To view the PDF file, sign up for a MySharenet subscription.

EFORA ENERGY LIMITED - Category 2 Disposal Announcement

Release Date: 08/02/2022 17:27
Code(s): EEL     PDF:  
Wrap Text
Category 2 Disposal Announcement

EFORA ENERGY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE Share Code: EEL
ISIN: ZAE000248258
(“Efora” or “the Company”)

CATEGORY 2 DISPOSAL ANNOUNCEMENT

1. INTRODUCTION

Shareholders of the Company (“Shareholders”) are referred to the announcement issued on
20 October 2021 wherein the Company provided an update on the business rescue proceedings at
Afric Oil Proprietary Limited (“Afric Oil”), a 71.13% indirectly owned subsidiary. Pursuant to the
aforementioned business rescue proceedings and a revised offer from Royale Energy Proprietary
Limited (“Royale”), the Company through its wholly owned subsidiary, Afric Oil Holdings Proprietary
Limited, has entered into an agreement (“Agreement”) with Royale (“Purchaser”), in terms of which
the Company will dispose of its 71.13% indirect interest in Afric Oil to the Purchaser, as a going
concern (“Disposal”), for a disposal consideration of R10 000 000 (“Disposal Consideration”).

2. DESCRIPTION OF BUSINESS CARRIED ON BY AFRIC OIL

Afric Oil markets, sells and distributes diesel, petrol, paraffin and lubricants to a diverse client base
in the agricultural, mining, transport and manufacturing industries, and also to parastatals.

3. RATIONALE FOR THE DISPOSAL

Afric Oil was placed under business rescue in April 2021 pursuant to s129 of the Companies Act
71of 2008 and the disposal is in line with the business rescue plan approved by creditors (“Business
Rescue Plan”) in August 2021 and implemented by Messrs Phahlani Mkhombo and Moses Singo
as the business rescue practitioners (“Business Rescue Practitioners”).

Afric Oil experienced financial difficulty brought upon by tough trading conditions and the loss of key
customers which ultimately resulted in its inability to service debt obligations to the Unemployment
Insurance Fund (“UIF”). This resulted the Public Investment Corporation (“PIC”), manager of the
UIF, obtaining an in the interim court order the effect of which was to take possession of movable
and immovable assets of Afric Oil under the terms of the loan agreement with the UIF, as announced
by the Company on 14 April 2021. The UIF advanced a loan of R210 000 000 to Afric Oil in February
2017 (“UIF Loan Agreement”).

Afric Oil business rescue notices can be found on the Afric Oil website at
https://www.africoil.co.za/business-rescue-notices/.

4. DISPOSAL CONSIDERATION

The Disposal Consideration of R10 000 000 will be paid in cash by the Purchaser on the Effective
Date (as outlined below).

The Compensation Fund which is the other shareholder in Afric Oil will received R2 900 000 for its
28.87% shareholding.

5. APPLICATION OF THE DISPOSAL CONSIDERATION

Funds received will be applied to secure new business interests pursuant to ongoing business
development activities of the Company.

6. CONDITIONS PRECEDENT

The Agreement is subject to the fulfilment or waiver (to the extent legally permissible) of the following
conditions precedent (“Conditions Precedent”):

6.1. the Loan Agreement (defined below) shall have been concluded and rendered unconditional in
     accordance with the terms thereof save for any condition relating to the Agreement being
     unconditional.
6.2. the Company and the Purchaser shall have received written consent from the UIF in terms of
     which it consents to the cancellation of the Bonds (defined below) against payments of amounts
     payable to it in accordance with the Business Rescue Plan.
6.3. the Purchaser shall have deposited an amount equal to the sum of the Disposal Consideration
     into the trust account of Rams Attorneys and shall have provided proof thereof; and
6.4. the transaction contemplated in the Agreement and in the Loan Agreement shall have been
     approved in terms of section 152 of the Companies Act.

"Loan Agreement" means the loan agreement to be concluded between the Purchaser and Afric Oil
on or about the Signature Date (defined below) in terms of which the Purchaser is to advance a loan
to Afric Oil in the total amount of R34 100 000.

"Bonds" collectively, means –
    • the special notarial bond over specified movable assets of Afric Oil Logistics (a 100% owned
       subsidiary of Afric Oil) in favour of the UIF as security for the obligations of Afric Oil under
       the UIF Loan Agreement.
    • the general notarial bond over the movable assets of Afric Oil in favour of the UIF as security
       for the obligations of Afric Oil under the UIF Loan Agreement; and
    • covering mortgage bond over all the properties of Afric Oil.

"Signature Date" means the date of signature of the Agreement by the last of its intended signatories,
being 25 January 2022.

7. EFFECTIVE DATE OF THE DISPOSAL

The effective date of the Disposal will be 1 March 2022 (“Effective Date”).

8. WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

8.1. The Agreement contains representations, warranties and indemnities by the Company in favour
     of the Purchaser which are standard for a transaction of this nature. Other specific warranties
     include:
     8.1.1 Afric Oil and its subsidiaries do not have any liabilities other than (i) those incurred in
             the ordinary course of business and (ii) those set out in the Business Rescue Plan.
     8.1.2 All material assets (movable and immovable) of Afric Oil will be unencumbered as at the
             Effective Date, save for the assets encumbered by the Bonds; and
     8.1.3 All information provided by, or on behalf of Afric Oil to the Purchaser and its agents for
             the transaction contemplated by the Agreement is true, accurate and is not misleading.

9. FINANCIAL INFORMATION

9.1. The value of the net liabilities of Afric Oil (“Net Liabilities”) as at 28 February 2020, being the
     date of the last audited consolidated annual financial statements, was R223 667 228.
9.2. The audited consolidated loss after tax attributable to Afric Oil for its year ended 28 February
     2020 was R128 691 191, based on the audited consolidated annual financial statements for the
     year then ended which were prepared in terms of IFRS.

10. CLASSIFICATION OF THE DISPOSAL

The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings Requirements.

Johannesburg
8 February 2022

Sponsor
PSG Capital

For further information please contact:

Efora Energy Limited
Darrin Arendse

+27 (0)10 591 2260

About Efora

Efora Energy Limited is a South African based independent African oil and gas company, listed on
the JSE. The Company has a diverse portfolio of assets spanning production in Egypt; exploration
and appraisal in the Democratic Republic of Congo; a midstream project relating to crude trading in
Nigeria and material downstream distribution operations throughout Southern Africa. Our focus as a
Group is on delivering energy for the African continent by using Africa’s own resources to meet the
significant growth in demand expected over the next decade.

Date: 08-02-2022 05:27:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story