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OAO
UNTP
OAO - Oando Plc - Additional information in respect of the Acquisition, and
Withdrawal of Cautionary
Oando Plc
(Incorporated in Nigeria
and registered as an external company in South Africa)
Registration number RC6474
(External company registration number 2005/038824/10)
Share code on the JSE Limited: OAO
Share code on the Nigerian Stock Exchange: UNTP
ISIN: NG00000UNTP0
("Oando" or "the Company")
ADDITIONAL INFORMATION AS REQUIRED BY THE JSE LIMITED IN RESPECT OF THE
ACQUISITION BY OANDO OF MINORITY INTERESTS IN CERTAIN SUBSIDIARIES AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
On 6 June 2007 Oando published an announcement containing the salient terms of
proposals in terms of which the Company would:
acquire the interests of Ocean and Oil Investments Limited ("OOI"), Oando`s
major shareholder, in certain jointly held subsidiaries; and
acquire the interests of certain minority shareholders in Gaslink Nigeria
Limited ("Gaslink") ("the transaction").
The scheme documentation relating to the transaction was posted to shareholders
on 7 June 2007.
In the terms announcement shareholders were advised that the scheme
documentation had not been approved by the JSE Limited ("JSE") prior to
distribution. Shareholders were further advised of various JSE rulings. In
accordance with these rulings, this announcement sets out further information on
Oando and the transaction required by the JSE.
2. Additional information relating to Oando
2.1 Directors` interests
Directors` interests in securities
The holdings of ordinary shares by the directors of Oando at 31 December 2006,
being the end of Oando`s immediately preceding financial year, are set out in
the table below:
Direct Indirect
Non- Non-
Director Beneficial beneficial Beneficial beneficial
Maj. Gen. Magoro* - - - -
J A Tinubu* - - - -
G O Boyo* - - - -
A Akinrele 32 170 - - -
Prince F N Atako 46 001 - - -
O A Gbadebo 1 025 - - -
V Oboden Ibru 126 141 - - -
H Mahmud 6 956 - - -
O P Okoloko* - - - -
I Osakwe 61 931 - - -
O Osifo* - - - -
Percentage
of issued
share
Director Total capital
Maj. Gen. Magoro* - -
J A Tinubu* - -
G O Boyo* - -
A Akinrele 32 170 0.01
Prince F N Atako 46 001 0.01
O A Gbadebo 1 025 0.00
V Oboden Ibru 126 141 0.02
H Mahmud 6 956 0.00
O P Okoloko* - -
I Osakwe 61 931 0.01
O Osifo* - -
*Maj. Gen Magoro (rtd), OFR, Mr. J. A. Tinubu, Mr. O. Boyo, Mr. O. P. Okoloko
and Mr. O. Osifo are directors representing OOI.
There have been no changes in the above shareholdings between 31 December 2006
and the date of this announcement.
Directors` interests in transactions
Avante Capital Partners Limited ("Avante Capital")
Avante Capital is an investment advisory firm based in Lagos, Nigeria. Oando`s
directors who are also directors of Avante Capital are Mr. Wale Tinubu, Mr. Jite
Okoloko, Mr. Mofe Boyo and Mr. Osaze Osifo. Details of Oando`s transactions with
Avante Capital that were effected in the current or immediately preceding
financial year are outlined in the table below:
Date Transaction details Amount (N)
