| Fri 14 May 2004, 10:17 | | ENERGY AFRICA RESPONSE TO TULLOW OFFER |
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ENERGY AFRICA LIMITED - ENERGY AFRICA RESPONSE TO TULLOW OFFER - POSTING OF
ENERGY AFRICA DOCUMENT TODAY
Registration number : 1995/007140/06
(Incorporated in the Republic of South Africa)
JSE code: ENR ISIN code: ZAE000010427
Energy Africa Response to Tullow Offer
Posting of Energy Africa Document Today
Energy Africa will post today its response to the offer from Tullow Oil plc
("Tullow") to Energy Africa shareholders. The following is a letter to
shareholders from the Energy Africa Directors extracted from the response
document. The terms used in this announcement are as defined in the response
document.
14 May 2004
Dear Shareholder
THE TULLOW OFFER
Tullow posted its Offer for your Energy Africa Shares on 4 May 2004.
The Offer
The Offer arises as a consequence of Engen"s initiative to dispose of its Energy
Africa Shares,
as advised in Energy Africa"s cautionary announcements, dated 20 November 2003,
5 January 2004, 16 February 2004 and 26 March 2004.
Tullow has announced that, in advance of making the Offer, Tullow secured from
Engen and Petronas irrevocable commitments to accept the Offer in respect of
their Energy Africa Shares, representing, in aggregate, approximately 65.2% of
the issued share capital of Energy Africa.
Tullow has also announced that other shareholders, representing in aggregate
approximately 25.3% of the issued share capital of Energy Africa, have also
irrevocably agreed to accept the Offer in respect of their Energy Africa Shares.
Consequently, the holders of approximately 90.5% of the issued share capital of
Energy Africa are irrevocably committed to accept the Offer.
The Board of Energy Africa draws the attention of Shareholders to the fact that
Tullow has indicated its firm intention that, once the Offer is declared wholly
unconditional and the holders of more than 90% of the issued share capital of
Energy Africa have accepted the Offer, it will invoke Section 440K to compel the
acquisition of Energy Africa Shares from the Remaining Shareholders.
The Board notes that should the Offer become unconditional, it is Tullow"s
intention to preserve Energy Africa"s valuable intellectual assets by
maintaining Energy Africa"s separate identity wherever practicable, by following
Energy Africa"s business model and vision of building an independent Pan-African
oil and gas company and by retaining existing Energy Africa officers and
employees. The Board also notes Tullow"s intention to carry out a fundamental
review of the executive and senior management of the Enlarged Group, with the
objective of optimally deploying resources and skills to ensure its future
success and, in particular, to consider the possible roles and functions in the
Enlarged Group of Energy Africa"s existing directors.
Observations on the Offer
Energy Africa"s business is primarily US Dollar denominated, while your Energy
Africa Shares are South African Rand denominated. The significant strengthening
of the Rand against the US Dollar since the Petronas offer has meant that,
whilst in Rand terms the Offer is approximately 24% lower than the Petronas
offer in 2002, the Offer is approximately 15% higher in US Dollar terms than the
Petronas offer. Your Board notes that Energy Africa"s minority Shareholders are
predominantly offshore-based, and are thus not adversely affected by the strong
Rand.
Financial Advisers" Views
The Board has taken independent financial advice from Goldman Sachs
International and Rothschild and such advice is attached as Appendices 1 and 2.
Goldman Sachs International and Rothschild are of the opinion that the cash
Offer is fair and reasonable.
Energy Africa Board"s Views
Your Company is actively involved in exploration and development activities,
which could add
considerable value for the benefit of all Shareholders. Furthermore, your Board
believes there is real potential for continuing high oil prices, which would
considerably enhance the value of the Company"s producing and development
assets.
Your Company"s exploration portfolio includes acreage with high potential for
commercial discoveries in Uganda, Gabon, Egypt, Morocco and Mauritania where
high impact wells are scheduled to be drilled in 2004. Your Board believes that
important development projects, including the Northern Block G oil discoveries
in Equatorial Guinea, the Kudu gas field in Namibia and the M`Boundi oil field
in the Congo have the potential to deliver considerable value in the future.
In your Board"s opinion, the offer of $500 million approximates the value of the
Company"s proven and probable reserves. We believe that Shareholders are not
being properly recompensed for the upside potential of the assets described
above.
Your Board consequently believes that this is not the best time to sell the
Company.
Recommendation
In terms of maximising value for all the Energy Africa Shareholders, your Board
believes that this is not the best time to sell the Company, as it is of the
opinion that the Offer does not adequately reflect the value that your Company
could realise if the Company continued to operate in its current form.
However, the Board recognises that Tullow has received irrevocable undertakings
to accept the Offer in respect of 90.5% of the issued Energy Africa Shares and
that Tullow has indicated its firm intention to invoke Section 440K to compel
the acquisition of the Energy Africa Shares from the Remaining Shareholders.
Acceptance of the Offer will result in Shareholders receiving their
consideration earlier than if Shareholders wait to receive their consideration
pursuant to any such compulsory acquisition in terms of Section 440K. Your Board
also recognises that the independent
financial advisers to the Board consider the cash Offer to be fair and
reasonable.
Your Board has therefore concluded, after due consideration of all the
circumstances, that the interests of Remaining Shareholders would be best served
by accepting the Offer. Accordingly, the Energy Africa Directors intend, in
respect of their own holdings of Energy Africa Shares, to accept the Offer.
The Board expresses no opinion as to whether Shareholders should elect to
receive the whole or part of the Consideration in the form of Tullow Shares.
Shareholders should consult their financial or other appropriate advisers, in
order to make an informed decision, taking into account their personal
circumstances, when considering that election.
Yours sincerely,
Rhidwaan Gasant Dato" M Idris MansorManaging
Director and Chief Executive Officer Non-executive Chairman
Copies of the response document (including the independent advice from Goldman
Sachs International and Rothschild referred to above) may be accessed on Energy
Africa"s website www.energyafrica.com
Enquiries:
Energy Africa
Rhidwaan Gasant +27 21 400 7600
College Hill
Nicholas Williams +27 11 447 3030
Goldman Sachs International and Rothschild are acting for Energy Africa Limited
and no one else in connection with the matters referred to above and neither
Goldman Sachs International nor Rothschild will be responsible to anyone other
than Energy Africa for providing the protections afforded to their clients.
Merrill Lynch South Africa (Pty) Limited is acting as sponsor to Energy Africa
in connection with the Offer and no one else and will not be responsible to
anyone other than Energy Africa for providing the protections afforded to
customers of Merrill Lynch South Africa (Pty) Limited nor for providing advice
in relation to the Offer
Lead Financial Adviser Attorneys
Goldman Sachs International Werksmans Incorporated
Financial Adviser Sponsor
Rothschild Merrill Lynch South Africa
(Pty) Limited
Public Relations Adviser
College Hill
Date: 14/05/2004 09:30:12 AM Produced by the JSE SENS Department
