The amount outstanding comes to around US$24.2mln, and the loans date back to the time the two companies were jointly participating in oil prospecting licence (OPL) 233 in Nigeria.
The settlement agreement restructures EERNL Group’s debt obligations to SacOil in exchange for SacOil‘s waiver of certain rights and interests emanating from the loans; however, SacOil retains the existing security over EERNL Group’s 20% interest in OPL 233.
The relationship between the companies had been further complicated by a farm-out agreement executed between SacOil, EERNL subsidiary EER 281 and Transcorp in respect of OPL 281, where SacOil advanced funds on behalf of EERNL to secure the farm-in.
As previously announced, EERNL is expecting Transcorp to repay the farm-in funds, which will effectively return US$12.5 million plus interest to SacOil.
SacOil has agreed to indemnify EERNL Group against any and all costs incurred or sustained as a result of any counter-claims by Transcorp; in return, EERNL Group has ceded its rights to SacOil 281 relating to any claims that it has against Transcorp.
“This settlement reflects the restructuring of the loans advanced to the EERNL Group and the consequences of our termination of the OPL 281 contract with Transcorp,” explained Dr Thabo Kgogo, chief executive officer of SacOil.
“It also brings an end to the master joint venture agreement with EERNL with regards to the joint investigation of new exploration opportunities. This is in line with our renewed focus on development and production assets,” Dr Kgogo added.
“Overall, we have negotiated this settlement to restructure the EERNL Group’s debt obligations and enhance our ability to recover the sums owed to the company and its shareholders,” he concluded.
Shares in SacOil were up by more than a third towards the end of the trading day, at 1.77p.
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