01/01/2006 - 31/12/2006 Retainership Fees for advising
Oando Energy
Services on corporate
acquisition activities 11 000 000.02
07/07/2006 Fees for financial advisory
services provided 16 578 947.36
for the restructuring of the
Oando Group
13/07/2006 Fees for financial advisory
services provided 4 973 684.22
to Oando Energy Services
08/11/2006 Fees for financial advisory
services to 6 212 115.00
Oando Petroleum Development
Company
29/01/2007 Fees for financial advisory
services provided 10 000 000.00
to Oando
22/02/2007 Fees for advising Oando on its
bid to increase 5 000 000.00
stake in Gaslink
22/02/2007 Fees for advising Oando on its
bid to acquire 10 000 000.00
a controlling stake in the
Port Harcourt
Refining Company
TOTAL 63 764 746.60
F. O. Akinrele & Co.
F. O. Akinrele & Co. is a law firm based in Lagos, Nigeria. Mr. Ademola Akinrele
is a partner at F. O. Akinrele and a director of Oando. Details of Oando`s
transaction with F.O. Akinrele & Co. are outlined in the table below:
Date Transaction details Amount (N)
09/06/2006 Professional fees for
advising on litigation 4 610 000.00
18/02/2007 Legal fees for professional
advisory services 262 500.00
03/04/2007 Legal fees for professional
advisory services 200 000.00
13/04/2007 Legal fees for advisory services 200 000.00
27/04/2007 Travel expenses re-imbursement 255 810.00
TOTAL 5 528 310.00
Oceanic Bank International Plc ("Oceanic Bank")
Oceanic Bank is one of Nigeria`s leading financial institutions. Mr. Valentine
Oboden Ibru is a director of Oceanic Bank as well as of Oando. Oando has the
following transactions with Oceanic Bank:
On 1 January 2006, Oando obtained an overdraft facility line of N500 000 000.00
at 15% per annum from Oceanic Bank to augment working capital. There is no
collateral on the facility and as at 31 December 2006 N2 080 156 849.00 credit
was the balance outstanding on the account. In addition, Oando has an import
financing facility of $27 111 651.70 running around the same time; and
as at 31 December 2006 Oando had a fixed deposit of N653 000 000.00 at 15% per
annum with Oceanic Bank.
Ocean and Oil Holdings (Nigeria) Limited ("OOH")
OOH is a diversified principal investment holding company with an indirect
controlling stake in Oando held through OOI. Oando`s directors who are also
directors of OOH are Mr. Wale Tinubu, Mr. Jite Okoloko, Mr. Mofe Boyo and Mr.
Osaze Osifo. Details of Oando`s transactions with OOH are outlined in the table
below:
Date Transaction details Amount (N)
01/01/2006 - 31/12/2006 Technical services and
management fees 344 531 647.08
21/02/2006 Book value of vehicle
allocated to a 3 884 306.16
transferred staff
29/12/2006 Travel expenses incurred
for services 933 780.00
rendered
Total 349 349 733.24
2.2 Directors` emoluments
Details of the emoluments of each director of Oando during the financial year
ended 31 December 2006 are shown in the table below:
Directors` Executive Sitting
fees compensation allowance
Director (US$) (US$) (US$)
Maj. Gen. Magoro 4 669.26 - 1 750.97
J A Tinubu - 439 190.66 2 334.63
G O Boyo - 297 431.91 1 556.42
O Osifo 5 214.01 - 1 556.42
V Oboden Ibru 5 214.01 - 1 556.42
Prince F N Atako 5 214.01 - 1 556.42
O P Okoloko 5 214.01 - 1 556.42
I Osakwe 5 214.01 - 778.21
H Mahmud 5 214.01 - 1 556.42
A Akinrele 5 214.01 - 778.21
O A Gbadebo 3 910.51 - 778.21
Total (US$) 45 077.82 736 622.57 15 758.75
Travel and
Estacode* Total
Director (US$) (US$)
Maj. Gen. Magoro 26 909.42 33 329.65
J A Tinubu 26 909.42 468 434.71
G O Boyo 23 096.19 322 084.51
O Osifo 23 096.19 29 886.61
V Oboden Ibru 23 096.19 29 886.61
Prince F N Atako 23 096.19 29 886.61
O P Okoloko 23 096.19 29 886.61
I Osakwe 23 096.19 29 088.40
H Mahmud 23 096.19 29 886.61
A Akinrele 23 096.19 29 088.40
O A Gbadebo 23 096.19 27 784.90
Total (US$) 261 684.51 1 059 143.66
*Travel allowance
There will be no variation in the remuneration receivable by any of the
directors of Oando as a consequence of the transaction.
