Quarterly Update Announcement
EFORA ENERGY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE Share Code: EEL
(“Efora” or “the Company”)
QUARTERLY UPDATE ANNOUNCEMENT
Shareholders of the Company (“Shareholders”) are referred to the ongoing suspension in trading of the Company’s shares on the Johannesburg Stock Exchange (“JSE”) which came into effect on 9 October 2020 pursuant to the delay in publication of the results for the year ended 29 February 2020 “2020 Results”). The 2020 Results were published on 1 July 2021 but trading in the Company’s shares remains suspended due to the subsequent delay in publication of the results for the six month period ended 31 August 2020 (“Interim Results”) and the year ended 28 February 2021 (“2021 Results”) brought upon by the ongoing business rescue proceedings at Afric Oil Proprietary Limited (“Afric Oil”), a 71.13% indirectly owned subsidiary of the Company. The purpose of this announcement is to provide an update on the current state of affairs of the Company and the progress made to date in working towards achieving the upliftment of the suspension.
Business rescue proceedings at Afric Oil
Shareholders are referred to the various announcements issued on the Stock Exchange News Service (“SENS”) regarding the business rescue proceedings at Afric Oil, the last of which was published on 16 August 2021. Subsequent to that update, Royale Energy Proprietary Limited made a revised offer of R47 000 000 (“Revised Royale Offer”) compromised of:
- R10 000 000 for the Company’s 71.13% shareholding in Afric Oil (“Proposed Disposal”);
- R2 900 000 for the Compensation Fund’s 28.87% shareholding in Afric Oil; and
- R34 100 000 to be advanced by the purchaser to the business rescue practitioners as shareholders loan to settle Business rescue costs and the secured creditor.
Meetings with Afric Oil’s creditors and shareholders were held on 22 September 2021 and 29 September 2021, respectively, to consider and vote on the Revised Royale Offer. Both creditors and shareholders approved the Revised Royale Offer and the business rescue practitioners will now proceed to implement the offer. The Proposed Disposal is a Category 2 transaction (as confirmed by the JSE Ruling of 5 October 2021) and as such, the Company will publish an announcement providing details pertaining to the transaction as required by section 9.15 of the JSE Listings Requirements once the sale agreement has been signed.
Disposal of Mena International Petroleum Company Limited
As previously referred to in our integrated annual report published on 1 July 2021 (the “Last Integrated Annual Report”),, the Efora board of directors in June 2021 approved a plan to dispose of the Company’s 100% interest in Mena International Petroleum Company Limited (“Mena”). Mena is the owner of the Lagia oil field which is located in the Sinai Peninsula, Egypt, directly adjacent to the Gulf of Suez and its assets constituted 6.5% of Company’s consolidated assets reported in the 2020 Results, being the last published results of the Company.
The decision to dispose of Mena was brought about by the inability of the Company to further develop the Lagia oil field in order to increase oil output due to funding constraints. In addition, the heavy oil reserves at the field continued to pose operational challenges. On 16 August 2021, the Company concluded an agreement with Enerjya International Limited (“Enerjya”), under the terms of which the Company sold its 100% shareholding in Mena for US$350 000. Enerjya is a private company incorporated in the United Arab Emirates, with no relation to Efora. The sale was perfected on 10 September 2021.
Amounts due from Encha Group Limited (“Encha”) and Transnational Corporation of Nigeria Limited (“Transcorp”)
As previously referred to in our Last Integrated Annual Report published on 1 July 2021, up to the date of this update, R20 000 000 was due from Encha on 30 June 2021 and US$3 750 000 from Transcorp in 3 equal quarterly payments. The funds expected from Transcorp were received during the period as they fell due and a final payment of US$1 250 000 is expected in December 2021 in accordance with the settlement terms.
Encha has defaulted on the payment of the R20 000 000 which was due on 30 June 2021. Accordingly, Encha has failed to comply with the Company’s deferred payment plan (as set out in the Last Integrated Report) and as such repudiated the agreement for the waiver and deferred payment of any amount. The full balance of R75 000 000 plus interest at prime plus 3% up until settlement date is now due and payable. Efora resolved to take legal action to recover the debt and to this effect is pursuing Encha in the High Court via a filed liquidation application.
Progress regarding the Interim Results and 2021 Results
Afric Oil is a key entity in the Group and the finalisation of its results for the year ended 28 February 2021 was impacted by the ongoing business rescue proceedings which also posed challenges regarding the commencement of the annual audit of Afric Oil for the year then ended. We are now in the process of agreeing the audit plan for this entity with SizweNtsalubaGobodo Inc. and will provide further updates as the audit progresses. Audits of the Company and other key Group entities are near finalisation. The Company will make an application to the JSE for the upliftment of the suspension and reinstatement in trading of the Company’s shares once the outstanding audit processes are completed and the Interim Results and 2021 Results are published.
20 October 2021
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 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.
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