Pre-Annual General Meeting Information • Aug 25, 2010
Pre-Annual General Meeting Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Document or the action you should take, you are recommended to take advice from your stockbroker, bank manager, solicitor, fund manager or other independent financial adviser who is authorised under the Financial Services and Markets Act 2000 and who specialises in advising in connection with shares and other securities, or from another appropriately authorised financial adviser if you are taking advice outside the United Kingdom.
If you have sold or otherwise transferred all of your Afren Shares please send this Document, together with the accompanying Form of Proxy, to the purchaser or transferee or to the stockbroker, bank, or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. However, such documents should not be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws in such jurisdiction. If you have sold or transferred only part of your holding of shares in Afren you should retain this Document and the accompanying Form of Proxy and consult the stockbroker, bank or other agent through whom the sale or transfer was effected.
This Document does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security.
(incorporated in England and Wales with registered number 05304498)
Sponsor BofA Merrill Lynch
This is not a prospectus but a shareholder circular. The distribution of this Document in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this Document comes should inform themselves about and observe any such restrictions. Failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Document does not constitute an offer or an invitation to purchase or subscribe for any securities or a solicitation of an offer to buy any securities pursuant to the Document or otherwise in any jurisdiction in which such offer or solicitation is unlawful. Your attention is drawn to the letter from the Chairman of Afren which is set out on pages 5 to 16 of this Document, which contains the unanimous recommendation of the Afren Directors that you vote in favour of the Acquisition and the resolution to be proposed at the General Meeting convened by the notice set out in this Document. Please read the whole of the Document and the Prospectus and, in particular, the risk factors set out in the section headlined "Risk Factors"out on pages 11 to 30 of the Prospectus. You should not rely solely on the information summarised in this Document.
Notice of the General Meeting, which is to be held at 11.00 a.m. on 21 September 2010 at the offices of White & Case LLP, 5 Old Broad Street, London EC2N 1DW, United Kingdom is set out at the end of this Document. A Form of Proxy for use in relation to the General Meeting is enclosed. To be valid, the Forms of Proxy should be completed, signed and returned in accordance with the intructions printed on them as to be received by the Company's registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY or at the electronic address provided on the proxy form which is www.eproxyappointment.com, in each case no later than 11.00 a.m. on 17 September 2010. Completion and return of a Form of Proxy will not preclude Afren Shareholders from attending and voting in person at the General Meeting, should they so wish.
Merrill Lynch International, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as a sponsor to Afren in connection with the Acquisition and will not be responsible to anyone other than Afren for providing the protections afforded to clients of Merrill Lynch International or for providing advice in relation to the Acquisition.
CIBC World Markets, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as a financial adviser to Afren and no-one else in connection with the Acquisition and will not be responsible to anyone other than Afren for providing the protections afforded to clients of CIBC World Markets or for providing advice in relation to the Acquisition.
The New Ordinary Shares have not been, and will not be, registered under the Securities Act, or under the securities laws of any state, district, province or other jurisdiction of the United States. No regulatory clearances in respect of the New Ordinary Shares have been, or will be, applied for in any state, province, territory or jurisdiction other than the United Kingdom. Accordingly, unless an exemption under relevant securities laws is applicable, the New Ordinary Shares are not being, and may not be, offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into the United States or to or for the account or benefit of any resident of the United States. The New Ordinary Shares are being offered in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof and upon issuance thereof will generally be capable of being resold without restriction under the Securities Act by former Black Marlin Shareholders who are not affiliates of Afren and have not been affiliates of Afren within 90 days prior to the issuance of New Ordinary Shares under the Scheme.
No prospectus has been filed with the securities regulatory authorities of any Canadian province or territory with respect to the New Ordinary Shares. The New Ordinary Shares will not be offered or sold in Canada other than to Black Marlin Shareholders in reliance on an exemption from the prospectus and registration requirements of the applicable province or territory of Canada pursuant to sections 2.11 and 3.11 of NI 45-106.
This Document contains a number of "forward-looking statements" relating to Afren and Black Marlin and the business sectors in which they operate. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates", "forecast", "plan" and "project" or similar expressions identify forward-looking statements. Such statements reflect the relevant company's current views with respect to future events and are subject to risks, assumptions and uncertainties that could cause the actual results to differ materially from those expressed or implied in the forward-looking statements. Many of these risks, assumptions and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions, changes in general economic and business conditions, introduction of competing products and services, lack of acceptance of new products or services and the behaviour of other market participants. Although Afren believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Afren Shareholders should not, therefore, place undue reliance on these forward-looking statements, which speak only as of the date of this Document. Except as required by the FSA, the London Stock Exchange or applicable law (including as may be required by the Listing Rules the Prospectus Rules and the Disclosure and Transparency Rules), Afren expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Document to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Dated: 24 August 2010