2.3 Directors` service contracts
Directors are appointed by either a resolution of the board (to fill casual
vacancies) or elected at the annual general meeting of the Company, a letter of
appointment is usually written to the new director evidencing such appointment.
2.4 Material changes
There have been no material changes in the financial or trading position of
Oando and its affiliates and subsidiaries between the 31 December 2006, being
the end of Oando`s immediately preceding financial year, and the date of the
scheme document, save in respect of this transaction. Oando published unaudited
results for the quarter ended 31 March 2007 on 17 May 2007.
2.5 Material contracts
The following material contracts have been entered into by the Oando group:
a Technical Services Agreement dated 1 August 2002 between OOH and Oando under
which OOH provides technical know how, marketing and consultancy services to
Oando for a fee of 4% of the Company`s net profit before tax ("NPBT") (where
NPBT is under N2 billion) and 5% of the Company`s NPBT (where NPBT is over N2
billion);
a Management Services Agreement dated 1 August 2002 between OOH and Oando under
which OOH provides general organisational, management expertise, strategic
planning and consultancy services to Oando for a fee of 3% of the Company`s NPBT
(where NPBT is under N2 billion) and 4% of the Company`s NPBT (where NPBT is
over N2 billion);
an agreement between OOH and Oando for the transfer of the Power Business and
Assets of OOH; and
a contract between Oando and Ocean and Oil Services for the assignment of
Facilities and Services and Construction of Onne Tank Farm.
No other material contracts, other than in the ordinary course of business, were
entered into within the two years preceding the date of the scheme document or
before that date and which remain outstanding in any respect.
3. Additional information relating to the transaction
3.1 Transfer of assets acquired
Ownership of the assets the subject of the transaction will pass to Oando on
implementation of the scheme of arrangement.
3.2 Financial effects
Set out below is the unaudited pro forma financial information and effects of
the transaction. The unaudited pro forma financial information and effects are
the responsibility of the Oando directors and have been prepared for
illustrative purposes only to provide information about how the transaction may
have affected the reported historical financial position of Oando. Due to their
nature, the unaudited pro forma financial information and effects may not be a
fair reflection of Oando`s financial position after the transaction nor of
Oando`s future earnings.
Balance Sheet
As at 31 December 2006
Acquisition of Acquisition of
Oando Oando
Before the Exploration Production &
US$ transaction & Production Development
Non-current assets
Property, plant and
equipment 117 771
Intangible assets 113 094 16 080.25 26 150.52
Long -term investments 256
Long -term receivable 38 281
Current assets
Inventories 119 835
Trade debtors 150 738
Debtors and prepayments 134 950
Loan receivable -
Bank and cash balance 60 121
465 645
Current liabilities
Creditors and accruals (192 161)
Dividend payable -
Tax payable (7 342)
Borrowings (316 629)
(516 132)
Net current
(liabilities)/assets (50 488)
Non-current liabilities
Borrowings (9 996)
Other non-current
liabilities -
Deferred taxation (18 557)
Retirement benefit
obligation (3 373)
Provisions (2 939)
(34 866)
Net assets 184 048
Shareholders` equity
Share capital (2 162) (102.94) (167.34)
Shar e premium account (120 742) (15 996.68) (26 004.01)
Revaluation reserve (18 475)
Exchange difference -
Retained earnings (28 025)
(169 404)
Minority interest (14 645) 19.37 30.83
Total equity (184 049)
Acquisition of Acquisition of
Oando Oando Acquisition of
Energy Supply & Oando
US$ Services Trading Trading
Non-current assets
Property, plant and
equipment
Intangible assets 3 990.40 5 484.76 19 440.94
Long -term investments
Long -term receivable
Current assets
Inventories
Trade debtors
Debtors and prepayments
Loan receivable
Bank and cash balance
Current liabilities
Creditors and accruals
Dividend payable
Tax payable
Borrowings
Net current
(liabilities)/assets
Non-current liabilities
Borrowings
Other non-current
liabilities
Deferred taxation
Retirement benefit
obligation
Provisions
Net assets
Shareholders` equity
