San Leon Energy has secured a $187 million investment from Tri Ri Asset Management, allowing it to become the largest shareholder in Energy Link Infrastructure (ELI).
San Leon will buy a 55% stake in ELI.
CEO Oisin Fanning said the last few months had been difficult for the company, and others. “It is testament to the determination and commitment of our team that we have secured one of the largest fundraisings by an AIM oil & gas company in recent years,” he said.
ELI recently commissioned the FSO Akaso, providing a new export route from OML 18. Fanning said commissioning the FSO was a “game changer, not only for OML 18 but for the entire industry in that region. We are confident that the FSO and the ACOES pipeline will be a significantly profitable and cash-generative project from which San Leon expects substantial upside.”
Tri Ri CIO Asad Ali said the investment would be the start of a long-term relationship between the two.
“We believe that the scale of OML 18 and the efficiencies that ELI’s new infrastructure will bring represents a very exciting opportunity for us and all investors in San Leon.”
Ali confirmed to Energy Voice this was Tri Ri’s first investment in Africa.
The investor will provide a $125mn convertible secured loan to San Leon, which it will draw down immediately. It will also spend $16mn on 44.99mn shares this month, this is around 10% of the company. There is another potential $46mn on 62.5mn warrants.
The loan has a term of three years and San Leon will pay a fixed 7.5% interest per year. This amount, $28.125mn, has already been deducted from the principal. San Leon will also pay a $7.5mn fee to advisors.
As a result, San Leon has net proceeds of $89.375mn.
Tri Ri has the right to convert $70mn of the principal into a 33.3% stake in San Leon ELI, the subsidiary which owns the ELI stake. The remaining $55mn can be converted into 90mn shares in San Leon.
Tri Ri will also receive 50% of any dividends from ELI for 15 years.
San Leon’s largest shareholder, Toscafund Asset Management with a 75% stake, has said it backs the Tri Ri financing and will vote for it at the planned EGM.
San Leon will use some of the cash from Tri Ri to pay down a $5mn loan from Toscafund, which has a 10% rate. It also has various other outstanding loans, worth around $15mn.
ELI is “heavily indebted” and San Leon must take steps to provide capital immediately.
San Leon also said it would appoint a new joint broker, Fortified Securities, which had introduced Tri Ri to the company.
Updated at 9:13 am with comment from Tri Ri.