| Page | ||
|---|---|---|
| PART 1 | EXPECTED TIMETABLE | 4 |
| PART 2 | CHAIRMAN'S LETTER | 5 |
| PART 3 | ADDITIONAL INFORMATION | 17 |
| PART 4 | DEFINITIONS | 21 |
| PART 5 | NOTICE OF GENERAL MEETING | 24 |
| Expected timetable for the Acquisition | |
|---|---|
| Application for Interim Court Order | 26 July 2010 |
| Record date for Black Marlin Shareholders | 3 August 2010 |
| Black Marlin Shareholders' meeting | 10 September 2010 |
| Record date for Afren Shareholders | 17 September 2010 |
| General Meeting | 21 September 2010 |
| Scheme Court Hearing | 6 October 2010 |
| Obtain Scheme Court Order | 8 October 2010 |
| Effective Date of Scheme | 8 October 2010 |
| Issue of New Ordinary Shares | 8 October 2010 |
| New Ordinary Share Admission | 11 October 2010 |
| Commencement of dealings on the London Stock Exchange of New Ordinary Shares | 11 October 2010 |
| Acquisition Statistics | |
| Number of existing Ordinary Shares in issue (as at 23 August 2010) | 891,125,768 |
| Number of New Ordinary Shares to be issued pursuant to the Scheme | up to 76,776,564 |
| Number of Ordinary Shares in issue upon completion of the Acquisition | up to 967,902,332 |
| New Ordinary Shares to be issued as a percentage of the enlarged issued share capital of Afren |
up to 7.9 per cent. |
(Incorporated and registered in England and Wales under the Companies Act 1985 with registered number 05304498)
Mr. Egbert Imomoh (Non-Executive Chairman) Afren plc Dr. Osman Shahenshah (Chief Executive) Kinnaird House Mr. Shahid Ullah (Chief Operating Officer) I Pall Mall East Mr. Constantine Ogunbiyi (Executive Director) London Mr. Darra Comyn (Group Finance Director) SWI Y 5AU Mr. Ennio Sganzerla (Non-Executive Director) Mr. Peter Bingham (Non-Executive Director) Mr. John St. John (Non-Executive Director) Mr. Toby Hayward (Non-Executive Director)
Directors: Registered and Head Office:
24 August 2010
Dear Shareholder,
On 2 June 2010, the Boards of Black Marlin and Afren announced that they had agreed the terms of a recommended proposal by Afren to acquire the entire issued and to be issued share capital of Black Marlin for New Ordinary Share consideration. On 11 August 2010, Black Marlin and Afren executed and delivered an amended and restated arrangement agreement. The Acquisition will be effected by way of a scheme of arrangement pursuant to section 179A of the BVI BCA (the "Scheme") and will be conditional on, amongst others, the approval of Black Marlin Shareholders and the sanction of the Scheme by the Court. The Scheme is expected to become effective, and the Acquisition to complete, on about 8 October 2010.
The Acquisition constitutes a Class 1 transaction (as defined in Chapter 10 of the Listing Rules of the UKLA) for Afren and therefore requires the approval of Afren Shareholders. Accordingly, the Afren General Meeting has been convened for 11.00 a.m. on 21 September 2010 at the offices of White & Case LLP, 5 Old Broad Street, London EC2N 1DW, United Kingdom to approve the necessary Resolution to implement the Acquisition. An explanation of the Resolution to be proposed at the meeting is set out in paragraph 13 below. The Board unanimously considers that the Resolution is in the best interests of the Company and recommends that Afren Shareholders vote in favour of the Resolution.
I am writing to give you further details of the Acquisition, including the background to and reasons for it, to explain why your Board considers it to be in the best interests of Afren and to seek your approval of the Resolution. The Prospectus in relation to the issue of the New Ordinary Shares in consideration for the Acquisition has been prepared in accordance with the Prospectus Rules and contains further details on the Acquisition.
The Acquisition will be implemented, subject to the satisfaction or waiver of certain conditions, by means of a BVI Court-sanctioned scheme of arrangement between Black Marlin and Black Marlin Shareholders pursuant to which the Scheme Shares will be transferred to Afren in exchange for an issue of New Ordinary Shares to Black Marlin Shareholders.
Under the terms of the Acquisition, Afren Shareholders will retain their shares in Afren and Black Marlin Shareholders will receive:
and so in proportion for any other number of Black Marlin Shares held. Any fractional entitlements to New Ordinary Shares arising out of the application of this exchange ratio shall be rounded down to the nearest whole number of New Ordinary Shares.
The terms of the Acquisition are based on the recent equity market capitalisations of the two companies. The exchange ratio is calculated by taking into account the share capital of Black Marlin on a fully diluted basis and values each Black Marlin share at C\$0.51 based on:
On this basis, Black Marlin is valued at approximately C\$106.5 million. This represents a premium per Black Marlin share of approximately 35 per cent. calculated by comparing the implied price per Black Marlin share as calculated above with Black Marlin's share price of C\$0.38 on the TSXV at market close 1 June 2010, being the last trading day prior to announcement of the Acquisition.
Immediately following the Effective Date, assuming a maximum of 76,776,564 New Ordinary Shares are issued pursuant to the Acquisition and that no other Ordinary Shares are issued in the period from the publication of this Document to the Effective Date, it is expected that Black Marlin Shareholders and Black Marlin option-shareholders will hold approximately 7.9 per cent. and Afren Shareholders will hold approximately 92.1 per cent. of Afren's enlarged resultant issued share capital.
Application will be made to the UK Listing Authority for the New Ordinary Shares to be admitted to the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities.
In connection with the Acquisition and pursuant to certain agreements between Black Marlin, Afren and Black Marlin's option-holders, approximately 18.8 million outstanding options to acquire Black Marlin Shares will be cancelled in exchange for an issuance of an aggregate of approximately 2.9 million New Ordinary Shares to such option holders to be allocated based on the value of the various options. The remaining 1.0 million outstanding options to acquire Black Marlin Shares will become options to acquire New Ordinary Shares on substantially equivalent terms and conditions. For further details see paragraph 11 below.
Upon the Scheme becoming Effective:
Black Marlin is an independent exploration and appraisal company listed on the TSX Venture Exchange. The company holds 12 upstream exploration blocks across Ethiopia, Kenya, Madagascar and the Seychelles. Its strategy is to focus on high impact exploration opportunities.
