San Leon Regulatory News (SLE)

19 December 2017

San Leon Energy plc

("San Leon" or the "Company")

£11,000,000 Convertible Loan Facility and Repayment of Avobone

San Leon Energy plc (the "Company"), the AIM listed company focused on oil and gas development and appraisal in Africa and Europe, announces that it has today entered into a loan facility agreement ("Facility Agreement") with Toscafund Asset Management LLP, Toscafund GP Limited and related entities (together, "Toscafund") in relation to a £11 million convertible secured loan facility (the "Loan").

The company has issued drawdown notices totalling £10,961,025 in order to repay €11.53 million due to Avobone N.V. and Avobone Poland BV (together, "Avobone") which will fully settle all amounts due to Avobone and to meet San Leon's immediate obligations due to certain other creditors.

Key terms of the loan

The Loan bears an interest rate of 10% per annum, accruing on a daily basis. The Company is also required to repay an arrangement fee of 5% of the total facility in cash to Toscafund. The loan and the arrangement fee are repayable by 29 December 2017 (or such later date as the Company and Toscafund may agree). The Company has the option to convert outstanding amounts of the Loan by the issue to Toscafund of ordinary shares of €0.01 each in the Company ("Ordinary Shares"). The issue price for any Ordinary Shares issued on a conversion will be 25 pence per share, which represents a 1.5% premium to the mid-market price of San Leon before the Company's shares were suspended on 03 November 2017.

Pursuant to the share authorities obtained at the Company's last AGM, the Directors can issue up to 45,628,062 Ordinary Shares without applying statutory pre-emption rights. At the issue price of 25 pence per share, assuming San Leon convert the full amount of Loan plus accrued interest as of 29 December 2017 into Ordinary Shares, Toscafund would hold 311,821,927 Ordinary Shares in the Company, representing 62.33 per cent of the Company's then enlarged Ordinary Share capital.

The Company has provided Toscafund with the following security in connection with the Facility Agreement:

· An assignment of the Company's rights as the holder of the loan notes issued by Midwestern Leon Petroleum Limited ("MLPL") pursuant to an instrument dated 22 March 2016 (as amended and restated) (the "Loan Notes").

· An Irish law debenture over all of the assets of the Company.

· The Company's subsidiary San Leon Nigeria B.V. ("SLN") has entered into a guarantee agreement pursuant to which it has guaranteed the repayment of the Loan by the Company.

· Within five business days of the date of the Facility Agreement, the Company will be required to enter into a Dutch law share pledge, pursuant to which the Company pledges all its shares in SLN in favour of Toscafund (the "Share Pledge"). SLN holds 40% of the issued share capital of MLPL.

Related Party Transaction

Toscafund is a substantial shareholder of the Company and therefore regarded as a related party as defined by the AIM Rules for Companies (the "AIM Rules"). The Facility Agreement and the Loan is therefore deemed to be a related party transaction for the purposes of Rule 13 of the AIM Rules. The Company's directors consider, having consulted with SP Angel Corporate Finance LLP, the Company's nominated adviser, that the terms of the Facility Agreement and the Loan are fair and reasonable insofar as shareholders are concerned.

Repayment of MLPL Loan Notes

As previously announced, the Company is scheduled to be paid approximately US$19 million per quarter by MLPL in respect of the Loan Notes from Q4 2017, with the next instalment due to be received by the Company on or before 1 January 2018. The Company has previously announced the receipt of US$5 million in satisfaction of payment of amounts due. A further US$6 million has also now been received.

Excluding the Loan from Toscafund, the Company will have an outstanding debt of US$3,806,955 with YA II PN Ltd (formerly known as YA Global Master SPV Ltd), an investment fund managed by Yorkville Advisors Global LP ("Yorkville"). The Company has agreed to make a payment to Yorkville at the end of each quarter, with the final payment due shortly after the 3rd quarter of 2018. In addition, the Company will have short-term trade and other payables inclusive of Yorkville of approximately €13.7 million. Excluding any monies owed to San Leon as the holder of the Loan Notes issued by Midwestern Leon Petroleum, San Leon has estimated trade and other receivables owing to it of €10.6 million resulting in a net trade and other payables position of €3.1 million. 

Oisin Fanning, Chief Executive Officer said "We are very grateful to Toscafund for its continued support. This facility removes certain matters that proved to be an extensive drain on management time, time which can now be focussed on increasing the value of the Company's interest in OML 18"

Martin Hughes, Founder and Chief Executive Toscafund Asset Management LLP, commented "It is advantageous for all stakeholders in San Leon that the Company enters 2018 with a robust balance sheet which this proposal has addressed.''

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

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