Kulczyk Oil announced that Neconde has signed an agreement providing that the time-frame for closing the proposed acquisition by Neconde of oil and gas assets in Nigeria, announced by KOV in a news release dated May 6, 2011, has been extended until November 14, 2011 and that the bridge financing arrangement between KOV and its major shareholder has been extended to provide the Company sufficient time for closing of the transaction and securing financing.
On May 6, 2011 the Company announced that it had joined the Neconde consortium as a 20% shareholder and that Neconde had entered into various agreements on 29 April 2011 with Shell Petroleum Development Company of Nigeria Ltd, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited (together, the "Sellers"), to acquire (the "Transaction"), the Sellers' cumulative 45% participating interest in Oil Mining License 42 ("OML 42"). OML 42 is a large license containing previously-discovered oil fields in the Niger Delta area of onshore Nigeria. The remaining 55% participating interest in OML 42 is currently held by the Nigerian National Petroleum Company ("NNPC").
In order to facilitate the participation of KOV in the Neconde consortium, Kulczyk Investments SA ("KI"), the major shareholder of the Company, provided bridge financing in respect of the Company's share of Neconde's acquisition costs of OML 42. KI and the Company agreed that until such time as the Company raises funds to repay KI, the shares of Neconde allocated to KOV would be held in trust by KI. They further agreed, in anticipation that the acquisition would have closed prior to the end of October 2011, that if the Company had not raised funds to repay KI for its bridge financing prior to October 31, 2011 the trust arrangement between KI and the Company would terminate and KI would become fully entitled (legally and beneficially) to the Company's shares in Neconde. An agreement in principle has been reached between the Company and KI to provide for an extension of that bridge financing to accommodate the extension agreed to between Neconde and the Sellers in relation to closing the Transaction.
Under the terms of the agreements between the Sellers and Neconde entered into on April 29, 2011, Neconde had up to 180 days to complete the acquisition. The Sellers have agreed to extend the time for completion of the Transaction in the manner described above.
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