SacOil hopes to raise up to R570m through rights offer

SACOIL, the JSE- and AIM-listed independent upstream oil and gas company, on Friday received authorisation from shareholders to proceed with a rights offer and convert debt to equity.

The company said it intended to raise a maximum of R570m by way of a renounceable rights offer, following which it would convert debt totalling R238.5m in Nigeria-based infrastructure group Gairloch into equity.

This paves the way for the substantial recapitalisation of the company, expected to be completed by the end of January next year.

“The recapitalisation opens the way for SacOil to fully pursue its exploration activities in Botswana, Malawi, the Democratic Republic of Congo and Nigeria, and is a vote of confidence in the company’s existing assets,” said Roger Rees, interim CEO of SacOil.

“The funds raised from the rights issue will be invested in the group’s existing assets, one of which, if the exploration programme is executed as planned, is expected to generate cash flows by the end of 2015,” he said.

The rights offer will be supported by SacOil’s second-largest shareholder, the Government Employees Pension Fund, managed by the Public Investment Corporation, to the value of R329m.

SacOil said the conversion of debt to equity would eliminate debt, improve its balance sheet and reduce group finance costs.

Mr Rees said SacOil’s Nigerian assets were 18-24 months away from producing revenue.

“We are also continuing to evaluate opportunities to secure new value-accretive acreage in established and prolific African hydrocarbon regions and basins,” he said.

Source: Mark Allix, BDLive