The 12 assets cover a surface area of 127,776 km2 on a gross basis, and are all located in basins with proven petroleum systems or strong evidence of working petroleum systems. The portfolio is focused on rift basins which are geological settings that have yielded significant discoveries in Uganda, Sudan, Tanzania and Madagascar. A number of prospects have already been defined to date across the acreage.
Black Marlin's asset base is detailed in the table below, which is based on information set out in the GCA Report and the McDaniel Report on Black Marlin contained in Parts 12 and 13 of the Prospectus and that are incorporated by reference in this Document.
| Working | Area in km2 | Area in Acres | |||
|---|---|---|---|---|---|
| Licences | Interest | Gross | Net | Gross | Net |
| Seychelles A, B and C | 75.00% | 14,964 km2 | 11,223 km2 | 3.7 million | 2.8 million |
| Ethiopia | 30.00% | 46,410 km2 | 13,923 km2 | 11.5 million | 3.4 million |
| Kenya 10A | 20.00% | 14,747 km2 | 2,949 km2 | 3.6 million | 0.7 million |
| Kenya 01 | 50.00% | 31,850 km2 | 15,925 km2 | 7.9 million | 3.9 million |
| Kenya L17/L18 | 65.00% | 4,905 km2 | 3,149 km2 | 1.2 million | 0.8 million |
| Madagascar | 40.00% | 14,900 km2 ————— |
5,960 km2 ————— |
3.7 million ————— |
1.5 million ————— |
| 127,776 km2 | 53,129 km2 | 31.6 million | 13.1 million | ||
| ————— | ————— | ————— | ————— |
Black Marlin is not currently producing. Black Marlin's audited income statement for the financial year ended 31 December 2009 (prior to the 19 March 2010 closing of the reverse takeover of Black Marlin Energy Limited by Kristina Capital Corporation) indicated a deficit of C\$6,574,010.
Note 13 to the unaudited interim financial statement for Black Marlin for the three months to 31 March 2010 contained in Part 7 of the Prospectus, which is incorporated by reference into this Document, indicates the value of Black Marlin's seismic investments as reflected in such financial statements as being US\$11,113,252 as at 31 March 2010.
Black Marlin will initially be held as a wholly owned East African business unit, with the prospect of unlocking further East African opportunities. Key management, who have entered into irrevocable undertakings, have agreed to a one year lock-up on the New Ordinary Shares they will receive in exchange for their Black Marlin share-options.
The Acquisition is consistent with Afren's pan-African strategic objective of seeking to deliver growth both organically and through acquisitions to enhance shareholder value and represents a compelling strategic entry into East Africa. The acquisition will bring together two portfolios that offer a complementary fit, providing a balanced exposure across the full E&P value cycle of production, development, appraisal and exploration. Black Marlin's portfolio of assets represents an attractive, multi-country entry position in East Africa, a region that has emerged as an exploration province of global interest following recent significant discoveries across the region.
In particular, the Acquisition:
adds six exploration wells, expected to be drilled through 2012;
delivers a complementary portfolio extension and high growth reinvestment opportunities to leverage Afren's significant production and revenue growth; and
The 12 assets cover a large surface area of 127,776 square kilometres on a gross basis, and are all located in basins with proven or strong evidence of working hydrocarbon systems. The portfolio is focused on basins associated with Mesozoic rifting phases associated with the break up of Gondwanaland, all of which share a common origin, including source rocks and reservoirs, with basins that are productive today (Mughlad Basin in Sudan, Bombay High and Cambay High in India, Yemen, Tanzania, Mozambique and Uganda). A number of prospects have already been defined to date across the acreage, where the potential also exists to establish new hydrocarbon plays and further large scale resource bases.
Gross production from Okoro for the period to 30 June 2010 was 3,229,178 bls (average gross 17,841 bopd). Two infill wells are planned at Okoro that are expected to add gross incremental production of between 3,000 bopd to 5,000 bopd over the second half of 2010. Average gross production and NGL output from CI-11 and the associated Lion Gas Plant for the 6 month period to 30 June 2010 was 6,481 boepd.
Afren's Ebok development commenced in December 2009 and is on schedule. The wellhead support structure was installed at the field in March 2010, and the drilling rig is on location and drilling ahead. The initial development phase consists of six horizontal production wells and one water injection well. First oil is expected in the fourth quarter of 2010.
In January 2010, production, processing and storage facilities for the Ebok development were contracted. A tanker owned by Mercator, a major Indian shipping company, is being converted into a floating storage offloading vessel ("FSO"). The vessel has been designed with a storage capacity of 1.2 million barrels and will be spread-moored near a mobile offshore production unit ("MOPU"), which is currently being refurbished and upgraded. The FSO vessel and MOPU will be leased to the Ebok development over an initial seven year period at a rate of US\$98,092 per day, with an option to extend.
Future development phases will target the West Fault Block (Phase 2 incorporating the installation of an additional dedicated wellhead platform (WHP) and six development wells tied back to the central MOPU and FSO facilities), the upside potential established in the Southern Lobe (Ebok 6), full development of the D1 reservoir in the Central Fault Block 1 and Fault Block 2 area of the field and any other commercial reserve additions from the exploration and appraisal drilling activity.
In March, an additional contract was signed for a jack up drilling unit to undertake planned drilling across the Company's assets offshore in shallow water south-east Nigeria. The contract is for a duration of up to 210 days and was agreed at a day rate of US\$84,000.
In January 2010, the Company announced the acquisition of an interest in the OML 115 block, which surrounds the Ebok and Okwok discoveries. On 15 July 2010, Afren announced that terms have been agreed to acquire Energy Equity Resources Oil and Gas' residual interest in OML 115. An exploration well on OML 115 is also planned for the second half of 2010.
