Zenith Energy reduces price of AAOG acquisition
Following the announcement of its acquisition of Anglo Africa Oil & Gas Congo S.A.U. in December, Zenith Energy has entered into a conditional Deed of Variation that changes the terms of the payment for the acquisition of an 80% stake in the company.
Anglo Africa Oil & Gas Congo S.A.U., which is a fully owned subsidiary of Anglo Africa Oil & Gas (AAOG), operates and owns a 56% stake in the Tilapia oilfield in the Republic of Congo.
Under the initial terms of the agreement, the international energy production company would pay £1 million to AAOG, of which half would be paid in cash in six equal monthly installments, with the first installment due on completion. The other half of the payment would be reflected in the issuance of equity in Zenith Energy, with shares issued at the volume weighted average price of a Zenith common share, for a period of 14 trading days prior to completion.
Due to the impact of the ongoing Covid-19 epidemic on the share price of the company, the new Deed of Variation reduces the price of the acquisition by 20%, all of which is to be paid in cash in ten equal monthly installments, with the first payment due on completion of the Acquisition. As a result, the company will not issue shares, while the remaining terms of the agreement remain unchanged.
“We are pleased to have successfully renegotiated the terms of the Acquisition with the achievement of a 20% reduction and the avoidance of any Zenith equity issuance as part of the Consideration,” said Andrea Cattaneo, CEO of Zenith Energy. “Recent world events, specifically the Covid-19 pandemic, have severely impacted the international financial markets, and, by consequence, also negatively affected the valuation of our share price. In view of the above developments, we have decreased the Consideration to reflect an adjusted asset valuation commensurate with the decline in oil prices and to include cash only consideration which shall be funded by means of our publicly announced €25 million EMTN Program.”
The negotiated settlement remains conditional on regulatory approvals from the Republic of Congo’s Ministry of Hydrocarbons, as well as the passing of a resolution by AAOG’s shareholders at a general meeting. If the resolution is not passed, the Deed of Variation will not enter into effect and the acquisition will move forward under the original terms announced in December 2019.