Published: January 16, 2018 |

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Swala Oil & Gas has agreed to acquire up to 40 percent of stake in Orca Exploration Group’s wholly-owned Mauritius subsidiary, PAE PanAfrican Energy (PAEM) for a total consideration of up to $130m.

Of this amount, US$16.3 million will be paid by issuing 16.3 million Preferred Shares to Orca, subject to shareholder approval at the Company’s upcoming Annual General Meeting. If the issuance of Preferred Shares is not approved, then SPL shall pay Orca the equivalent amount in cash.

A further US$24 million shall be satisfied by SPL assuming through its share ownership a pro-rata share of the obligations under an IFC loan agreement entered into by PAEM’s wholly-owned subsidiary, PanAfrican Energy Tanzania Limited (“PAET”).

The acquisition financing has been arranged by Exotix Capital, a London-based specialist frontier markets investment bank. Exotix has placed a gross US$25 million from US institutions under an early bird 144A USD bond offering, a first for a Tanzanian company. Tanzanian, East African and international investors will be accessed in January for a second tranche fundraising via a new Tanzanian bond and additional tapping of the 144A USD bond.

Swala conducted a roadshow in Uganda, Kenya and Tanzania in early-August and received significant investor interest. Contemporaneously, the Company has submitted a prospectus for the issuance of US$50 million USD-linked Tanzanian Shilling bonds (with greenshoe rights) for approval by the Capital Markets and Securities Authority (CMSA).

Dr. David Mestres Ridge (Swala CEO) said: “Our investment in PAEM is transformational for Swala and the result of committed engagement by all parties. It also represents a number of firsts for Tanzania as part of Swala and Orca’s commitment to local participation in the Oil and Gas sector: it is the first deal of this magnitude between a foreign and a Tanzanian company; it is the first time that US dollar-linked bonds shall be listed on the DSE; and it is the first time that the Tanzanian pension and investment funds are invited to participate alongside international investors in these opportunities.

“This arrangement ultimately results in the benefits of more than 20 percent of Orca’s Tanzania business being indirectly owned by Tanzanian shareholders and bondholders, providing an alternative mechanism for local participation alongside traditional listings on the DSE, and the recirculation of funds into the Tanzanian economy mean a lower demand on the country’s foreign currency reserves over the duration of the project.

“Swala is an exploration company and we look forward to working with all stakeholders to ensure that Songo Songo can be fully explored to continue to deliver the value to the country that it has delivered to date.”

Source: Energy Business Review

To stop by Swala’s website, CLICK HERE

To stop by Panafrican’s website, CLICK HERE

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