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27 Jul 2009 07:00
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Roxi Petroleum plc
("Roxi" or the "Company")
Shareholder Circular and Notice of GeneralΒ Meeting
The CompanyΒ hasΒ todayΒ posted a circular to shareholders regarding the proposed sale of part of its interest in the BNG Contract Area.Β As announced on Friday 17 JulyΒ regarding the extension of the sale agreement, under the terms of the agreement signed with Canamens and announced in January 2009 and because of the size of the proposed farm-out Roxi shareholder approval is required byΒ 14 AugustΒ 2009.
The Company willΒ hold a General MeetingΒ at 10amΒ on 12 August.
The Circular is available on the Company's website atΒ www.roxipetroleum.comΒ
The full text of the circularΒ is insertedΒ below
24 July 2009
Β
Enquiries:Β
Roxi Petroleum plc
Rob Schoonbrood, CEO +7 727 244 0920
College Hill (Financial PR)
Paddy Blewer /Β Nick Elwes +44 (0) 20 7457 2020
WH Ireland (NOMAD and broker)
James Joyce +44 (0)20 7220 1666
Β
Dear Shareholder,
Disposal of part of BNG.
On 19 January 2009 Roxi Petroleum plc ("Roxi" or the "Company") announced that it had entered into aΒ farm out agreement with Canamens BNG B.V. ("Canamens"), a non-related natural resources investmentΒ company, conditional on Roxi shareholder approval, to help fund the development of Roxi's 58.4%Β indirect interest in the BNG Contract Area assets, held through Roxi's BNG Energy B.V. subsidiaryΒ ("BNG B.V.") ("the Proposed Sale").
Under the AIM Rules the size of the assets to be sold compared to the market capitalisation of Roxi is suchΒ that Roxi shareholder approval is required to complete the agreement. Completion of the agreement is alsoΒ subject to certain conditions being fulfilled, including the approval of the Company's shareholders.
The purpose of this circular is to set out the reasons why the Directors believe the Proposed Sale is in theΒ best interests of the Company and to convene the General Meeting to consider the resolution required toΒ complete the Proposed Sale.
Β
Background
Β
Roxi acquired its interest in the BNG Contract Area through the acquisition of Eragon Petroleum LimitedΒ ('Eragon') in March 2008. Under the obligations of the BNG work programme, Roxi is required to fund aΒ minimum of $15.9 million in respect of the 2009 work programme and a further minimum $35.9 millionΒ in respect of the 2010 work programme.
Despite an extensive search for new investment during the summer and autumn of 2008, it was clear to theΒ board, by late 2008, that Roxi was unlikely to be able to raise sufficient funds on appropriate terms fromΒ the conventional debt and equity markets to meet these obligations. Accordingly, the board sought financeΒ from within the industry to maximise the value of the BNG Assets.
Canamens is well known to Roxi as a result of the sale of 32.5% of Roxi's interest in the Ravninnoe
Contract area to an affiliate of Canamens, which was announced on 19 November 2008 and approvedΒ byΒ Roxi Shareholders in a General Meeting in December 2008.
The sale and purchase agreement with Canamens in respect of the BNG Contract Area was recentlyΒ renegotiated and a new sale and purchase agreement was entered into on 1 July by the Company withΒ Eragon, BNG B.V. and Canamens ('the Agreement'). The sale and purchase agreement was subsequentlyΒ amended by an amendment agreement dated 17 July 2009.
Details of the Proposed Sale
Under the terms of the Agreement, completion is due to take place in 2 stages.Β At Stage 1 completion, Canamens commits to provide $27 million funding of the work programme toΒ develop the BNG Contract Area and will pay BNG B.V. a performance bonus of $2 million provided thatΒ Stage 1 completion takes place on or before 14 August 2009. On completion, Canamens will receive 23%Β of BNG B.V.'s interest in the BNG Contract Area and will acquire 23% of Roxi and BNG B.V. loanΒ receivables in respect of loans made to BNG ltd LLP.
Canamens may before 1 January 2010, elect to proceed to Stage 2 completion. Stage 2 completion isΒ subject to the prior approval of the Company's shareholders. If Stage 2 completion takes place, CanamensΒ will commit to provide $23 million funding of the work programme to further develop the BNG ContractΒ Area for the sale of a further 12% of BNG B.V.'s interest in the BNG Contract Area and will acquireΒ further 12% of Roxi and BNG BV loan receivables. Subject to completion of both stages, Roxi's interestΒ in the BNG Contract Area will reduce to 37.96%.
To date, Canamens has advanced Roxi some $8 million of the amount due under Stage 1.
Recommendation
It is the view of all of the Directors of the Company, that the sale of this investment is in the bestΒ interests of the Company and recommend you vote in favour of the resolution to allow the CompanyΒ to complete the Proposed Sale.
Attached hereto is a Notice of General Meeting of Shareholders and a Proxy Form.
Yours faithfully
CLIVE CARVER
CHAIRMAN
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