Anglo African Oil & Gas (LON:AAOG) have told shareholders that they have added a new investor to their portfolio on Monday.
Anglo African said that Forum Energy Services Ltd (NYSE:FET) had taken a stake in the company, as shares jumped.
Riverfort Global Opportunities PCC (LON:RGO) and YA II PN Ltd will be selling 84.0 million shares to Forum Energy at 0.5 pence each, for a total of £420,205. AAOG will get £361,376 off this.
Anglo have said that they intend to use the proceeds to pay off debt, and also look at the deal with Zenith Energy which hit news headlines earlier this month.
The update also said that Forum will have the right to appoint three directors to AAOG board, and the current Non-Executive Director Phil Beck will leave once the first Forum Energy nomination joins.
Sarah Cope, chair of AAOG, said, “The Board has considered several offers to purchase the ISA Shares and has, in consenting to the purchase by Forum, given consideration to the long-term interests of the Company rather than purely immediate financial gain. The Board is confident that, of all the potential partners considered, Forum has the clearest vision and best contacts that will enable it to deliver value for shareholders in the long term.”
Paul Forrest, Chief Executive of Forum, commented, “Forum is pleased to have taken a strategic stake in the Company and we are looking forward to working with the Board to create shareholder value. Forum has, through its investors and network, access to sources of funding as well as exciting and viable projects in the natural resources sector that could be suitable as acquisition targets for AAOG.”
Zenith Energy deal
As mentioned, Anglo African saw their shares crash when a deal with Zenith Energy (LON:ZEN) hit market headlines.
Zenith are set to purchase an 70% stake in Anglo African Oil & Gas’s Congo subsidiary for £1 million under a sale and purchase agreement.
The deal has been put on hold however as Anglo African Oil & Gas shareholders have yet to approve the deal.
Following the lack of funds and a recent share subscription, Anglo African entered negotiations with Riverfort for a convertible note loan.
However, a deal has not be struck. Riverfort have agreed terms where Anglo will receive an initial tranche of £250,000, if shareholders approve the Zenith deal, and a further £50,000 every month until negotiations over the convertible notes concludes, which leaves shareholders will power.
Zenith has also agreed to advance a £250,000 loan to AAOG to help with its cashflow position. This loan, whilst subject to shareholder approval, is not contingent on the sale of AAOG Congo. The loan is for an initial six month period but may be extended for an additional three months.
“When the board entered into the sale and purchase agreement on December 24, the reality facing the company and its shareholders was that AAOG had very limited cash resources, a large debt owing from Societe Nationale des Petroles du Congo with no certainty as to when the debt would be repaid, a significant creditor position both at the plc level and at AAOG Congo, a work programme at Tilapia that was not fully funded and the likelihood of a significant signature bonus attaching to reattribution of the Tilapia Licence which expires in July 2020,” AAOG said.
Shares in Anglo trade at 0.4p jumping 14.14%. 20/1/20 11:27BST.