In addition, an appraisal well is planned on the Okwok discovery in the second half of 2010 to confirm and define commercial development requirements of the field.
An exploration well is also planned at OPL 310. The block is located offshore south-west Nigeria. An electro-magnetic survey is currently underway on the block. One exploration well is also scheduled at the Keta Block in Ghana during the first half of 2011.
In March 2010, Afren entered into a debt facility agreement for up to US\$450 million, which is secured against Afren's share of production from the Ebok field. The facility will provide up to US\$450 million of reserves based lending and has a maturity up to five years, is repayable semi-annually and has a margin of between 4.0 per cent. and 5.5 per cent. over LIBOR. The facility will be available to be used for development of the Ebok, Okwok and OML 115 areas, offshore south-east Nigeria.
Afren's net debt/(cash) at 30 June 2010 was US\$12.2 million.
On 31 May 2010 Black Marlin published its unaudited quarterly results on SEDAR, for the three months to 31 March 2010. These results indicate that Black Marlin has generated revenue of US\$123,346 from its seismic acquisition services division for the three month period ending 31 March 2010. It also indicates that investments during three months period ending 31 March 2010 in various exploration properties amounting to US\$742,880. However, accumulated investment in all exploration properties as of 31 March 2010 amounted to US\$11,113,252, in addition to an investment of US\$1,941,793 in seismic data in Seychelles.
In the second quarter of 2010, Black Marlin's seismic business in UPSL was subject to delays in extracting equipment out of Djibouti port due to adverse weather conditions, which resulted in crew and equipment being placed on standby. This exceptional event has contributed to an increase in operating expenses and a decrease in Black Marlin's current assets during the second quarter of 2010 by approximately US\$4.7 million and an increase in its net loss position (arising as a result of the payment of the expenses incurred, advances paid and payments made for increases in investment) during the second quarter of 2010 by approximately US\$4.34 million.
In addition, following completion of the Acquisition, Afren intends to undertake a strategic review of the seismic business contained in UPSL, such that it will be divested in a manner to be determined by Afren and on transaction terms and at a valuation acceptable to Afren.
This Document incorporates by reference from the Prospectus the most recently published financial statements for Black Marlin, being its 31 March 2010 interim financial statements. However, until completion of the Acquisition, to comply with its obligations as a TSXV listed company, Black Marlin will continue to periodically update the market with further interim financial information on SEDAR as and when such information is available and ready for publication. Black Marlin intends to publish its interim financial statements for the quarter to 30 June 2010 by no later than 30 September 2010, which will be available for review on www.sedar.com. Shareholders should therefore monitor updates in this regard.
Unaudited pro forma financial statements showing the expected impact of the Acquisition on the assets, liabilities and earnings of Afren are set out in Part 8 of the Prospectus and are incorporated by reference in this Document.
This unaudited pro forma financial information has been prepared to illustrate the effect on the Group's consolidated balance sheet of the Acquisition and the Share Issue as if they had been completed on 31 December 2009 and on the Group's Profit and Loss as if the transaction had occurred on 1 January 2009. The accounting policies used in the preparation of the unaudited pro forma financial information are consistent with those to be used by Afren in the audited consolidated financial statements as at 31 December 2010.
Black Marlin holds exploration assets, and a seismic business (UPSL), and no producing assets. Therefore the pro forma impact of the transaction would have been to increase total assets, total liabilities and equity. The pro forma impact of the transaction on Afren's 31 December 2009 income statement would have been to increase the loss for the year.
The Directors do not expect that Afren will pay any dividends in the foreseeable future, and in any event until such time as it is prudent to do so, having regard to the level of revenue generated by the Group's operations and the retained earnings to fund its operations and exploration and development programmes. For the foreseeable future, any earnings will be reinvested in developing the businesses of the Group.
Black Marlin and Afren have entered into the Arrangement Agreement which provides, amongst others, for the implementation of the Acquisition by way of the Scheme and which contains assurances and confirmations between the parties, including provisions to implement the Scheme on a timely basis and governing the conduct of the businesses of Black Marlin during the period prior to the Acquisition becoming Effective.
Under the Arrangement Agreement, Black Marlin is required to prepare its shareholder circular, which must comply with all applicable laws and include the unanimous recommendation of the Black Marlin directors that the Black Marlin Shareholders vote in favour of the Acquisition.
The Arrangement Agreement sets out the covenants of both parties including those relating to Black Marlin's conduct of business and its performance of certain actions in connection with the Scheme and to the performance by Afren of other general obligations, such as applications for requisite regulatory consents. The Acquisition is conditional on certain conditions which are customary for a transaction of this nature, including the sanction of the Scheme by Court Order and obtaining the Requisite Approval at the Shareholder Meeting and the approval of the Afren Shareholders.
The Arrangement Agreement also contains certain non-solicitation provisions, pursuant to which Black Marlin provides to Afren covenants not to solicit any offer, proposal or inquiry relating to a merger or takeover of Black Marlin or any of its subsidiaries. However, under the Arrangement Agreement, in the event that Black Marlin receives an unsolicited superior offer, Afren has the right to amend the terms of the Arrangement Agreement and the board of Black Marlin is obliged to review such proposed amendments in good faith, to determine whether the superior offer is still preferable to the proposed amended Arrangement Agreement. The Arrangement Agreement contains various provisions which govern the options available to Black Marlin in such an event, which include, but are not limited to, termination, subject to payment of a break fee (as discussed below).
