Category 2 Disposal Announcement
EFORA ENERGY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE Share Code: EEL
(“Efora” or “the Company”)
CATEGORY 2 DISPOSAL ANNOUNCEMENT
Shareholders of the Company (“Shareholders”) are referred to the announcement issued on 20 October 2021 wherein the Company provided an update on the business rescue proceedings at Afric Oil Proprietary Limited (“Afric Oil”), a 71.13% indirectly owned subsidiary. Pursuant to the aforementioned business rescue proceedings and a revised offer from Royale Energy Proprietary Limited (“Royale”), the Company through its wholly owned subsidiary, Afric Oil Holdings Proprietary Limited, has entered into an agreement (“Agreement”) with Royale (“Purchaser”), in terms of which the Company will dispose of its 71.13% indirect interest in Afric Oil to the Purchaser, as a going concern (“Disposal”), for a disposal consideration of R10 000 000 (“Disposal Consideration”).
- DESCRIPTION OF BUSINESS CARRIED ON BY AFRIC OIL
Afric Oil markets, sells and distributes diesel, petrol, paraffin and lubricants to a diverse client base in the agricultural, mining, transport and manufacturing industries, and also to parastatals.
- RATIONALE FOR THE DISPOSAL
Afric Oil was placed under business rescue in April 2021 pursuant to s129 of the Companies Act 71 of 2008 and the disposal is in line with the business rescue plan approved by creditors (“Business Rescue Plan”) in August 2021 and implemented by Messrs Phahlani Mkhombo and Moses Singo as the business rescue practitioners (“Business Rescue Practitioners”).
Afric Oil experienced financial difficulty brought upon by tough trading conditions and the loss of key customers which ultimately resulted in its inability to service debt obligations to the Unemployment Insurance Fund (“UIF”). This resulted the Public Investment Corporation (“PIC”), manager of the UIF, obtaining an in the interim court order the effect of which was to take possession of movable and immovable assets of Afric Oil under the terms of the loan agreement with the UIF, as announced by the Company on 14 April 2021. The UIF advanced a loan of R210 000 000 to Afric Oil in February 2017 (“UIF Loan Agreement”). Afric Oil business rescue notices can be found on the Afric Oil website at
- DISPOSAL CONSIDERATION
The Disposal Consideration of R10 000 000 will be paid in cash by the Purchaser on the Effective Date (as outlined below).
The Compensation Fund which is the other shareholder in Afric Oil will received R2 900 000 for its 28.87% shareholding.
- APPLICATION OF THE DISPOSAL CONSIDERATION
Funds received will be applied to secure new business interests pursuant to ongoing business development activities of the Company.
- CONDITIONS PRECEDENT
The Agreement is subject to the fulfilment or waiver (to the extent legally permissible) of the following conditions precedent (“Conditions Precedent”):
6.1. the Loan Agreement (defined below) shall have been concluded and rendered
unconditional in accordance with the terms thereof save for any condition relating to the Agreement being unconditional.
6.2. the Company and the Purchaser shall have received written consent from the UIF in terms of which it consents to the cancellation of the Bonds (defined below) against payments of amounts payable to it in accordance with the Business Rescue Plan.
6.3. the Purchaser shall have deposited an amount equal to the sum of the Disposal Consideration into the trust account of Rams Attorneys and shall have provided proof thereof; and
6.4. the transaction contemplated in the Agreement and in the Loan Agreement shall have been approved in terms of section 152 of the Companies Act.
“Loan Agreement” means the loan agreement to be concluded between the Purchaser and Afric Oil on or about the Signature Date (defined below) in terms of which the Purchaser is to advance a loan to Afric Oil in the total amount of R34 100 000.
“Bonds” collectively, means –
- the special notarial bond over specified movable assets of Afric Oil Logistics (a 100% owned subsidiary of Afric Oil) in favour of the UIF as security for the obligations of Afric Oil under the UIF Loan Agreement.
- the general notarial bond over the movable assets of Afric Oil in favour of the UIF as security for the obligations of Afric Oil under the UIF Loan Agreement; and
- covering mortgage bond over all the properties of Afric Oil.
“Signature Date” means the date of signature of the Agreement by the last of its intended signatories, being 25 January 2022.
- EFFECTIVE DATE OF THE DISPOSAL
The effective date of the Disposal will be 1 March 2022 (“Effective Date”).
- WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT
8.1. The Agreement contains representations, warranties and indemnities by the Company in favour of the Purchaser which are standard for a transaction of this nature. Other specific warranties include:
8.1.1 Afric Oil and its subsidiaries do not have any liabilities other than (i) those incurred in the ordinary course of business and (ii) those set out in the Business Rescue Plan.
8.1.2 All material assets (movable and immovable) of Afric Oil will be unencumbered as at the Effective Date, save for the assets encumbered by the Bonds; and
8.1.3 All information provided by, or on behalf of Afric Oil to the Purchaser and its agents for the transaction contemplated by the Agreement is true, accurate and is not misleading.
- FINANCIAL INFORMATION
9.1. The value of the net liabilities of Afric Oil (“Net Liabilities”) as at 28 February 2020, being the date of the last audited consolidated annual financial statements, was R223 667 228.
9.2. The audited consolidated loss after tax attributable to Afric Oil for its year ended 28 February 2020 was R128 691 191, based on the audited consolidated annual financial statements for the year then ended which were prepared in terms of IFRS.
- CLASSIFICATION OF THE DISPOSAL
The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings Requirements.
8 February 2022
For further information please contact:
Efora Energy Limited
+27 (0)10 591 2260
Efora Energy Limited is a South African based independent African oil and gas company, listed on the JSE. The Company has a diverse portfolio of assets spanning production in Egypt; exploration and appraisal in the Democratic Republic of Congo; a midstream project relating to crude trading in Nigeria and material downstream distribution operations throughout Southern Africa. Our focus as a Group is on delivering energy for the African continent by using Africa’s own resources to meet the significant growth in demand expected over the next decade.
Date: 08-02-2022 05:27:00
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