Africa Oilfield, the investment company established to invest in the oil and gas logistics support industry in sub-Saharan Africa, announces that it has entered into a framework and option agreement (the "Agreement") pursuant to which:
· overseen by Africa Oilfield, Ardan Risk & Support Services (Ardan), the oilfield logistics and support services business with operations in East Africa, is undertaking a corporate and contractual restructuring programme to rationalise operational management and implementation, planning and reporting; and
· Africa Oilfield has been granted a 3-year conditional call option which provides the right, but not the obligation, to acquire 100% of Ardan Logistics Kenya Limited (ALK), a separate and new 'shell' company from which the restructured business of Ardan will be operated (Option).
The signing of the Agreement follows negotiations conducted with the principals of Ardan during the period of exclusivity granted to the Company in August 2013 at the time when the Company acquired a 49 per cent. interest, and agreed to provide funding to, Ardan. Together with Africa Oilfield management, the principals of Ardan have identified that the operation of the Ardan business requires and will benefit from restructuring so as to improve operational management and implementation, planning and reporting. Accordingly, the principals of Ardan have established ALK, a separate and new 'shell' company in Kenya within which it will implement a new divisionalised structure through which the Ardan business will be operated going forwards. As part of this process, management of Ardan will seek to novate certain existing contracts to ALK.
Under the terms of the Agreement, an option has been granted to Africa Oilfields which provides the right, but not the obligation, to acquire 100% of the issued share capital of ALK. The Board do not intend to exercise the Option unless and until the corporate and contractual restructuring has been completed to its satisfaction. In addition to being subject to shareholder approval, completion of the Agreement will also be subject to the satisfaction of certain other conditions, including satisfaction of any requirements of relevant competition authorities. Recognising that local competition authority procedures will need to be followed, in order to avoid any extended period of uncertainty in respect of completion, AOL intend to seek approvals at an early stage and, if possible, have them in place prior to exercise of the Option. In the event that the Option is not exercised, the board recognise and acknowledge that appropriate accounting impairment may need to be made in respect of the Company's 49% investment in Ardan, as required.
Shareholders of the Company are advised that should the Option be exercised by Africa Oilfield, such exercise will likely constitute a reverse takeover for the purposes of rule 14 of the AIM Rules for Companies (AIM Rules). Accordingly, the Company expects to publish a re-admission document and to convene a general meeting to approve the reverse takeover immediately upon exercise of the option. Further information will be provided in this regard in due course and, in accordance with the AIM Rules, full details relating to the reverse takeover will be provided in the re-admission document.
In the meantime, Africa Oilfield will continue to provide funding to Ardan to enable it to continue to develop its services to meet its clients' specialist needs, in the fast moving African natural resource exploration and development sectors.
Recently appointed Chief Executive Officer of Africa Oilfield, Carl Esprey, said "The signing of the Agreement marks another important step in the Company's continuing development and towards cementing its original vision of developing into a leading provider of quality turn-key support services and logistics solutions to international oil, gas and mining companies operating on the African continent. Our work since completing our original investment has shown that the Ardan business requires the proposed restructuring to fully meet its potential. We believe that a successfully restructured Ardan business has the potential to become the premier support services and logistics company in the East African region. We will keep shareholders regularly updated on progress and look forward to working with our committed team through this exciting phase, with a view to maximising value for shareholders".