25th Mar 2020 06:51
(Alliance News) - Anglo African Oil & Gas PLC and Zenith Energy Ltd have agreed a lower price for assets in the Republic of Congo, the two said Tuesday.
Zenith agreed in December it would be buying a stake in the Tilapia field for GBP1 million off AAOG. Zenith is buying 80% of AAOG's Congolese business, which owns 56% of Tilapia.
This was to be paid in six equal monthly cash payments amounting to GBP500,000 and the rest in Zenith shares to AAOG.
However, this has now been changed. Zenith will pay ten equal monthly cash instalments totalling GBP800,000 and no shares.
"At present, if the disposal was to proceed without amendment, AAOG would own approximately 20% of the issued share capital of Zenith and would be forced to retain such shares for at least six months," said AAOG.
"Exacerbated by the current uncertainty in the markets, there is no certainty AAOG would be able to sell such a large stake in Zenith in an acceptable timeframe or at a price equal to the issue price."
"Taking account of all these factors, the board believes it is in the best interests of its shareholders to remove any uncertainty related to the value of the consideration shares and instead to receive a certain cash payment pursuant to the disposal," it added.
Andrea Cattaneo, the chief executive of Zenith, commented: "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.
"Recent world events, specifically the Covid-19 pandemic, have severely impacted 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 EUR 25 million euro medium-term note programme," he added.
AAOG shares closed 7.0% higher on Tuesday in London, with Zenith ending up 12% at 0.48p.
By George Collard; [email protected]
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