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Woburn Energy PLC (WBN)

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Friday 01 June, 2012

Woburn Energy PLC

Proposed Disposal

RNS Number : 6330E
Woburn Energy PLC
01 June 2012
 

For immediate release

1 June 2012

Woburn Energy Plc

("Woburn" or the "Company")

Proposed Disposal of the Company's Colombian beneficial interests

 

1.     Introduction

The Board of Woburn is delighted to announce that the Company's 51 per cent. owned subsidiary, LQRC, has today entered into a conditional Assignment Agreement for the sale of its 50 per cent. beneficial interest in the Las Quinchas Association Contract with Ecopetrol, the sole remaining asset of LQRC. The proposed completion of the sale by LQRC is conditional on approval by Ecopetrol and the approval of Shareholders at a general meeting of the Company (the "Disposal"). Following Completion, Woburn will have no assets other than its share of the net proceeds of the Disposal, which are expected to amount to approximately US$4.5 million after settlement by LQRC and Woburn of all outstanding liabilities owed both to the Las Quinchas Association Contract operator, Pacific Rubiales, and the LQRC minority shareholder, PetroMagdalena, together with the costs and expenses of the Disposal.

The Disposal will constitute a fundamental change of business of the Company under Rule 15 of the AIM Rules, which requires the approval of the Shareholders. The Disposal will result in the Company becoming an Investing Company, as a consequence of which Rule 15 of the AIM Rules further requires the Company to obtain the approval of its Shareholders for its proposed Investing Policy going forward.

Following approval of the Disposal by Shareholders, the Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the General Meeting, failing which, the Company's Ordinary Shares would then be suspended from trading on AIM. If the Company's Investing Policy has not been implemented within 18 months of the General Meeting the admission to trading on AIM of the Ordinary Shares would be cancelled and the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.

2.      Background to the Disposal

In June last year, Woburn announced that it was seeking a buyer for its Colombian beneficial interests, which are owned by its 51 per cent. owned subsidiary, LQRC, which has a 50 per cent. non-operated beneficial interest in Las Quinchas Association Contract in Colombia. The disposal process has been managed by the Company's partner in LQRC and Colombia, PetroMagdalena, which first acquired an interest in LQRC in 2008. The operator of Las Quinchas Association Contract is Pacific Rubiales.

 

The Directors have been seeking to find a buyer for the Company's Colombian beneficial interests for some considerable time and they believe that the Disposal provides an attractive opportunity for the Company to realise its entire investment in its remaining Colombian oil and gas beneficialinterests for cash and settle outstanding liabilities. The cash proceeds of the Disposal will enable LQRC and Woburn to settle all outstanding liabilities owed both to the Las Quinchas Association Contract operator, Pacific Rubiales, and the LQRC minority shareholder, PetroMagdalena.

 

Woburn's share of the net Disposal proceeds is estimated to amount to approximately US$4.5 million after expenses.

 

3.        Summary of the Assignment Agreement

The Disposal has been structured as an assignment of the beneficial interests of LQRC in the Las Quinchas Association Contract.  The Assignment Agreement is conditional on approval by Ecopetrol and Woburn Shareholder approval. The Assignment Agreement values 100 per cent. of Las Quinchas at US$35 million, of which US$34 million has been apportioned in aggregate to the Arce and Acacia Este fields in which LQRC has a 50 per cent beneficial interest, and the balance to the Baul well (in which LQRC did not participate). The total cash consideration to be received by LQRC from the Purchaser amounts to US$16 million.

 

Under the terms of the Assignment Agreement, the Consideration will be paid to LQRC in ten instalments, of which the first instalment of US$1,777,778 has been paid as a deposit (from which LQRC made a first payment of US$730,000 to PSE in respect of unpaid billings), as summarised in Column A in Table 1 below. The payment date for each instalment is determined by the date on which the relevant Colombian authority, in this case Ecopetrol, approves the assignment of LQRC's beneficialinterest in the Las Quinchas Association Contract to the Purchaser or, if earlier, the date which is three (3) months following the sixtieth (60th) day after formal submission to the Colombian authority requesting assignment of the Las Quinchas Association Contract to the Purchaser.

 

LQRC has also entered into a private payment and settlement agreement with PSE pursuant to which PSE has agreed to advance to LQRC a proportion of the instalments that PSE will receive from the Purchaser which will be repaid to PSE out of the proceeds of the fifth, sixth, seventh, eighth, ninth and tenth instalments. LQRC has in return agreed to settle the outstanding billings due to PSE as operator of the Las Quinchas Association Contract, which currently amounts to US$4.4 million (of which US$2.15 million is to be paid to PetroMagdalena, which has settled this amount with PSE on behalf of LQRC). LQRC has further agreed pursuant to the Settlement Agreement that it will pay interest to PSE (at an annual rate of 7.5 per cent.) on any outstanding billings and advances from PSE, and that the balance of any interest will be paid immediately following payment of the Fifth Instalment. The obligations of PSE to make such advances to LQRC, and the obligations of LQRC to repay any such advances and agreed billings, is conditional on the Purchaser paying the instalments that are due to both LQRC and PSE pursuant to their respective assignment agreements with the Purchaser.