The Arrangement Agreement may be terminated in certain circumstances including (amongst others) if the conditions to the agreement become incapable of being satisfied (other than as a result of breach by the terminating party), breach of the agreement by either party, where the Black Marlin Board has withdrawn, modified or qualified adversely its recommendation and approval for the Acquisition where Black Marlin has entered into a binding agreement with regard to a superior proposal, the scheme fails to become effective by 31 December 2010 (or such later date as the parties may agree), cancellation of the Black Marlin meeting, failure to receive the required shareholder approvals or by the written agreement of both parties.
Further details of the Arrangement Agreement are set out in Paragraph 6.3 of Part 3 and in Paragraph 13.7 of Part 10 of the Prospectus.
The Arrangement Agreement provides that Black Marlin shall pay Afren or procure that Afren is paid a break fee of US\$4,000,000 ("Break Fee") where the Agreement is terminated in the circumstances summarised below and payment shall be made within two (2) business days.
• Afren or Black Marlin terminates the Arrangement Agreement in circumstances where the Black Marlin Shareholder resolution(s) required to implement the Acquisition do not receive the Requisite Approval in circumstances where a competing acquisition proposal (as defined in the Arrangement Agreement) from another bidder is received prior to such Shareholder Meeting and within 12 months of termination of the Arrangement Agreement an acquisition of more than 50 per cent. of the consolidated assets or issued share capital of Black Marlin completes or Black Marlin enters into an agreement providing for the foregoing;
Where the Arrangement Agreement is terminated by either Black Marlin or Afren in circumstances where the Acquisition did not receive the Requisite Approval at the Shareholder Meeting or in circumstances where Afren terminates the Arrangement Agreement if certain conditions become incapable of being satisfied as a result of any breach by Black Marlin of any of its covenants under the Arrangement Agreement (other than wilful or intentional breach), Black Marlin shall pay to Afren up to a maximum of US\$2,000,000 within two business days of such termination.
Where the Arrangement Agreement is terminated by either Black Marlin or Afren in circumstances where the Acquisition is not approved by Afren Shareholders at the Afren General Meeting or in circumstances where Black Marlin terminates the Arrangement Agreement either where the Black Marlin Shareholder resolution(s) to implement the Acquisition does not receive the Requisite Approval or if certain conditions become incapable of being satisfied as a result of any breach by Afren of any of its covenants under the Arrangement Agreement (other than a wilful or intentional breach), Afren shall pay to Black Marlin up to a maximum of US\$2,000,000 within two business days of such termination.
The Arrangement Agreement may be terminated in certain circumstances including (amongst others) if the conditions to the Arrangement Agreement become incapable of being satisfied (other than as a result of breach by the terminating party), breach of the Arrangement Agreement by either party, where the Black Marlin Board has withdrawn, modified or qualified adversely its recommendation and approval for the Acquisition or Black Marlin has entered into a binding agreement with regard to a superior proposal, the scheme fails to become effective by 31 December 2010 (or such later date as the parties may agree), failure to receive the required approvals or by the written agreement of both parties.
The Black Marlin Directors and officers have undertaken to vote in favour of the resolutions to be proposed at the Black Marlin Shareholder Meeting relating to the Acquisition pursuant to certain voting and support agreements in respect of their own beneficial holdings of 7,918,750 Black Marlin Shares representing, in aggregate, approximately 3.91 per cent. of the existing issued share capital of Black Marlin.
Certain other Black Marlin shareholders who hold a total of 103,988,733 Black Marlin Shares representing, in aggregate, 51.35 per cent. of the existing share capital of Black Marlin (on a non-diluted basis) have also entered into similar voting and support agreements with Afren, whereby such Black Marlin Shareholders have undertaken to vote in favour of the resolutions to be proposed at the Black Marlin Shareholder Meeting. The voting and support agreements can be terminated by the Black Marlin Shareholders when the Arrangement Agreement is terminated (which includes the circumstance of Black Marlin terminating the Arrangement Agreement to enter into a binding commitment in relation to a superior proposal).
Afren attaches great importance to the skills and experience of the existing management and employees of Black Marlin. Afren believes that the Enlarged Group's prospects for growth should lead to increased employment opportunities. Further details of certain key members of Black Marlin's management team are set out below:
Richard Schmitt holds a B.Sc. in Geological Sciences from the University of Aston in Birmingham, England. Richard has over 32 years of international experience in the upstream oil and gas industry with expertise in exploration, exploitation, operations and new ventures. He has managed and developed projects in Yemen and was Occidental's President and General Manager in Yemen for 5 years. Prior to his current role, Richard was President and CEO of Africa Oil Corp.
Barry Rogers is the Chief Operating Officer of Black Marlin. He is a geologist and geophysicist with 35 years experience in the oil and gas industry. He has worked at BP and Enterprise Oil, the latter in the Europe, Africa and South-East Asia business units and with smaller independent oil and gas companies in the Middle East. Barry oversees the continuing exploration of Black Marlin's acreage position throughout East Africa.
Mike Watson is a graduate in Electronic engineering with 15 years experience in the seismic exploration industry. Mike started his career with Geophysical Services Incorporation (GSI) in the 3D multi streamer offshore data acquisition sector. This was followed by employment periods with A&B Geoscience (Canada) and SeaBird Exploration (Norway) over the past five years.
Eddie Harney has been involved in the industry for over 18 years. He has previously worked offshore for Western Geophysical (WesternGeco) in several roles culminating in a five year period on a number of multistreamer vessels. Eddie has also worked offshore for Seabird Exploration and more recently for Seabird Exploration in the role of Operations Manager.