Share capital (27.70) (36.02) (133.11)
Shar e premium account (4 303.90) (5 598.09) (20 685.68)
Revaluation reserve
Exchange difference
Retained earnings
Minority interest 341.20 149.35 1 377.86
Total equity
Acquisition of After the
US$ Gaslink transaction % change
Non-current assets
Property, plant and equipment 117 771
Intangible assets 27 576.14 211 807 87.28
Long -term investments 256
Long -term receivable 38 281
Current assets
Inventories 119 835
Trade debtors 150 738
Debtors and prepayments 134 950
Loan receivable -
Bank and cash balance 60 121
465 645
Current liabilities
Creditors and accruals (192 161)
Dividend payable -
Tax payable (7 342)
Borrowings (316 629)
(516 132)
Net current (liabilities)/assets (50 488)
Non-current liabilities
Borrowings (9 996)
Other non-current liabilities -
Deferred taxation (18 557)
Retirement benefit obligation (3 373)
Provisions (2 939)
(34 866)
Net assets 283 193 53.63
Shareholders` equity
Share capital (251.35) (2 881) 33.23
Shar e premium account (39 059.84) (232 390) 92.47
Revaluation reserve (18 475)
Exchange difference -
Retained earnings (28 025)
(281 771) 66.33
Minority interest 11 735.06 (991) (93.23)
Total equity (282 762) 53.63
Income Statement
For the period ended 31 December 2006
Acquisition of Acquisition of
Oando Oando
Before the Exploration Production &
US$ transaction & Production Development
Turnover 1 647 840
Cost of sales (1 507 512)
Gross profit 140 328
Selling and marketing
costs (42 514)
Administrative expenses (50 572)
Interest received -
Other operating income 9 565
Operating profit 56 807
Interest payable and
similar charges (20 946)
Amortisation of goodwill -
35 861
Exceptional item -
Profit before taxation 35 861
Taxation (13 839)
Profit after taxation 22 022
Minority interest 2 755
Attributable to equity
holders 19 267
Earnings per share 0.03
Average number of shares 547 000
Weighted average number
of shares 547 000
Earnings 19 267
Earnings per share 0.04
Headlines earnings 19 267
Headlines earnings per
share 0.04
Diluted earnings per share 0.04
Net asset value 184 049
Net tangible asset value 70 955
Net asset value per share 0.34
Net tangible asset value
per share 0.13
Acquisition of Acquisition of
Oando Oando Acquisition of
Energy Supply & Oando
US$ services Trading Trading
Turnover
Cost of sales
Gross profit
Selling and marketing
costs
Administrative expenses
Interest received
Other operating income
Operating profit
Interest payable and
similar charges
Amortisation of
goodwill
Exceptional item
Profit before taxation
Taxation
Profit after taxation
Minority interest (257.81) (136.32) (761.92)
Attributable to equity
holders 257.81 135.32 761.92
Earnings per share
Average number of
shares
Weighted average
number of shares
Earnings
Earnings per share
Headlines earnings
Headlines earnings per
share
Diluted earnings per
share
Net asset value
Net tangible asset
value
Net asset value per
share
Net tangible asset
value per share
Acquisition of After the
US$ Gaslink transaction % change
Turnover 1 647 840
Cost of sales (1 507 512)
Gross profit 140 328
Selling and marketing costs (42 514)
Administrative expenses (50 572)
Interest received -
Other operating income 9 565
Operating profit 56 807
Interest payable and similar
charges (20 946)
Amortisation of goodwill -
35 861
Exceptional item -
Profit before taxation -
Taxation (13 839)
Profit after taxation 22 022
Minority interest (1 358.59) 241 (91.25)
Attributable to equity holders 1 358.59 21 781 13.05
Earnings per share 0.03
Average number of shares 754 070 37.86
Weighted average number of
shares 754 070 37.86
Earnings 21 781 13.05
Earnings per share 0.03 (25.00)
Headlines earnings 21 781 13.05
Headlines earnings per share 0.03 (25.00)
Diluted earnings per share 0.03 (25.00)
Net asset value 282 762 53.87
Net tangible asset value 70 955
Net asset value per share 0.37 11.76
Net tangible asset value per
share 0.09 (30.77)
Notes:
1. The unaudited consolidated pro forma financial information of Oando has been
prepared in order to show the effects of the transaction assuming the
transaction took place on 1 January 2006 for purposes of the income statement
and on 31 December 2006 for purposes of the balance sheet. This information is
provided for illustrative purposes only and may not give a true picture of the
financial position of Oando because of the nature of the pro forma information.
