Vivo Energy restructures acquisition of Engen holdings in Africa

(Sharecast News) - Vivo Energy has reached an agreement with Engen Holdings to restructure the acquisition of Engen International Holdings Mauritius by its subsidiary Vivo Energy Investments, it announced on Tuesday.The London-listed company said the restructured transaction was now unconditional, aside from customary closing conditions, including material adverse change clauses.All required regulatory and competition authorities' approvals had been received for the transfer of Engen's international operations in nine Sub Saharan countries, Vivo confirmed.The restructure allowed for completion of the transaction, first announced on 4 December last year, to proceed in all countries other than the Democratic Republic of Congo, with completion now scheduled for 1 March 2019.Vivo Energy said the restructured transaction would add operations in eight new countries and more than 225 Engen-branded service stations to Vivo Energy's network, taking its total presence to more than 2,000 service stations across 23 African markets.The new markets for Vivo Energy would be Gabon, Malawi, Mozambique, Reunion, Rwanda, Tanzania, Zambia and Zimbabwe.#Engen's Kenya operations, where Vivo Energy already operates, would be the ninth country included in the transaction.As per the agreement on 4 December last year, and as a result of the restructure of the transaction, consideration for the transfer of EIHL would be $203.9m, comprising an issue by Vivo Energy of 63.2 million new shares valued at its IPO offer price of 165p per share, and $62.1m in cash, resulting in EHL holding around 5.0% of Vivo Energy.The cash element of the consideration would be funded by a draw down on Vivo Energy's multi-currency facility, established in May.Vivo said that at present, Engen was continuing its discussions with the Government of the Democratic Republic of Congo regarding the transfer of the subsidiary holding Engen's interests in that market.The company said it was continuing to evaluate the potential acquisition, with negotiations with Engen ongoing.For the year ended 31 December, unaudited management adjusted EBITDA for the nine entities that would transfer on 1 March 2019 was around $33m, of which $26m was attributable, with attributable net cash on hand of approximately $48m.Vivo Energy said its belief in the potential of the businesses being transferred, and the objective to achieve double digit volume and EBITDA growth rates over the medium term, set out as part of the IPO prospectus, remained unchanged.It said it would provide updated guidance for the nine Engen countries to the market, reflecting the changes to the transaction, with the 2018 full-year results announcement in March next year, following completion of the transaction.Engen Holdings would retain its interest in Engen Petroleum - its South Africa business and refinery - and its businesses in Mauritius, Botswana, Ghana, Namibia, Swaziland and Lesotho, which would not be part of the transaction."Today's announcement opens an important new chapter for Vivo Energy and we look forward to welcoming around 350 new employees, adding eight new countries to our network, and increasing our target market by nearly 150 million people to around 35% of the African population," said Vivo Energy chief executive officer Christian Chammas."Importantly, our existing business remains on track to achieve our full year guidance and we continue to invest in and grow our existing operations."