Heritage Oil Plc: Proposed Rights Issue

Heritage Oil Plc: Proposed Rights Issue

in Connection With the Proposed Acquisition of a Major Interest in OML 30
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS. THE SECURITIES REFERRED TO HEREIN ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. A CIRCULAR AND PROSPECTUS WILL BE PUBLISHED BY THE COMPANY TODAY IN CONNECTION WITH THE PROPOSED ACQUISITION AND RIGHTS ISSUE. FOLLOWING PUBLICATION, COPIES OF THE CIRCULAR AND PROSPECTUS WILL BE AVAILABLE FROM THE COMPANY’S REGISTERED OFFICE AND FROM 34 PARK STREET, LONDON, W1K 2JD AND WILL BE AVAILABLE FOR VIEWING ON THE COMPANY’S WEBSITE
On 29 June 2012, Heritage Oil Plc (TSX:HOC)(LSE:HOIL), an independent upstream exploration and production company, announced that Shoreline Natural Resources Limited (“Shoreline”), a special purpose private Nigerian company formed between a subsidiary of Heritage and a local Nigerian partner, Shoreline Power Company Limited (“Shoreline Power”), had reached an agreement to acquire, by way of assignment, a 45% participating interest in a producing oil mining lease in Nigeria (“OML 30”), together with a 45% interest in other assets under the joint operating agreement for OML 30 (the “Acquisition Assets”), for a total cash consideration of US$850 million, net of costs (the “Proposed Acquisition”).
The Proposed Acquisition will be financed by a US$550 million secured bridge finance facility, and a fully underwritten rights issue (“Rights Issue”) raising proceeds of up to US$370 million (which amount may be reduced by the proceeds of any capital raising which has completed and settled prior to 27 August 2012). Heritage expects to publish a prospectus (“Prospectus”) in connection with the Rights Issue today.
Principal Terms of the Rights Issue
The Rights Issue is fully underwritten pursuant to the Rights Issue Underwriting Agreement. The Issue Price at which Qualifying Shareholders will be invited to subscribe for New Ordinary Shares will be determined and announced in advance of the EGM and will be at a discount to TERP within a range of between 40 per cent and 45 per cent, having regard to, among other things, investor feedback, market conditions, any relevant requirements of the Listing Rules and/or Investor Protection Committee Guidelines and the market price of the Company’s shares over the five days preceding the determination of the Issue Price. The Issue price is to be announced no later than 7.00 a.m. on 28 August 2012.
The New Ordinary Shares, when issued and fully paid, will rank pari passu in all respects with existing Ordinary Shares, including the right to receive dividends or distributions made, paid or declared (if any) after Admission of such New Ordinary Shares, as described below. Applications will be made to the UKLA for the New Ordinary Shares to be admitted to Listing on the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the Main Market. It is expected that Admission will occur, and that dealings in the New Ordinary Shares on the London Stock Exchange will commence, at 8.00 a.m., London time, on 17 September 2012.
The Rights Issue is conditional upon, amongst other things:
— the passing, without amendment, of the Resolutions that are to be
proposed at the EGM;
— the Rights Issue Underwriting Agreement not having been terminated prior
to becoming unconditional;
— the Facilities Agreement not having been terminated and none of the
conditions precedent to drawdown set out therein having become incapable
of satisfaction;
— the Acquisition Agreement not having been amended in any material
respect, and not having lapsed or been terminated nor any of the
Conditions having become incapable of satisfaction or having been waived
prior to Admission; and
— Admission having become effective by no later than 8.00 a.m., London
time, on 31 August 2012 (or such later time and/or date as the Company
and the Underwriter may agree).
The results of the Rights Issue, including the aggregate number of New Ordinary Shares issued and the aggregate amount raised, net of expenses, is expected to be announced by Heritage to a Regulatory Information Service after 7.00 a.m., London time, on 17 September 2012.
Advance Capital Raisings
Concurrently with the Rights Issue, the Directors are contemplating (i) a potential non pre-emptive placing of Ordinary Shares (“Equity Placing”) and (ii) subject to a waiver from the lenders under the Facilities Agreement having been obtained by the Company, a potential issuance of a convertible bond (“Convertible Bond Issue” and together with the Equity Placing, the “Advance Capital Raisings”), or a combination thereof.
If the Directors elect to implement any or both of the Advance Capital Raisings, any such Advance Capital Raising would complete and settle during the period between the date of the Prospectus (6 August 2012) and the announcement of the Issue Price (28 August 2012). Any amounts raised pursuant to any Advance Capital Raisings would reduce the size of the Rights Issue.
