Further proof that the Exile/Oando deal have nothing to do with ERHC and was done for purposes of the RTO:
FAQ on Oando Plc and Exile Resources Inc.
August 09, 2011
Here is some additional information on this transaction.
1. We read this announcement of this deal that Oando is doing with Exile and see newspaper headlines suggesting that Oando is exiting the E&P business. Is this true?
No, Oando is not exiting the E&P business but rather strengthening its commitment to the growth of its E&P business by giving it a platform to raise Equity for faster growth through both organic and inorganic means.
2. But the announcement says that Oando is selling OEPL to Exile?
No, Oando is not selling OEPL to Exile, but rather undergoing a Reverse Take-Over (RTO). An RTO is a financial arrangement where a large unlisted company (Company A) offers itself to be bought by a smaller listed company (Company B) but asks for shares in a combined company (Company C). Company A thus owns a very large percentage of the new company C (in our case 95%), has a majority on the Board of Directors and selects the Management team. In most cases, such as this one, Company C changes name to Company A’s name.
3. So OEPL will not be called Exile Resources when this is completed?
No, upon completion of the transaction, subject to all necessary approvals, the new company will have a new name, to be determined by Oando. The company has announced that it will most likely be called Oando Energy Resources Inc or any name Oando chooses.
4. So, who runs the new company, Oando or Exile?
Oando will have the right to appoint members to the management team of the new company. The board of directors of the company will be comprised of three nominees of Oando, two nominees of Exile and two independent directors, and the Group Chief Executive of Oando Plc, Mr. Wale Tinubu, will be appointed as the chairman of the new company.
5. What is OEPL’s current relationship with Exile Resources Inc?
OEPL is a Joint Venture Partner with Exile Resources on the Akepo oil field located in OML 90 in Nigeria. Oando acquired 75 percent working interest in Exile’s 40 percent stake in the Akepo field in OML 90 in 2009. Thus, Oando owns 30% of Akepo and Exile owns 10% of Akepo. Oando’s Partner, Sogenal, owns the balance 60%. Oando is the Financial and technical partner, which means it is funding and leading the technical part of the operation in return for a higher than 30% portion of the cash flow.
6. What is the benefit of this transaction to Oando?
A listing will create a platform that will facilitate OEPL’s access to equity capital required for acquisition of proven and producing assets as well as the further development of our current E & P portfolio, which is comprised of current production of 5,000 barrels a day, near term development opportunities and exploration upside. The transaction will also create a standalone E & P company that would be readily comparable to its international peers and provide a pure play investment vehicle for our shareholders and new investors.
7. What is the benefit of listing on the Toronto Stock Exchange (TSX)?
With a listing, OEPL will have a platform to raise the Equity financing required to develop the exciting opportunities in the upstream sector. In addition, by carving OEPL out of Oando PLC, Oando PLC shareholders will receive a proper valuation for OEPL assets, which is currently subsumed, at a discount, in Oando Plc’s share price. By having a listing on one of the foremost Exchanges for resource companies, Oando Plc is enabled to grow and create value at a faster pace than its previous debt-financed and Group-financed pace allowed.
8. What stage is the transaction currently at?
Oando and Exile have executed a term sheet dated July 28, 2011 providing for, subject to the completion of satisfactory due diligence by both parties and other conditions.
9. When is the transaction expected to be concluded?
Oando expects to sign a definitive agreement with Exile before the end of September, 2011 and then begin the process of approvals. This will probably go on till the end of November.
10. How is this expected to play out?
Subject to satisfactory completion of due diligence and obtaining all the approvals, OEPL would be a separately listed company from Oando PLC, owned by Oando PLC and listed on the Toronto Stock Exchange. This listing still keeps OEPL, a Nigerian Company and its assets Nigerian owned, with the company on the fast track path to becoming Nigeria’s leading indigenous E&P company.
11. Will ALL upstream (i.e. OEPL) assets of Oando be part of the new entity?
Oando is yet to decide on the structure for the new company and which assets will immediately be transferred to the new company.
12. How much of net debt will be assigned to the new entity?
Oando is yet to decide on the structure the acquisition will take and on whether the debt will remain in OEPL or be transferred to the Group.
For further enquiries, kindly contact:
Meka Olowola
Head, Corporate Communications
Oando PLC
5th, 7th -10th Floors
2, Ajose Adeogun Street,
Victoria Island
Lagos, Nigeria
Tel: +234 (1) 2702400 Ext 6376
Fax: +234 (1) 261 1366
DL: 01-2805593
Website: www.oandoplc.com