2. The pro forma consolidated income statement and balance sheet have been
compiled as follows:
The historical audited consolidated income statement of Oando for the year
ended 31 December 2006 and the historical consolidated balance sheet at 31
December 2006, each prepared in accordance with International Financial
Reporting Standards;
The audited consolidated financial statements for the year ended 31 December
2006 included each of the businesses covered by the scheme of arrangement;
On conclusion of the scheme of arrangement only two of the companies will still
have minority interests, Gaslink and Oando Production and Development Company;
None of the companies being consolidated;
An estimated ZAR23 667 101 transaction costs have been taken into account;
and
A share price of N78.20 per Oando share.
Ernst &Young has issued an independent reporting accountants` report on the pro
forma financial information and effects in accordance with the Listings
Requirements of the JSE.
3.3 Profit forecasts
Shareholders are advised that the forecast financial information contained in
the scheme document has not been prepared in accordance with the Listings
Requirements of the JSE nor has it been reviewed and reported on by the auditors
of Oando.
3.4 Related party transactions
As OOI holds 23.66% of the issued ordinary shares in Oando and one of the twelve
transacting shareholders of Gaslink, Forte Properties and Investments Limited,
holds 12.59% of Gaslink both parties are related parties to Oando in terms of
the Listings Requirements of the JSE. In terms of the Listings Requirements of
the JSE, companies are required to obtain an opinion from an independent expert
giving an opinion on whether the terms of the proposed related party transaction
are fair and reasonable as far as the shareholders of the company are concerned.
The JSE has imposed the requirement that Oando obtain a positive fair and
reasonable opinion as a condition precedent to the implementation of the scheme
of arrangement.
In terms of the Listings Requirements of the JSE:
OOI will be precluded from voting on the resolution pertaining to the to the
acquisition by Oando of OOI`s stake in the jointly held subsidiaries; and
any of the Gaslink minority shareholders who are also shareholders of Oando
will be precluded from voting on the resolution pertaining to acquisition by
Oando of their interests in Gaslink.
3.5 Working capital statement
The directors are of the opinion that the working capital available to Oando and
its affiliates and subsidiaries is sufficient for the group`s present
requirements, that is, for at least 12 months from the date of issue of the
scheme document.
Oando has undertaken to comply with Schedule 25 of the Listings Requirements of
the JSE prior to the implementation of the scheme of arrangement.
3.6 Expenses
The total expenses of the transaction are estimated at ZAR 24.4 million
(excluding Value-Added Tax and other sales taxes).
