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(Alliance News) - Anglo African Oil & Gas PLC said Monday its shareholders have approved the sale of 80% of its Congolese subsidiary Anglo African Oil & Gas Congo SAU to Zenith Energy Ltd.
In December, the oil & gas developer had announced it agreed to sell 80% of its Congolese subsidiary to Zenith for GBP1 million. The business holds 56% in the producing Tilapia field, with the rest owned by the country's national oil company.
Earlier Monday, the two companies agreed a put-and-call option for the remaining 20%.
AAOG will become a cash shell once the disposal of the Congolese business has completed. It will consider takeover options in future.
Following the approval, the company said it will draw down GBP250,000 loan from Zenith on January 25, when the loan becomes effective.
AAOG also said it is finalizing the terms of convertible loan note with RiverFort for up to GBP500,000.
The company had said on Monday last week RiverFort had agreed a term sheet whereby AAOG will receive an initial tranche of GBP250,000, if shareholders approve the Zenith deal, and a further GBP50,000 every month until negotiations over the convertible notes concludes.
These proceeds will be used to pay down creditors and finance the day-to-day operations of the company, AAOG said.
Following the approval of the requisite resolution, each ordinary share of GBP0.05 will be subdivided into ordinary shares of GBP0.001 and one C deferred share of GBP0.049, the company said.
The company's resulting share capital will consist of 396.5 million shares and are expected to be admitted to trading on AIM at 0800 GMT on Tuesday.
The company also announced that Nick Butler has resigned as a non-executive director with immediate effect.
In a separate statement, Zenith Energy said it was "pleased" with the approval of AAOG shareholders.
The company said it will make available a loan to AAOG of GBP250,000 with effect from January 25.
Andrea Cattaneo, chief executive officer of Zenith, said: "We are pleased to have passed the major hurdle in our acquisition of a controlling stake in AAOG Congo and look forward to completing the Acquisition in due course."
AAOG shares were up 3.9% in London at 0.44 pence each on Monday, meanwhile Zenith shares were trading 13% higher in London at 2.70p each on Monday.
By Loreta Juodagalvyte; loretajuodagalvyte@alliancenews.com
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