Highlights of the Proposed Acquisition
— OML 30, located onshore in the delta in Nigeria, includes eight
producing fields and associated infrastructure, including a segment of
the 850,000 bpd capacity Trans Forcados pipeline
— The Proposed Acquisition represents a significant opportunity for
Heritage to achieve a material change in production and reserves
— OML 30 is currently averaging gross production of c.35,000 bopd,
increasing Heritage’s net production from 567 bopd to c.11,320 bopd
— RPS estimates that OML 30 has gross proved and probable reserves of
1,114 mmbbls of oil
— In addition, Heritage’s Directors estimate 2.5 Tcf gross of gas
which has not been included in the RPS review or valuation
— Net proved and probable reserves increase 568% from 61 mmbbls to 408
mmbbls
— Potential to ramp up production of OML 30 in the short term by
refurbishing and maintaining existing infrastructure
— Cash consideration of US$850 million, net of costs, for Shoreline to
purchase a 45% participating interest in OML 30 and related assets under
the corresponding joint operating agreement
— OML 30 is expected to be cash generative immediately following
completion of the Proposed Acquisition
— Shoreline will be one of the leading indigenous companies producing in
Nigeria
— Combines Shoreline Power’s energy and infrastructure operating
expertise and respected network of relationships within Nigeria with
Heritage’s strong technical team with relevant geographic expertise
— Shoreline and Heritage will work to develop close relationships with
local communities and other stakeholders
— The Proposed Acquisition provides Heritage with exposure to Nigeria,
which is reported to contain the second largest proved reserves in
Africa, and provides further growth opportunities in a prolific
hydrocarbon region
— The Proposed Acquisition will further diversify Heritage’s portfolio,
balancing exploration with production, while extending Heritage’s
geographic footprint within its core areas of Africa and the Middle East
Expected Timetable
All times are London times unless specifically stated otherwise.
—————————————————————————-
Announcement of the Proposed Acquisition 29 June 2012
—————————————————————————-
Publication of the Prospectus, the Circular 6 August 2012
(including the Notice of EGM) and the Form of
Proxy and despatch to Shareholders outside of
Canada
—————————————————————————-
Despatch of the Prospectus, the Circular 7 August 2012
(including the Notice of EGM) and the Form of
Proxy to Shareholders in Canada
—————————————————————————-
Announcement of any Advance Capital Raising no later than 27 August
2012
—————————————————————————-
Completion and settlement of any Advance Capital no later than 27 August
Raising 2012
—————————————————————————-
Issue Price determined no later than 27 August
2012
—————————————————————————-
Announcement of Issue Price and entitlements of no later than 7.00 a.m. on
Qualifying Shareholders 28 August 2012
—————————————————————————-
Latest time and date for receipt of Forms of 4.00 p.m. on 28 August
Proxy in respect of the EGM 2012
—————————————————————————-
Rights Issue Record Date close of business on 28
August 2012
—————————————————————————-
EGM 4.00 p.m. on 30 August
2012
—————————————————————————-
Despatch of Provisional Allotment Letters (to 30 August 2012
Qualifying non-CREST Shareholders only)(1)
—————————————————————————-
Despatch of Rights Certificates (to Qualifying 30 August 2012
Exchangeable Shareholders only)
—————————————————————————-
Ordinary Shares marked “ex” by the London Stock 8.00 a.m. on 31 August
Exchange 2012
—————————————————————————-
Admission and dealings in Nil Paid Rights and 8.00 a.m. on 31 August
Fully Paid Rights commence on the London Stock 2012
Exchange
—————————————————————————-
Nil Paid Rights credited to stock accounts in as soon as practicable
CREST (Qualifying CREST Shareholders only)(1) after 8.00 a.m. on 31
August 2012
—————————————————————————-
Nil Paid Rights and Fully Paid Rights enabled in as soon as practicable
CREST after 8.00 a.m. on 31
August 2012
—————————————————————————-
Recommended latest time for requesting withdrawal 4.30 p.m. on 10 September
of Nil Paid Rights and Fully Paid Rights from 2012
CREST (i.e. if your Nil Paid Rights and Fully
Paid Rights are in CREST and you wish to convert
them to certificated form)
—————————————————————————-
Recommended latest time for requesting withdrawal 4.30 p.m. on 10 September
Rights from CDS (i.e. if your Rights are in CDS 2012
and you wish to convert them to certificated
form)
—————————————————————————-
Recommended latest time for depositing renounced 3.00 p.m. on 11 September
Provisional Allotment Letters, nil or fully paid, 2012
into CREST or for dematerialising Nil Paid Rights
or Fully Paid Rights into a CREST stock account
(i.e. if your Nil Paid Rights and Fully Paid
Rights are represented by a Provisional Allotment
Letter and you wish to convert them to
uncertificated form)
—————————————————————————-
Latest time and date for splitting Provisional 3.00 p.m. on 12 September
Allotment Letters, nil or fully paid 2012
—————————————————————————-
Latest time and date for splitting Rights 3.00 p.m. on 12 September
Certificates 2012
—————————————————————————-
Latest time and date for acceptance, payment in 11.00 a.m. on 14 September
full and registration of renunciation of 2012
Provisional Allotment Letters
—————————————————————————-
Latest time and date for acceptance and payment 10.00 a.m. (3.00 a.m.
