8th Apr 2015 15:21
LONDON (Alliance News) - SacOil Holdings Ltd Wednesday said it has agreed a repayment and restructuring settlement on money owed to it under a loan to Energy Equity Resources Norway Ltd (EERNL).
According to SacOil, EERNL loans originated from the joint participation in oil prospecting licence 233 in Nigeria. That saw SacOil advance funds on EERNL's behalf so as to secure participation interest in the licence. SacOil said it advanced USD5 million to EERNL in October 2011 because its subsidiary, EER 233 Nigeria Ltd, had to pay a "performance bond" for the licence. The USD5 million loan carried an interest rate of between 25% and 32% and was secured against EER 233's equity. SacOil said that effectively gave it security over EER 233's 20% interest in the licence.
"The EERNL Group has to date been unable to settle the amount outstanding under the loans, which amounts to approximately USD24.2 million," SacOil said, though it had not impaired the loans in its accounts for the six months ended August 31, 2014. SacOil said this was because "the value of the security notionally exceeds the carrying value of the loans". SacOil said it will update the way it accounts for the loans.
The news comes one week after SacOil revealed the termination of its participation with Transnational Corp of Nigeria PLC, the company which operates oil prospecting licence 281. SacOil also had advanced funds on behalf of the EERNL Group to secure the farm-in to that licence. SacOil said that the sum due to be repaid by Transcorp following the end of its participation will be paid into a SacOil account nominated by EERNL.
"This settlement reflects the restructuring of the loans advanced to the EERNL Group and the consequences of our termination of the OPL 281 contract with Transcorp," SacOil Chief Executive Thabo Kgogo said in a statement.
"It also brings an end to the master joint venture agreement with EERNL with regards to the joint investigation of new exploration opportunities. This is in line with our renewed focus on development and production assets. Overall, we have negotiated this settlement to restructure the EERNL group's debt obligations and enhance our ability to recover the sums owed to the company and its shareholders," Kgogo said.
SacOil shares were up 42% at 1.85 pence near the close Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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