Jeremy Martin holds a B.Sc Hons. in Geology from the Sir John Cass School of Geology in London and has 20 years of oil industry experience. Following Sandhurst and a short service commission with the British Army, he spent 6 years with the DTC in Angola and Zaire. In 1989 Jeremy joined Enterprise Oil for its operations in Vietnam. He then became Country Manager for Premier Oil in Cambodia followed by various roles in the Bay of Cambay, India and the Delta Region, Nigeria. Prior to joining Black Marlin, Jeremy managed the exploration activities for Madagascar Oil.
Terence Nilsen is the Chief Explorationist of East African Exploration Limited, a wholly owned subsidiary of Black Marlin. He has a B.Sc. Honours (Geology) from University of Western Australia (1985). Terence has over 20 years in the Oil & Gas business. Terence's expertise is in basin to field scale geophysical and geological interpretation.
It is intended that the Acquisition will be effected by means of a scheme of arrangement between Black Marlin and the Scheme Shareholders pursuant to section 179A of the BVI BCA. The procedure involves an application by Black Marlin to the Court to sanction the Scheme.
The Scheme will be subject to the Conditions and the full terms and conditions which are summarised in paragraph 5 of Part 3 of the Prospectus.
The Acquisition is conditional upon, amongst other things:
Following implementation of the Scheme, Black Marlin will become a wholly-owned subsidiary of Afren.
The Scheme will only become effective following the Court Hearing on filing with the Registrar of Corporate Affairs the Court Order. Upon the Scheme becoming effective, it will be binding on all Black Marlin Shareholders, irrespective of whether or not they attended or voted at the Shareholder Meeting.
The holders of Black Marlin Options ("Black Marlin Options") (other than RAKGAS International FZ) have agreed that all the Black Marlin Options that remain unexercised at the Effective Time shall be cancelled by Black Marlin and exchanged for that number of New Ordinary Shares of equivalent value as set out in an option exchange agreement executed by each holder of Black Marlin Options. A total of 18,832,500 such options valued at £2,632,782 at 28 May 2010 will be exchanged for 2,924,328 Afren Shares (the calculation of such number of Afren Shares being based on the 20 day volume weighted average price for the Afren Shares on the London Stock Exchange as of 28 May 2010).
In addition, one million Black Marlin Options held by RAKGAS International FZ valued at £66,270 as at 28 May 2010 that remain unexercised at the Effective Time will be exchanged for, and will represent, 364,702 stock options in Afren with an exercise price of C\$1.37 as set out in an option rollover agreement between Afren and RAKGAS International FZ and as determined based on the exchange ratio in accordance with the exchange ratio and the terms of the existing option agreement between RAKGAS International FZ and Black Marlin and for which no additional consideration was paid.
The holders of common share purchase warrants of Black Marlin (the "Warrants") have agreed that the Warrants that have not been exercised prior to the Effective Time shall be cancelled by Black Marlin and each holder thereof shall cease to have any rights with respect thereto. The Warrant holder will not receive any compensation for such termination.
The formal documentation setting out details of the Acquisition, including the Scheme Document setting out the procedures to be followed to approve the Scheme and the disclosure relating to Afren and the New Ordinary Shares, is being posted to Black Marlin Shareholders.
The key risks associated with the Acquisition are set out below:
The implementation of the Scheme is subject to the satisfaction (or waiver, where applicable) of a number of conditions, including:
Additionally, as the Acquisition has been classified as a class 1 transaction for the purpose of the Listing Rules, the Acquisition will also require the approval of the Afren Shareholders. There is no guarantee that these (or other conditions) will be satisfied (or waived, if applicable), in which case the Acquisition will not take effect.
Black Marlin is a listed entity whose common shares are freely traded on the TSXV. It is possible that an existing or new shareholder with significant shareholding in Black Marlin could use, or could threaten to use, its shareholding to vote against the Acquisition when shareholder consent is sought. Such an action could materially delay or prevent the implementation of the Acquisition and therefore deprive the parties of some or all of the anticipated benefits of the Acquisition.
Prospective investors should be aware that the value of an investment in the Enlarged Group may go down, as well as up. The market value of the Ordinary Shares can fluctuate and may not always reflect the underlying asset value. A number of factors outside the control of the Enlarged Group may impact on its performance and the price of the Ordinary Shares. Such factors include the operating and share price performance of other companies in the industry and markets in which the Enlarged Group operates, speculation about the Enlarged Group's business in the press, media or investment community, changes to the Enlarged Group's trading forecasts, the publication of research reports by analysts and general market conditions.
Since the Acquisition is to be effected by means of a Scheme under which Black Marlin Shareholders will be offered New Ordinary Shares once the Acquisition becomes effective, existing Afren Shareholders will suffer a reduction in their proportionate ownership and voting interest in the ordinary share capital of Afren.
If the Acquisition completes, the process of integrating Black Marlin and its subsidiaries may create unforeseen operating difficulties and expenditures and pose management, administrative and financial challenges. Specifically, integrating operations and personnel and pre-completion or post-completion costs may prove more difficult and/or expensive than anticipated, thereby rendering the value of the Acquisition less than the value paid. The integration of the Acquisition may require significant time and effort on the part of Afren and, if the Acquisition completes, the Enlarged Group's management. The challenges of integrating Black Marlin may also be exacerbated by differences between Afren's and Black Marlin's operational and business culture, the need to implement unpopular cost cutting measures, difficulty in maintaining internal controls and difficulty in establishing control over cash flows and expenditures. While Afren has successfully completed the integration of the businesses it has acquired thus far, it could experience difficulties in integrating Black Marlin successfully, which could have an adverse effect on Afren's and, if the Acquisition completes, the Enlarged Group's financial condition and results of operations.
