16th Feb 2016 10:40
LONDON (Alliance News) - San Leon Energy PLC on Tuesday said it had been unsuccessful in its appeal against a decision made by the International Court of Arbitration involving its Aurelian Oil & Gas subsidiary's acquisition of a stake in Energia Zachod.
In 2013, the International Court of Arbitration of the International Chamber of Commerce said it had received a request for arbitration from Avobone NV and Avobone Poland BV in relation to Aurelian's acquisition of Avobone's 10% shares and loans in Energia Zachod, the holder of the Siekierki asset in Poland.
San Leon said at the time that it believed the request was without merit and has contested the claims, but the court last May ruled Aurelian had to pay GBP13.0 million, including costs, to settle the case. Two-thirds of the fee related to the repayment of a loan provided to Aurelian by Avobone. San Leon started an appeal against the decision in October.
In Aurelian's view, the loan was a standard industry-practice mechanism that was used to fund Avobone's share of the drilling and other field-related costs in a tax-efficient manner, and should only have been repayable had Avobone exited after the field had generated sufficient cashflow to repay the loan, San Leon had said. As of the timing of Avobone's exit in early 2013, the field had yet to generate cashflow, it had added.
However, San Leon said on Tuesday its appeal had been dismissed by the court, with the award still standing at GBP13.0 million.
San Leon said it is conferring with counsel on its options and will provide further updates in due course.
San Leon shares were untraded on Tuesday, having last traded at 29.12 pence. Its shares have been suspended from trading on AIM since January 22, when the company announced a reverse takeover, which is expected to close in March.
By Hannah Boland; [email protected]; @Hannaheboland
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