The following expenses will be for the account of Oando and will be paid out of
existing cash reserves:
Expense Payable to R
JSE documentation fees* JSE 39 850
NSE fees NSE 5 007 235
SEC documentation and listing fees SEC 770 327
CSCS eligibility fees CSCS -
Printing, publication, distribution
and advertising expenses Various 7 391 700
Legal fees Banwo & Ighodalo 716 250
Advisory fee FCMB Capital Markets 4 297 500
Sponsor fee Deutsche Securities 750 000
Accounting and auditing fees PricewaterhouseCoopers 916 800
Reporting accountant fees Ernst & Young 1 060
Estimated total 19 890 772
*Excludes the JSE listing fees which will be calculated based on the share price
on the date on which the Court sanctions the scheme of arrangement.
The table above excludes fees payable to the independent expert.
The following expenses will be for the account of OOI and will be paid out of
existing cash reserves:
Expense Payable to R
Advisory fee IBTC Chartered Bank 4 297 500
Accounting and auditing fees PricewaterhouseCoopers 223 470
Estimated total 4 520 970
3.7 Action required in terms of the scheme meeting
If you are a registered holder of certificated Oando ordinary shares or hold
dematerialised Oando ordinary shares in your own name and are unable to attend
the scheme meeting, which is to be held at The Cultural Centre, Mary Slessor
Avenue, Calabar, Cross River State, Nigeria at 13:00 on Thursday, 28 June 2007
and wish to be represented thereat, you must complete and return the form of
proxy that was distributed together with the scheme document in accordance with
the instructions therein and lodge it with the transfer secretaries whose
details were contained in the form of proxy to be received by them by no later
than 24 hours before the scheme meeting.
If you do not hold your dematerialised Oando ordinary shares in your own name,
you must timeously provide your CSDP or broker with your voting instructions in
terms of the custody agreement entered into with your CSDP or broker. If you
wish to attend the general meeting in person, you need to request your CSDP or
broker to provide you with the necessary authority to attend and vote your Oando
ordinary shares.
If you hold certificated Oando ordinary shares through a nominee, you should
provide your nominee with your voting instructions in terms of the agreement
entered into with such nominee. If you wish to attend the general meeting in
person, you need to request your nominee to provide you with the necessary
authority to attend and vote your Oando ordinary shares.
3.8 Consents
All parties named in the scheme document consented in writing to act in the
capacities stated and to their names being included in the scheme document.
Where appropriate consent was given in writing for the inclusion of reports in
the form and context in which they appeared.
3.9 Responsibility statement
The directors of Oando, collectively and individually, accept full
responsibility for the accuracy of the information given and certify that to the
best of their knowledge and belief there are no facts that have been omitted
which would make any statement false or misleading, and that all reasonable
enquiries to ascertain such facts have been made and that all information
required by the Listings Requirements of the JSE has been appropriately
disclosed in accordance with our discussions with the JSE.
3.10 Further announcements
Further announcements will be made when the conditions set out in paragraphs 3.4
and 3.5, including details of the opinion of the independent expert, have been
fulfilled and announcing any changes to the expected dates relating to Court
sanction of the scheme of arrangement and the date of listing of the additional
Oando shares.
3.11 Documents available for inspection
Copies of the following documents will be available for inspection at the
offices of Deutsche Securities (SA) (Proprietary) Limited, 3rd Floor, 3 Exchange
Square, 87 Maude Street, Sandton, during normal business hours until 28 June
2007:
the memoranda and articles of association of Oando and of its material
subsidiaries;
the audited annual financial statements of Oando for the three financial
years ended 31 December 2006;
the independent reporting accountants` report on the pro forma financial
information and effects;
copies of the directors` service contracts;
copies of the material contracts;
copies of the consent letters; and
a signed copy of the scheme document.
4. Withdrawal of cautionary announcement
Shareholders are advised that they are no longer required to exercise caution
when dealing in their Oando ordinary shares.
Lagos
22 June 2007
Sponsor
Deutsche Securities
Member of the Deutsche Bank Group
Date: 22/06/2007 16:30:01 Produced by the JSE SENS Department.
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