Through the merger with CEHL, Equator will acquire CAMAC International's exploration and production interests in the territorial waters of Nigeria which include participating interests in OML 108, OML 120, OML 121, OPL 278 and OPL 282.
The Merger will be structured by way of a reverse takeover of Equator. Equator will acquire the entire issued share capital of CEHL in consideration for the issue of the Consideration Shares to CAMAC International's wholly owned subsidiary, CAMAC Energy EP Limited ("CAMAC" or "Seller").
Based on Equator's existing issued share capital, the terms of the Merger will result in the Enlarged Group being 70% owned by CAMAC EP and 30% owned by Equator Shareholders, on an undiluted basis. The Enlarged Group will be led by a board selected from existing directors and senior managers of CAMAC International and Equator and will be complemented by additional independent non-executive directors.
The Merger is conditional upon, amongst other things, the posting of the AIM Admission document to Equator Shareholders and Equator Shareholders subsequently passing a resolution approving the Merger at an Extraordinary General Meeting to be convened in due course. The AIM Admission Document will only be posted once the current Equator directors and the proposed directors of the Enlarged Group are each satisfied that the Enlarged Group will have sufficient working capital to meet its requirements and are satisfied that due diligence relating to the re-admission of the Company has been completed.
The AIM Admission Document will be posted to existing Equator Shareholders in due course and in any event no later than 31 August. It will include the notice of the Extraordinary General Meeting.
Equator has also entered into a working capital facility agreement with South African Oil Company ("SAOC"), a wholly owned subsidiary of CAMAC International, and a working capital facility agreement with a shareholder lender. Under these agreements, SAOC and the shareholder lender have each agreed to provide to the Company a $5 million facility. These facilities each have a maturity date of 15 February 2009 and will be utilized by Equator for near-term working capital requirements.
In addition to the $10 million drawn down from the two working capital facilities, Equator and CAMAC EP have identified potential sources of additional financing that will be required to fund the future working capital requirements of Equator and the Enlarged Group.
As the proposed Merger is a reverse takeover for the purposes of AIM Rules, Equator securities will remain suspended by the London Stock Exchange pending the publication of an AIM Admission Document for the Enlarged Group.
Samuel Jonah, KBE, OSG, Executive Chairman of Equator Exploration Limited, said:
"Having carried out an in-depth review of Equator's strategic, operational and financial position, I am delighted that we can today present to Equator shareholders this proposed merger with CAMAC Energy Holdings Limited. This strategic transaction will offer shareholders a larger and more balanced portfolio of assets in the highly prospective West African offshore basin. In addition, the financing facilities and our collaborative efforts with CAMAC EP to secure additional financing can give Equator shareholders more confidence in the Company's financial position and the sustainability of its operations."
Dr. Kase L. Lawal, the Chairman and Chief Executive Officer of CAMAC International Corporation, said:
"We are excited about our shared intention to merge CAMAC Energy Holdings Limited and Equator. We believe that the combination of these two entities and their portfolios of assets will create for shareholders a more diversified and Better-capitalized business focused on the West African offshore sector. We believe that both asset portfolios offer significant upside potential, which can best be pursued through the combination of our managerial and capital resources as well as our respective regional knowledge and relationships."
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