 

Table 1: Payments due to LQRC

 

Instalment

Instalment payment date

Column A:

Gross proceeds

Column B:

Net proceeds



US$

US$

First

Paid

         1,777,778

        2,150,000

Second

Within 3 months of the Assignment Date

         2,666,667

            255,147

Third

Within 6 months of the Assignment Date

         2,666,667

        6,899,600

Fourth

Within 9 months of the Assignment Date

         2,666,667

            773,210

Fifth

Within 12 months of the Assignment Date

         2,666,667

                       -  

Sixth

Within 3 months of payment of the Fifth Instalment

            888,889

                       -  

Eighth

Within 6 months of payment of the Fifth Instalment

            888,889

                       -  

Ninth

Within 9 months of payment of the Fifth Instalment

            888,889

                       -  

Tenth

Within 12 months of payment of the Fifth Instalment

            888,889

                       -  







      16,000,000

      10,077,957





 

 

The net proceeds therefore which the Board expects LQRC to receive, after adjustment for advances received from, and thereafter repayable to, PSE, together with settlement of billings and interest payments owed to PSE, amount in aggregate to US$10.1 million, and are set out in Column B of Table 1 above, of which Woburn's net share in respect of its 51 per cent. interest in LQRC amounts to US$5.14 million. Woburn has also settled outstanding administrative and management charges owed by LQRC to PetroMagdalena, which amounts in aggregate to approximately US$0.257 million. The Board expects that LQRC will receive the second, third and fourth Instalments (as set out in Column B of Table 1 above) on or before the end of November 2012, February 2013 and May 2013 respectively.

 

Accordingly, after settlement of these liabilities and the cost of the transaction, the Board estimates that Woburn's net receipts in respect of its 51 per cent. interest in LQRC will amount to US$4.5 million (including net receipts under the First Instalment).

 

4.        The Company's operations following the Disposal

The Company will be an investing company under the AIM Rules following completion of the Disposal. The Company will have no assets other than the proceeds of the Disposal.

 

Following the settlement of all outstanding management fees and other administrative costs owed by Woburn to PetroMagdalena, Woburn's expenses and costs of the Disposal and repayment in full of the Cetus Loan, Woburn's share of the net proceeds of the Disposal are estimated to amount to approximately US$3.4 million which will provide the Company with significant cash resources to pursue new investment opportunities in accordance with the Investing Policy and to provide working capital for the day-to-day business of the Company. 

The Board will review and assess potential new investments in accordance with the Investing Policy.

5.        Proposed Investing Policy

The Company's proposed Investing Policy, which is subject to shareholder approval, is set out below:

Investing Policy

The Company intends to make investments in the oil and gas sector.

The Directors intend initially to focus on Europe, the Middle East, Africa and Asia where the Directors believe that a number of opportunities exist to acquire interests in suitable projects, although other regions may be considered. Investments may be made in exploration, development or producing assets.

 

The Directors may consider it appropriate to take an equity interest in any proposed investment which may range from a minority position to 100 per cent. ownership. Proposed investments may be made in either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct interest in a project.

The Company intends to be an involved and an active investor. Accordingly, where necessary, the Company may seek participation in the management or with the board of directors of an entity in which the Company invests or in the event that it is acquired then in the on-going enlarged entity.

New investments will be held for the medium to longer term, although shorter term disposal of any investments cannot be ruled out.

There will be no limit on the number of projects into which the Company may invest, and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules. Where the Company builds a portfolio of related assets it is possible that there may be cross-holdings between such assets. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate.

Investments may be made in all types of assets and there will be no investment restrictions.

The Company's primary objective is that of securing for the Shareholders, the best possible value consistent with achieving, over time, both capital growth and income for Shareholders through developing profitability coupled with dividend payments on a sustainable basis.

Following on from adopting an Investing Policy, the Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the General Meeting, failing which the Ordinary Shares would then be suspended from trading on AIM. If the Investing Policy has not been implemented within 18 months of the General Meeting the admission to trading on AIM of the Ordinary Shares would be cancelled and the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.

 

The Directors believe that their broad collective experience in the areas of natural resources, acquisitions, accounting, corporate and financial management together with the opinion of consultant experts in the evaluation and exploitation of natural resources projects, which will assist them in the identification and evaluation of suitable opportunities, will enable the Company to achieve its objectives. Internationally recognised competent persons will be commissioned to prepare reports on the projects being considered by the Company, where the Directors consider it necessary. The Directors may undertake the initial project assessments themselves with additional independent technical advice as required. The Company will not have a separate investment manager.

 

6.       Circular to shareholders

The Company is sending a circular to shareholders, which provides details on the proposed Disposal and notice of a general meeting to be held on 21 June 2012 at 10.00am.