The JOAs relating to the Black Marlin's assets in Ethiopia, Kenya and the Seychelles each contain a change of control provision, pursuant to which the other parties to the JOAs shall have the right to acquire the participating interest of the party who is subject to the change of control. The value to be paid for such participating interest is determined in accordance with the provisions of the respective JOA, which includes the need for an independent expert valuation in the event of any dispute. The JOAs are based on the standard Association of International Petroleum Negotiators (AIPN) JOA, which contains this right of first refusal language. None of the corresponding production sharing contracts contains a similar right of first refusal provision.
In the event that the counterparties to the relevant JOAs elect to exercise their right of first refusal following the Acquisition, it is possible that Black Marlin will be obliged to transfer its participating interest in the corresponding production sharing contract and it is possible, therefore, that the Enlarged Group (if the Acquisition completes) will not (i) hold the participating interests in these blocks, which range from 30 to 75 per cent. of the blocks; and (ii) if any such blocks are found to have hydrocarbons the commercial extraction of which is economically viable, will not then benefit from such production. Although Black Marlin has undertaken in the Arrangement Agreement to use commercially reasonable efforts to obtain, and assist Afren in obtaining, waivers in relation to these pre-emption rights and although at the date of the Prospectus, the Group is not aware of any counterparty to the relevant JOAs having elected to exercise its right of first refusal, if exercised, these rights of first refusal are material in the context of completion of the Acquisition and, taken together, if exercised could negate the benefits of the Acquisition as set out above.
The notice convening the Afren General Meeting to be held at the offices of White & Case LLP, 5 Old Broad Street, London EC2N 1DW, United Kingdom, on 21 September 2010 at 11.00 a.m. is set out at the end of this Document. The purpose of the meeting is to approve the Resolution in connection with the Acquisition. A summary of the Resolution is set out below.
The Resolution is to approve the Acquisition and to authorise the Board to make such non-material waivers and extensions and amendments or variations to the terms and conditions of the Acquisition and to do all things as it considers necessary or expedient in connection with the Acquisition.
The full text of the Resolution is set out in the notice convening the Afren General Meeting at the end of this Document. In the event that the Resolution is not passed, the Acquisition will not proceed.
You will find enclosed with this Document a Form of Proxy for use at the Afren General Meeting or at any adjournment thereof. You are requested to complete and sign the Form of Proxy whether or not you propose to attend the Afren General Meeting in person in accordance with the instructions printed on it and return it as soon as possible, but in any event so as to be received no later than 11.00 a.m. on 17 September 2010, by the Company's Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY or at the electronic address provided on the proxy form which is www.eproxyappointment.com.
CREST members may also choose to utilise the CREST electronic proxy appointment service in accordance with the procedures set out in the notice convening the General Meeting at the end of this Document. The lodging of the Form of Proxy (or the electronic appointment of a proxy) will not preclude you from attending and voting at the meeting in person if you so wish.
Your attention is drawn to the further information set out in Parts 2, 3 and 4 of this Document. You should also read the Prospectus in whole and, in particular, the risk factors set out in the section headed "Risk Factors" on pages 11 to 30 of the Prospectus.
The Board, which has received financial advice from CIBC, considers that the Resolution is in the best interests of the shareholders of Afren and the Afren Shareholders as a whole. In providing advice to the Board, CIBC has taken into account the Board's commercial assessments of the Acquisition.
Accordingly, the Board unanimously recommends that Afren Shareholders vote in favour of the Resolution to be put to the Afren General Meeting as they intend to do in relation to their own individual holdings which amount in total to 12,698,320 Afren Shares, representing approximately 1.42 per cent. per cent, of the existing issued share capital of Afren as at 23 August 2010, the latest practicable date prior to publication of this Document.
Yours faithfully,
Egbert Imomoh Chairman
The Afren Directors, whose names appear on page 5 of this Document accept responsibility for the information contained and incorporated by reference in this Document. To the best of the knowledge and belief of the Afren Directors (who have taken all reasonable care to ensure that such is the case) the information contained and incorporated by reference in this Document is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Company is of the opinion that, taking account of available facilities and existing cash resources, the working capital available to the Enlarged Group is sufficient for its present requirements, that is, for at least the twelve months following the date of the publication of this Document.
Save in relation to the change in Black Marlin's current asset position and its net loss position as a result of higher than anticipated operating expenses in the UPSL seismic business described under the heading "Black Marlin" in Section 5 of the Chairman's Letter set out in Part 2 of this Document, there has been no significant change in the financial or trading position of Black Marlin since 31 March 2010, being the date to which the latest unaudited interim financial information incorporated by reference from the Prospectus to this Document has been compiled. The changes arose as a result of adverse weather conditions which affected Black Marlin's seismic businesses in UPSL. These exceptional circumstances resulted in increased operating expenses contributing to an increase in the net loss position during the second quarter of 2010 by approximately US\$4.34 million and a decrease in Black Marlin's current asset position during the second quarter of 2010 by approximately US\$4.7 million as described under the heading "Black Marlin" in Section 5 of the Chairman's Letter in Part 2 of this Document.
