1. Is Oando exiting the E&P Business?
No, Oando is not exiting the E&P business but rather strengthening its commitment to the growth of its E&P business by giving it a platform to raise equity for faster growth through both organic and inorganic means.
2. Does this mean Oando is selling its E&P Division to Exile?
No, Oando is not selling its E&P Division to Exile, but rather undergoing a Reverse Take-Over (RTO). An RTO is a financial arrangement where a large unlisted company (Company A) offers shares itself to be acquired by a smaller listed company (Company B) in exchange for shares in the combined company (Company C). Company A thus owns a very large percentage of the new company C (in our case 95%), has majority seats on the Board of Directors and selects the management team. In most cases, such as this one, Company C changes its name to Company A’s name.
3. So the E&P Division will not be called “Exile Resources Inc.” when this transaction is completed?
Yes, upon completion of the transaction, the new company will be called “Oando Energy Resources Inc.” (“OER”).
4. So, who runs the new company, Oando or Exile?
The board of directors of OER will comprise three executives from Oando; Messrs. Wale Tinubu, Omamofe Boyo, and Olapade Durotoye, and Messrs. Stan Bharti, Christopher J.F. Harrop, Tony Henshaw and Ian Gray, existing directors of Exile. Mr. Wale Tinubu, will be appointed as the Chairman of OER.
5. What is OEPL’s current relationship with Exile Resources Inc?
OEPL (a subsidiary of Oando Plc) is a joint venture partner with Exile Resources Nigeria Limited (a subsidiary of Exile Resources Inc.) on the Akepo Field located within OML 90 in Nigeria (“Akepo Field”). OEPL acquired 75 % participating interest out of Exile’s 40% participating interest in the Akepo Field in 2009. Thus, OEPL owns 30% participating interest in the Akepo Field, whilst Exile owns 10%. Sogenal Limited (the operator of the Field), owns the balance 60%.
OEPL is the Financial and Technical Partner, which means OEPL is obligated to fund the joint operations and provide technical and management services to Sogenal in return for a higher than 30% portion of the cash flow.
6. What is the benefit of the RTO transaction and listing on the Toronto Stock Exchange (TSX) to Oando?
The RTO and listing transaction will create a platform that will facilitate the E&P Division’s access to equity capital required for the acquisition of proven and producing assets, as well as the further development of its current E & P portfolio, which is comprises of current production of 5,000 barrels a day, near term development opportunities and exploration upside.
In addition, by carving the E&P Division out of Oando PLC, Oando PLC’s shareholders will receive a proper valuation for the E&P Division’s assets, which are currently subsumed, at a discount, in Oando PLC’s share price. By having a listing on one of the foremost exchanges for resource companies, we are enabled to grow and create value at a faster pace than our previous debt-financed and Group-financed pace allowed.
The transaction will also create a standalone E & P company that would be readily comparable to its international peers and provide a pure play investment vehicle for our shareholders and new investors.
7. What stage is the transaction currently at?
Oando executed a definitive Master Agreement with Exile Resources Inc. on September 27th 2011, as provided in the previously announced Term Sheet dated July 28th 2011.
8. When is the transaction expected to be concluded?
We expect to receive final approvals before the end of 2011.
9. How is this expected to play out?
Completion of the transaction is subject to a number of conditions, including the approval of the TSX Venture Exchange, Toronto Stock Exchange and completion of satisfactory confirmatory due diligence and requisite majority approval of shareholders of Exile. There can be no assurance that the Transaction will be completed as proposed or at all. OER would be a separately listed company from Oando PLC, with majority shares owned by Oando PLC and listed on the Toronto Stock Exchange. This listing still keeps the asset holding companies, as Nigerian companies and the E&P Division’s assets Nigerian owned, with the company on the fast track path to becoming Nigeria’s leading indigenous E&P Company.
10. Does this mean the transaction will be completed upon and subject to approvals from Exile shareholders and regulatory bodies?
Yes.
11. What is the next step after transaction is concluded?
Oando Energy Resources Inc. will be listed on the Toronto Stock Exchange as a subsidiary of Oando Plc.
12. Will OEPL still exist after completion of this transaction?
OEPL as a legal entity will still exist however OER will be the vehicle through which Oando Plc will execute all its E&P aspirations and OEPL would not compete with OER with respect to participation in the E&P business.
