Anglo African to sell most of Tilapia amid funding constraints

Anglo African Oil & Gas has entered into a conditional sale and purchase agreement with Zenith Energy for the sale of an 80% interest in its wholly-owned subsidiary, Anglo African Oil & Gas Congo, which holds a 56% interest in Tilapia in the Republic of the Congo, it announced on Friday.

The AIM-traded firm said consideration for the disposal would be £1m, of which £0.5m would be in cash payable in six equal monthly instalments from the date of completion, and £0.5m of Zenith ordinary shares to be issued at a volume-weighted average price of a Zenith share for a period of 14 trading days prior to completion.

In addition, Zenith would fund Anglo African’s share of a $5.5m work programme on Tilapia, and the upfront cash element of any signature bonus payable for the new licence negotiated with the Congolese Ministry of Hydrocarbons.

Anglo African said the disposal remained conditional, amongst other things, on the approval of shareholders at a general meeting, notice of which would be posted to shareholders in due course.

The company said it would apply the proceeds of the disposal to finance its day-to-day operations, and to conduct due diligence over reverse takeover transactions that presented themselves once the company is an AIM rule 15 cash shell.

Anglo African said it had agreed not to sell the Zenith shares for a period of six months from completion, and thereafter in “an orderly manner”.

The board said it would analyse the value of the Zenith shares from time to time, with a view to selling at them at the most advantageous time for Anglo African shareholders.

It was also proposed that the company enter into a new facility agreement with RiverFort, from whom it has received a term sheet for a facility to provide up to an initial £0.5m of capital over six months to the company.

Anglo African said it was continuing to negotiate the term sheet with RiverFort, but added that it expected to be in a position to sign a binding agreement with RiverFort by the end of the year.

It noted that the entry into the RiverFort Financing would constitute a related party transaction for the purpose of the AIM rules, by virtue of RiverFort being a substantial shareholder.

“We are very pleased to have reached agreement with Zenith on the terms of the disposal and we look forward to working with them going forward,” sand non-executive chair Sarah Cope.

“Whilst regrettable that Anglo African Oil & Gas has been unable to fund the work programme as planned, the board believes that the disposal is in the best interests of the company and its shareholders as we retain an interest in any upside at Tilapia.

“We are also grateful to RiverFort and its associates for their continued support and indeed the support of all our shareholders through what has been a very difficult time.”

At 0915 GMT, shares in Anglo African Oil & Gas were up 9% at 0.54p.