in full of Rights Certificates Calgary time) on 14
September 2012
—————————————————————————-
Results of Rights Issue to be announced through a as soon as practicable
Regulatory Information Service after 7.00 a.m. on 17
September 2012
—————————————————————————-
Dealings in New Ordinary Shares, fully paid, 8.00 a.m. on 17 September
commence on the London Stock Exchange 2012
—————————————————————————-
New Ordinary Shares credited to CREST as soon as practicable
after 8.00 a.m. on 17
September 2012
—————————————————————————-
Despatch of definitive share certificates for the by no later than 24
New Ordinary Shares in certificated form September 2012
—————————————————————————-
Latest date for despatch of sale of rights 24 September 2012
payment, if any
—————————————————————————-
Expected date of satisfaction of all Conditions on or around 1 November
(including receipt of consent to the Proposed 2012
Acquisition from the Nigerian Minister of
Petroleum Resources) other than in respect of
Readmission
—————————————————————————-
Completion and Readmission by no later than 6
November 2012
—————————————————————————-
Note:
Each of the times and dates in the above timetable are subject to change.
The times and dates set out in the expected timetable of principal events
above and mentioned throughout this Prospectus may be adjusted by the
Company in consultation with J.P. Morgan Cazenove, in which event details of
the new times and dates will be notified to the UKLA, the London Stock
Exchange and, where appropriate, Qualifying Shareholders.
(1) Subject to certain restrictions relating to Qualifying Shareholders with
registered addresses outside the United Kingdom.
Restoration of trading
As the Proposed Acquisition is classified as a reverse takeover under the Listing Rules, the listing of the Company’s Ordinary Shares and Exchangeable Shares on the Official List of the UK Listing Authority was suspended with effect from Monday 2 July 2012 until sufficient information on the Proposed Acquisition was available to the market. Following approval by the UK Listing Authority of the Circular and Prospectus as expected later today, the Company will request that the listing of its Ordinary Shares and Exchangeable Shares be restored to the Official List and trading in such Shares is expected to resume with effect from the commencement of trading on 7 August 2012.
Tony Buckingham, Chief Executive Officer, commented:
“The Proposed Acquisition is considered to be the largest ever upstream asset transaction in sub-Saharan Africa, based on the licence’s proved and probable reserves. The sheer size and valuation of the oil fields, based on the recently issued independent reserves report, and the use of debt to fund a considerable portion of the purchase consideration make this transaction transformational and highly attractive.
“We remain confident of completing the acquisition in the announced timeframe and that we will build Shoreline into one of the leading oil and gas producers in Nigeria.”
Analyst Presentation
Mr. Paul Atherton, Chief Financial Officer, will be hosting an analyst presentation at 11.00 a.m. (BST) on 6 August 2012, details of which can be obtained from Stephanie Power at FTI Consulting on 0207 269 7277 or stephanie.power@fticonsulting.com.
Capitalised terms used in this announcement, unless otherwise specified, have the meanings given to them in the Prospectus and the Circular.
Notes to Editors
Shoreline Power
— Shoreline Power is a subsidiary of Shoreline Energy International
Limited (“SEI”), a leading private Nigerian energy and infrastructure
company. SEI was founded in 1997 and has offices in Lagos, where it has
its headquarters, and London.
— SEI has operations across Sub-Saharan Africa and a portfolio of 16
operating companies with over 3,000 employees.
— SEI has interests in the infrastructure, construction, energy,
investments and energy trading, and telecommunications sectors.
— Shoreline Power is led by Mr. Kola Karim, who is also the CEO of SEI.
— For further information please refer to www.shoreline-power.com
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