For further information, please contact:

 

Woburn Energy Plc

Tel: +44 (0) 20 7380 4600

Kamran Ahmed

Graeme Thomson

www.woburnenergy.com

 

 

Beaumont Cornish Limited (Nominated Adviser)

Tel: +44 (0)20 7628 3396

Michael Cornish


 



 

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

"$" or "US$" or "USD"

the lawful currency of the United States;

"Act"

the Companies Act 1985 and the Companies Act 2006 as amended, including all secondary legislation made under the Act;

"AIM"

AIM, a market operated by the London Stock Exchange;

"AIM Rules"

the rules of the London Stock Exchange governing admission to, and operation of, AIM and comprising the AIM Rules for Companies and the AIM Rules for Nominated Advisers;

"Alange Alberta"

Alange Alberta Incorporated, a wholly-owned subsidiary of PetroMagdalena;

"Assignment Agreement"

the conditional assignment agreement executed 31 May 2012 and entered into between LQRC and the Purchaser;

"Assignment Date"

the date on which the relevant Colombian authority, in this case Ecopetrol, approves the assignment of LQRC's beneficial interest in the Las Quinchas Association Contract to the Purchaser or, if earlier, the date which is three (3) months following the sixtieth (60th) day after formal submission to the Colombian authority requesting assignment of the Las Quinchas Association Contract to the Purchaser;

"Cetus Investment"

 

Cetus Investment Resources Incorporated, a company incorporated under the laws of the British Virgin Islands whose registered office is located at Morgan & Morgan Building, Pasea Estate, Road Town, Tortola, British Virgin Islands.  Cetus Investment is a wholly owned subsidiary of Zaver Petroleum International Incorporated, which itself is a wholly owned subsidiary of United Paramount Holding Corporation.  Mr Hashwani, a director of the Company, is beneficially interested in the entire issued share capital of United Paramount Holding Corporation and is therefore the ultimate controlling party of the Company;

"Cetus Loan"

The £650,000 unsecured, non-interest bearing loan provided by Cetus to the Company, which is repayable on demand;

 "Company" or "Woburn"

Woburn Energy PLC, a company incorporated and registered in England and Wales with registered number 04128401, whose registered office is at 16 Upper Woburn Place, London, WC1H 0AF;

"Completion"

completion of the Assignment Agreement in accordance with its terms;

"Directors" or the "Board"

the directors of the Company;

"Disposal"

the conditional sale  by LQRC of its 50 per cent. beneficial interest in the Las Quinchas Association Contract pursuant to the Assignment Agreement;

"Fifth Instalment

The payment by the Purchaser to LQRC pursuant to the Assignment Agreement to be made within 12 months of the Assignment Date;

"Investing Company"

has the meaning given in the glossary to the AIM Rules;

"Investing Policy"

the proposed investing policy of the Company, to be pursued by the Company following Completion;

"Las Quinchas Association Contract"

the association contract between Empresa Colombiana De Petroleos (Ecopetrol) and Clavijo Avila Geopozos & Company S.A. dated 29 January 1996 (as amended);

"LQRC"

Las Quinchas Resource Corporation, a company incorporated under the laws of Barbados (West Indies) with registered number 16000063 whose registered office is located at c/o Oceanic Managers (Barbados) Incorporated, Braemar Court, Deighton Road, St. Michael, BB14017, Barbados;

"LQRC Branch"

the branch office of LQRC situated in Colombia

"Ordinary Shares"

the existing ordinary shares of in the capital of the Company, each of 1.0 pence;

"Pacific Rubiales"

Pacific Rubiales Energy Corp, incorporated under the laws of the Province of British Columbia, whose records office is located at Suite 650 - 1188 West Georgia Street, Vancouver, British Columbia V6E 4A2;

"Pacific Stratus"

Pacific Stratus Energy Colombia Corp, a company organised under the laws of Panama, with a branch established in Colombia, a wholly-owned subsidiary of Pacific Rubiales;

"PetroMagdalena"

PetroMagdalena Energy Corporation (formerly Alange Energy Corporation), incorporated under the laws of the Province of British Columbia, whose records office is located at Suite 650 - 1188 West Georgia Street, Vancouver, British Columbia V6E 4A2;

"Purchaser"

the purchaser of the beneficial interests of LQRC under the Las Quinchas Association Contract pursuant to the  Assignment Agreement, being Cloister Blue Corporation, a company organised and existing under the laws of the British Virgin Islands with registered number 1054513;

"Settlement Agreement"

the Private Payment and Settlement Agreement between: (1) Pacific Stratus; and (2) LQRC, executed 31 May 2012;

"Shareholders"

holders of Ordinary Shares in the Company;

"Sterling" or "£"

the lawful currency of the UK;

"Takeover Code"

the City Code on Takeovers and Mergers;

"UK" or the "United Kingdom"

the United Kingdom of Great Britain and Northern Ireland;

"United Paramount Holding Corporation"

the parent company of Zaver Petroleum, which is the parent company of Cetus Investment;

"Zaver Petroleum"

Zaver Petroleum International Incorporated, a company incorporated in the British Virgin Islands whose registered office is located at Morgan & Morgan Building, Pasea Estate Road Town, Tortola, British Virgin Islands."

 

 

 

ENDS

 

 

 

 

 

 

                                                                          


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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