Rns cont23 Apr 2018 08:11
The Company has worked hard with Midwestern over the recent months to see if there was a transaction that would be beneficial to existing San Leon shareholders. Whilst the Company received an interesting proposal from Midwestern, the Board does not feel the structure of the combination (which would have included the Loan Notes being deemed to have been repaid) reflected the true value of the Company's portfolio. Accordingly, we have elected to terminate discussions with Midwestern.
Our financial position is much stronger than when discussions with Midwestern commenced. We are pleased to report that the first three quarterly payments have been received. Consequently, San Leon is now on a solid financial footing with a cash balance of $13.5 million and all material problems with creditors and litigation are behind us. I am therefore pleased to say that the Company is progressing its capital reorganisation in order to allow shareholder distributions. I thank all shareholders, and in particular, our largest shareholder, Toscafund for their patience and support during this period.
The Company has experienced a number of positive developments across its business over the last few months (as described below), whilst the backdrop of improving oil prices is encouraging. I look forward to updating shareholders with continued progress."
Notable Additional Developments during the period of temporary suspension
A number of important events occurred during the period of suspension, each of which has been already announced.
Repayment of Midwestern Leon Petroleum Limited Loan Notes
As previously stated, San Leon entered into an arrangement in September 2016 with MLPL, whereby SLE would be repaid $174.5 million plus an annual coupon of 17% through to 2020. The Instrument had an inbuilt grace period as historically explained (see the Half year results announced on 29 September 2017). This grace period has now lapsed and, as announced on 03 April 2018, a payment of US$19 million was received, being the third such quarterly payment of the outstanding Loan Notes, with payments received now totalling $58.6 million. A further $168.6 million of principal and interest remains outstanding and payable, along with future interest, in similar quarterly instalments to those received to date.
In the event of default of any of the future quarterly payments, SLE may demand immediate repayment of the full outstanding principal amount of the Loan Notes, all unpaid accrued interest and any other sum then payable from MLPL. SLE also has the benefit of a security package including guarantees from Midwestern Oil & Gas Company Limited (60% shareholder in MLPL) and Mart Resources Limited to guarantee the obligations of MLPL under the Instrument, as well as a share pledge.
Settlement of Outstanding Material Creditors
At the time of suspension, San Leon was involved in a legal dispute with Avobone N.V. over outstanding
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