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Pushed to 2 April
1 February 2024
Savannah Energy PLC
("Savannah" or "the Company")
South Sudan Acquisition Update
Further to the Company's announcement on 14 December 2023, the Company confirms that it remains suspended from trading on AIM, with a revised cancellation date of 2 April 2024, whilst it continues to advance the various workstreams, including receipt of in-country approvals, required to complete the acquisition of PETRONAS International Corporation Limited's energy business in South Sudan. Further updates will be provided as and when appropriate.
Pretty pleased with that. Sounds positive and implies progress being made which is what I wanted to see. Happy to be patient here
At least we are not being taken as April Fools.
They said this in the rns of 12/12/22 announcing the SPA :
"The Transaction is conditional upon the satisfaction of certain conditions precedent including, inter alia, approval of the Government of the Republic of South Sudan, the approval of Savannah's shareholders and re-admission to trading on AIM taking effect."
In any of the extensions (updates) since, approval of the government of SS doesn't figure, until todays rns when this is included " whilst it continues to advance the various workstreams, including receipt of in-country approvals,"
One can draw ones own conclusions.
My thought when I saw that included Noix, was that it was a simply a little more information for shareholders indicating that we won't see the AD until they have secured the in-country approvals. The update today was fine with with me. I know others want to recommence trading and have access to their cash, which is understandable, but I'm taking today's update to signify we are more likely than I'd thought previously to complete this transaction.
Komakino
I believe it's flagged government approval as the main (not necessarily the only) sticking point.
I'd like to think that pretty firm verbal assurances have been given, otherwise why prolong the agony.
Is “approval of the Government of the Republic of South Sudan” the same as “receipt of in-country approvals”. Has Government approval been granted and we now await other “in-country approvals”?
Needless to say not happy how AIM has let them of the hook again. What workstreams ? How long can they be allowed to push this out ? end of 2024 ? I don't think they would get away with it on main market.
Not sure of the answer to that PF. I'd imagine they need both, approvals from the varioul ministries plus the overall approval of the govt., but happy to be corrected. Either way, I do think that the extension shows that the powers that be (AIM, Nomad) have been convinced that the transaction still has a good chance of completing.
RR, for the AD doc. to be published I'm pretty sure that the finance workstream would need to be completed. You would have thought that any new timeframe given by SAVE i.e. 2nd April would include that as well. At some point I would expect the financiers will be satisfied that things can re-commence and that the end date reflects that.
Noix - the main thing being worked on are the license extensions. In addition to those work streams, there are the finance packages, shareholder approval and SS gov approval.
K - yes I do agree finance in place before AD and readmission.
Whilst we all want to see this back ASAP, I too am pleased to see the further extension. Obviously my number one aim is to see the deal done and dusted. However, as TiL alludes to, I also see it like this.
The longer we see suspended, the better chance we have of the SP returning at a higher price even should the SS deal fail. Let’s say the deal failed today and we returned at a made up SP of 25p.
Now let’s say the deal fails in a few months time instead. By that time we would:-
Have a few more months of strong Accugas revenues reducing next debt, therefore pushing SP up.
Improved chance of seeing first oil in Niger and 35mboe moving from 2C to 2P
Possibility of an interim ruling on 4 court cases re Chad / Cameroon
Another M&A acquisition could be announced (or are we not allowed to announce due to everything else at the moment)
Accugas debt restructure may eventually get done in this window
Compression project in Nigeria completes and significant new gas customers possibly signed up
So if a few of those came in over the next few moths before deal fails, the SP would return at a premium compared to what it would be had the deal failed today.
So with all the World volatility and the vast amount of uncertainty we have, a few more months of suspension gives us a chance of some of our issues improving, whilst the Worlds issues will probably deteriorate even further with all the incompetent Governments we have making it all up as they go.
By the way, should we get the in Country approvals by 2nd April, there is not a cat in hell’s chance we will be trading again before 1/7/24.
Should we complete then we may have had 30 months of EI since 1/1/22 to take off the headline deal figure of $1.25bn. A mere $20 per boe equates to $913m leaving $337 to be found from future production deal and or debt and or cash.
At an economic interest of $27.38 per boe, the $1.25bn would be paid in full after 913 days from 1/1/22 = 1/7/24, ever likely AK is camping out in SS. Maybe he will return with a net worth higher than EM!
PS Shore Cap have just issued a note, does anyone have access to it?
Thanks for your post RR, However i don't agree with your resumption date of 1.07.2024 for trading upon approvals, if we get approvals pre 2nd April we will be back up trading within days of admission doc submission in my opinion .