Anglo African O&G (AAOG.L) Proposed amendment to consideration & Notice of GM

AAOG provides an update on the disposal (the “Disposal”) of an interest in its wholly-owned subsidiary Anglo African Oil & Gas Congo S.A.U (“AAOGC”) to Zenith Energy Ltd (“Zenith”).

It has now been some 16 weeks since AAOG entered into the sale and purchase agreement with Zenith on 27 December 2019 and at that time all parties expected that completion would take place swiftly following the shareholders’ meeting in January 2020. Indeed, AAOG’s cash position did not at the time allow for the completion of the Disposal to be delayed as long as it has been. The delay to completion has been the wait for the Minister of Hydrocarbons in the Republic of Congo to consent to the change of control of AAOGC which has so far not been forthcoming and which is a condition to completion of the Disposal. Neither AAOG nor Zenith can say with any certainty when such consent will be forthcoming, particularly in light of the COVID-19 pandemic which has restricted the ability to meet with officials and progress matters.

Accordingly, there is no certainty as to timing of completion of the Disposal, no certainty on when AAOG can expect to receive funds from Zenith and no certainty on when Zenith will assume AAOGC’s liabilities and running costs pursuant to the Disposal

AAOGC’s creditor position in December 2019 was circa $3 million and the team in country has been continuing operations and managing the creditors carefully with the cash that AAOG has been able to send as well as receipts from the sale of oil production from the Tilapia field. Since 20 January 2020, AAOG’s primary cash source has been its strategic investor, Forum Energy Services Limited (“Forum”). Forum has indicated to the Board of AAOG that it is not prepared to fund any further cash calls from AAOGC given the uncertainty outlined above. This coupled with the collapse in the oil price and the COVID-19 pandemic means that the situation at AAOGC is becoming untenable.

The Board of AAOG face the very real prospect of AAOGC falling into some form of insolvency procedure which would obviously mean the Disposal would not complete and the Company would receive none of the consideration from Zenith.

The Company and Zenith have therefore entered into a further conditional Deed of Variation (the “Further Deed of Variation”) to accelerate the assumption by Zenith of the running costs and liabilities of AAOGC. Commensurate with this the Company and Zenith have conditionally agreed to amend the terms of the consideration payable pursuant to the Disposal (the “Consideration”) and the terms of Completion.

The Further Deed of Variation provides that the Disposal shall be for 100% of AAOG’s interest in AAOGC rather than the 80% original envisaged. The Consideration shall be amended to £200,000 (the “Revised Consideration”) which is to be paid in cash only upon receipt of consent of the shareholders of AAOG to the revised terms of the Disposal pursuant to the Further Deed of Variation (the “Revised Completion Date”). The payment of the Revised Consideration shall not be conditional on Ministerial consent. Zenith will assume responsibility for all liabilities within and ongoing costs associated with AAOGC at the Revised Completion Date. As a result, shareholders in AAOG will no longer have any exposure to the Tilapia asset or its liabilities or receivables from the Revised Completion Date.

General Meeting

A further general meeting (the “Further General Meeting”) to consider and if thought fit approve the Further Deed of Variation will be called for 4 May 2020 and a circular to shareholders containing the Notice of the Further General Meeting will be dispatched shortly.

Payment of the revised consideration is anticipated to take place on the business day following the conclusion of the Further General Meeting, provided that the Resolution is passed. However, to the extent the regulatory approvals in the Republic of the Congo are received prior to the date of the Further General Meeting and therefore prior to the terms of the Further Deed of Variation taking effect, Completion will take place on the terms of the first Deed of Variation as approved by Shareholders earlier today. The Company will issue an appropriate announcement in due course.

It should be noted that if the Resolution is not passed at the Further General Meeting, the Further Deed of Variation will not come into effect and if at that time the necessary regulatory approvals in the Republic of the Congo have not been obtained the Disposal will not proceed and it is likely that AAOGC will be subject to some form of liquidation.

Forum Energy Services Limited has given an irrevocable undertaking to vote in favour of the resolution at the Further General Meeting in respect of its registered holding in the Ordinary Shares amounting in aggregate to 116,768,283 Ordinary Shares, representing 25.02 per cent. of the Company’s Ordinary Shares in issue.

AIM Rule 15

Shareholders are reminded that, in accordance with AIM Rule 15, the Disposal constitutes a fundamental change of business of the Company. On the Revised Completion Date, the Company shall cease to own, control or conduct all or substantially all, of its existing trading business, activities or assets.

Following the Revised Completion Date, the Company will therefore become an AIM Rule 15 cash shell and as such will be required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from Completion or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million) failing which, the Company’s Ordinary Shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.

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