Oando Plc has announced that it has reached an agreement to buy the minority shares of its subsidiary Oando Energy Resources (OER). OER is its Canadian listed subsidiary. The deal according to Oando is worth about US$13.7 million and implies an equity value for the Company of approximately US$955.3 million (N200b). Oando Group the parent company in Nigeria is worth about N70billion (based on its latest share price).
Oando Pls recently declared record losses in its 2014 full year and 2015 9 months results attributing it mostly to impairments taken in the wake of the drop in oil prices. The company is also said to have agreed deal with its financiers to restructure its debts.
Oando is often viewed as having complex capital and financial structures that often confuse retail shareholders.
See press release below;
CALGARY, Dec. 22, 2015 /CNW/ – Oando Energy Resources Inc. (“OER” or the “Company“) (TSX: OER), a company focused on oil and gas exploration and production in Nigeria, today announced that it has entered into a definitive agreement (the “Arrangement Agreement“) with Oando PLC and Oando E&P Holdings Limited, a private company incorporated under the laws of the Province of British Columbia as a wholly-owned subsidiary of Oando PLC (the “Purchaser“), under which the Purchaser would acquire all of the issued and outstanding common shares of OER (the “Common Shares“), excluding the Common Shares held by Oando PLC and those held by M1 Petroleum Ltd., West African Investment Ltd. and Southern Star Shipping Company Inc. (collectively, the “Institutional Shareholders“) (such Common Shares, excluding those of Oando PLC and the Institutional Shareholders being the “Minority Shares“), pursuant to a plan of arrangement (the “Plan of Arrangement“) for cash consideration of US$1.20 per share (the “Consideration“), subject to the receipt of relevant lender consent and regulatory approvals.
Oando PLC holds, either directly or indirectly, 746,107,838 of the Common Shares, representing approximately 93.7% of the issued and outstanding Common Shares. Pursuant to the Plan of Arrangement, the Purchaser will acquire all of the Common Shares that are held either directly or indirectly by the Institutional Shareholders and Oando PLC. In consideration for such transfer, they shall receive such number of shares of the Purchaser as reflects the number of their contributed Common Shares for the purposes of completing the transactions contemplated by the Plan of Arrangement.
The Consideration represents a 177.2% premium to the 20-day volume weighted average price of the Common Shares on the Toronto Stock Exchange for the period ending December 21, 2015, using the Bank of Canada US$ to CDN$ closing exchange rate of 1.3965 on December 21, 2015. The transaction provides total consideration to holders of Minority Shares of approximately US$13.7 million and implies an equity value for the Company of approximately US$955.3 million.
The Board of Directors of OER has unanimously (with Messrs. Tinubu and Boyo abstaining) determined that the Plan of Arrangement is fair to shareholders (excluding Oando PLC and the Institutional Shareholders) and it would be in the best interests of the Company to enter into the Arrangement Agreement.