's website at www.coroenergyplc.com.
"As the Company continues to focus on the investment opportunities in
Background to, and reasons for, the Disposal
The Group continues to execute its South East Asian growth strategy following the acquisition of a 15% interest in the Duyung Production Sharing Contract ("PSC") in the West Natuna basin, offshore
Completion of the Company's acquisition of a working interest in the Bulu PSC was, as announced on
The Company announced on
The Company was pleased to announce on
In addition to progress at the Duyung PSC, the Group continues its business development activities in the region and the Directors see further opportunities for the Group to capture value and scale in
The Directors do not consider that the same opportunities currently exist for the Group in
Whilst the Italian Portfolio produces 100% of the Group's current revenues (H1 2019: c.
The Board believes that incremental capital expenditure in
As a result,
Details of the Disposal
The Company's wholly owned subsidiary, Cell A, has entered into a binding conditional sale and purchase agreement with Zenith for the Disposal by the Group of the entire issued share capital of
The Disposal is conditional on, inter alia, the passing of the requisite Resolution at the General Meeting and receipt of necessary regulatory approvals including the approval of the
Under the SPA, the Consideration for the Disposal of
(i) a payment of
(ii) subject to the average production of all hydrocarbon assets in which
The Initial Consideration Shares and the Deferred Consideration Shares will be subject to a six-month lock-in from issue. All proceeds received by the Group pursuant to any sale of the Initial Consideration Shares and/or the Deferred Consideration Shares, as proceeds from the disposal of the Italian Portfolio, must be retained within Cell A and its subsidiary companies pursuant to the security charge associated with Coro's Eurobond issued in
Further key terms of the SPA are set out below.
Background to Zenith
Zenith is an international oil and gas production group, incorporated in
Zenith's strategy is defined by its focus on the acquisition and further development of proven onshore oil and gas fields where production has declined over time, but which hold significant untapped reserves and the possibility to produce sizeable volumes of oil and gas following investment in new field infrastructure, the application of modern production technology, and new management supervision. To maximise shareholder value, Zenith targets acquisitions of production opportunities that offer strong logistics and close proximity to refineries and pipelines. Zenith's management and directors have extensive financial and government experience and possess the technical knowledge to execute this strategy.
Zenith operates the largest onshore oilfield in
Zenith's strategy is to identify and rapidly seize opportunities in the onshore oil & gas sector. Specific attention is directed to fields formerly controlled by oil majors and state oil companies. These assets often have significant untapped potential and the capacity to produce sizeable volumes of oil & gas with investment in technology and new management supervision.
Completion of the Disposal is conditional on, inter alia, the passing of the Resolution at the General Meeting of the Company. A Circular, which provides further details of the Disposal and includes a notice convening the General Meeting will be sent to Shareholders later today. A copy of the Circular will be available shortly from the Company's website at www.coroenergyplc.com.
The General Meeting is to be held at the offices of
If Shareholders do not pass the Resolution, Completion of the Disposal and issue of the Initial Consideration Shares will not proceed.
Recommendation and Voting Intentions
The Disposal constitutes a fundamental change of the Company's business for the purposes of Rule 15 of the AIM Rules and is therefore subject to the approval of Shareholders at the General Meeting.
The Directors consider the Disposal to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings of Ordinary Shares, representing approximately 1.55% of the Company's existing Ordinary Shares.
Terms defined in the Circular apply throughout this announcement, unless the context requires otherwise.
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. Bcf means billion standard cubic feet; scm means standard cubic metres; and scm/d means standard cubic metres per day.
For further information please contact:
Cenkos Securities plc (Nominated Adviser)
Tel: 44 (0)20 7397 8900
Tel: 44 (0)20 7390 0230
Tel: 44 (0)20 3167 7221
Tel: 44 (0)20 3657 0050
Summary of SPA terms
The SPA is conditional on certain conditions having been satisfied or waived on or prior to Completion, including the following:
· Approval by Coro Shareholders;
· Receipt of required regulatory approvals required from the Italian authorities (the "Italian Regulatory Approvals");
· Zenith having submitted applications in the manner prescribed in the SPA for the issue of the Initial Consideration Shares to be issued on the Completion Date;
· there not having occurred (in relation to the Company or Zenith) between the date of the SPA and the Completion Date, a breach of a warranty which constitutes a material adverse change, defined as an event, change or condition that causes, or could reasonably be expected to cause a reduction in (A) the consolidated net assets of Zenith and its subsidiaries of more than
· Cell A having carried out its obligations in respect of a Bezzecca-Vitalba pipeline leak which occurred in
As noted above, the initial consideration of
The SPA may be terminated in certain circumstances:
(i) by either party in the event that the conditions precedent, completion obligations and/or undertakings given for that party's benefit and standing to be satisfied on or before the Completion Date are not met or waived;
(ii) by Zenith in the event that any director of the Company publicly changes (including by attaching qualifications to) or withdraws (including by abstaining) their statement that they consider the Disposal to be in the best interests of the Shareholders or their recommendation that the Shareholders approve the Disposal, or publicly states an intention to change their voting intention in respect of any relevant Company shares; and
(iii) by Zenith in the event that (a) the conditions precedent have not been met by
Zenith and Cell A have undertaken to procure that, with effect from the Completion Date, each of Zenith and the Company enters into an agreement with Sound Energy plc ("Sound" as previous owner of
Zenith and Cell A have further undertaken to procure that, with effect from the Completion Date, each of Zenith, the Seller and the Company enter into an agreement with Sound pursuant to which:
(i) Sound will retain its economic rights to receive the proceeds of any future sale of the land comprising the Badile permit issued on
(ii) Sound undertakes that it shall:
(A) provide a restoration payment to Zenith (or
(B) in addition to providing the Badile Site Restoration Payments, indemnify Zenith,
· the requirement of any regulatory authority (whether or not pursuant to applicable laws or regulations);
· changes in any applicable laws or regulations following the date of the SPA;
· changes following the date of the SPA in either environmental laws applicable to the restoration of Badile and/or the specific restoration requirements for Badile imposed by the relevant regulatory authority on Zenith,
· any bid or tender for works comprised or forming part of the Badile site restoration costs expiring as a result of delays in receipt of approvals from any regulatory authority (whether or not pursuant to applicable laws or regulations) and any new or revised bid or tender for such works being for an increased cost; and/or
· a dispute regarding unpaid rent and unlawful occupation of land relating to the Badile Land;
(iii) each of Zenith and Sound shall irrevocably and unconditionally release the Company from all liability that they may have in connection with the Badile Sale, including (for the avoidance of doubt) under an implementation agreement entered into between the Company (then known as
(iv) the Company shall irrevocably and unconditionally waive any rights that it might have to receive the Badile Restoration Payments and/or the Additional Badile Restoration Payment, including (for the avoidance of doubt) under the Original Sale Agreement.
Under the SPA, Cell A has agreed to indemnify Zenith and each member of the
Under the SPA, no warranty claim can be brought unless it is for an amount at least equal to
(i) Cell A's total liability for all claims under the Coro Europe Tax Covenant and Leakage Indemnity and for all claims under the warranties given by it shall not in any event exceed
(ii) Zenith's total liability for all claims under the warranties given by it shall not in any event exceed
This information is provided by RNS, the news service of the
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