The following sections of the Prospectus are incorporated by reference into this Document:
| Information on Afren | Sections of the Prospectus Information incorporated by reference into the Circular |
Page number |
|---|---|---|
| Risk factors relating to the Oil and Gas industry, Afren's and, if the Acquisition completes, the Enlarged Group's business, an investment in Afren's Ordinary Shares and the Acquisition |
Risk Factors | 11-30 |
| Afren's address | Directors, Secretary and Advisers | 31-32 |
| Trend information | Paragraph 14 of Part 5 Operating and Financial Review | 125-126 |
| Details of the Afren Directors' interests in Ordinary shares |
Paragraph 7 of Part 10 Additional Information | 179-180 |
| Service contracts, letters of appointment and advisors' consultancy agreements |
Paragraph 8 of Part 10 Additional Information | 182-184 |
| Significant Shareholders in Afren | Paragraph 11 of Part 10 Additional Information | 190-191 |
| Information on Afren | Sections of the Prospectus Information incorporated by reference into the Circular |
Page number |
|---|---|---|
| Related party transactions | Paragraph 25 of Part 10 Additional Information | 218 |
| Details of material contracts | Paragraph 13 of Part 10 Additional Information | 191-195 |
| Details of litigation | Paragraph 12 of Part 10 Additional Information | 191 |
| Information on Black Marlin | Sections of the Prospectus Information incorporated by reference into the Circular |
Page number |
| The significant change statement of Afren |
Paragraph 18 of Part 10 Additional Information | 213 |
| Risk factors relating, if the Acquisition completes, to the Enlarged Group's business |
Risk Factors | 20-28 |
| Historical Financials on Black Marlin Energy Limited |
Part 6 Historical Financials on Black Marlin Energy Limited |
127-141 |
| Unaudited Financial Information (incorporated by reference pursuant to LR 13.5.30 and LR 13.5.27) |
Part 7 Unaudited Interim Financial Information on Black Martin |
142-151 |
|---|---|---|
| Competent Person's Report | Part 12 GCA Report on Black Marlin | 311-367 |
| Part 13 McDaniel Report on Black Marlin | 368-405 | |
| Details of litigation | Paragraph 12 of Part 10 Additional Information | 191 |
| Details of material contracts | Paragraph 14 of Part 10 Additional Information | 195-200 |
| Pro Forma Information Pro forma statement of the Enlarged Group |
Part 8 Unaudited Proforma for the Enlarged Group | 152-159 |
| Other | ||
| Settlement | Paragraph 6.6 of Part 3 Summary of the Acquisition | 95-96 |
| Glossary of Technical Terms | Glossary | 413-416 |
The New Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with the Ordinary Shares in issue at the time the New Ordinary Shares are issued pursuant to the Acquisition. The New Ordinary Shares will be created under the Companies Act and the legislation made thereunder, will be issued in registered form and will be capable of being held in both certificated and uncertificated form.
The New Ordinary Shares will not be, and are not required to be, registered with the SEC under the Securities Act, in reliance on the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) of the Securities Act.
No prospectus has been filed with the securities regulatory authorities of any Canadian province or territory with respect to the New Ordinary Shares. The New Ordinary Shares will not be offered or sold in Canada other than to Black Marlin Shareholders in reliance on an exemption from the prospectus and registration requirements of the applicable province or territory of Canada pursuant to sections 2.11 and 3.11 of NI 45-106.
GCA, whose address is Bentley Hall, Blacknest, Alton, Hampshire. GU34 4PU, United Kingdom, has given and has not withdrawn its written consent to the inclusion in this Document of references to its name and to the incorporation by reference of its report set out in Part 12 of the Prospectus, in the form and context in which they appear.
McDaniel, whose address is 255 5th Avenue S.W., Ste. 2200, Calgary, AB T2P 3G6, Canada, has given and has not withdrawn its written consent to the inclusion in this Document of references to its name and to the incorporation by reference of its report set out in Part 13 of the Prospectus, in the form and context in which they appear.
BDO, whose address is Suite 305, Al Futtaim Tower Al Maktoum Street, Deira, Dubai UAE, has given and has not withdrawn its written consent to the inclusion in this Document of references to its name and to the incorporation by reference of its reports set out in Part B of Part 6 and Part C of Part 7 of the Prospectus, in the form and context in which they appear.
Deloitte, whose address is 2 New Street Square, London EC4A 3BZ, United Kingdom, has given and has not withdrawn its written consent to the incorporation by reference of its report relating to the unaudited pro forma financial information set out in Part B of Part 8 of the Prospectus in this Document for the purposes of paragraph 13.4.1R(6) of the Listing Rules.
Merrill Lynch International, whose address is Bank of America Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ, United Kingdom, has given and has not withdrawn its written consent to the inclusion in this Document of references to its name in the form and context in which they appear.
CIBC World Markets, whose address is Cottons Centre, Cottons Lane, London SE1 2QL, United Kingdom, has given and has not withdrawn its written consent to the inclusion in this Document of references to its name in the form and context in which they appear.
Copies of the following documents will be available for inspection at the head office of Afren at Kinnaird House, 1 Pall Mall East, London SW1Y 5AU and at the offices of White & Case LLP at 5 Old Broad Street, London EC2N 1DW during normal business hours on each Business Day from the date of this Document up to and including the date of Admission:
(C) the unaudited interim financial information on Black Marlin for the three months ended 31 March 2010 and reconciliation statement and accountant's report in respect thereof;
(D) the unaudited pro-forma financial information for the Enlarged Group and accountant's report in respect thereof;
They will also be available for inspection at the offices of White & Case LLP, 5 Old Broad Street, London EC2N 1DW, United Kingdom, from at least 15 minutes prior to the Afren General Meeting until the conclusion of that meeting.
Dated: 24 August 2010.
The following definitions apply throughout this Prospectus, unless the context otherwise requires:
| "2006 Act" | the Companies Act 2006, as amended |
|---|---|
| "Articles" | the articles of association of Afren |
| "Acquisition" | the acquisition of Black Marlin by Afren to be implemented by way of the Scheme, pursuant to the terms of and subject to the conditions in the Arrangement Agreement |
| "Afren" | Afren plc |
| "Afren Shareholders" | holders of Ordinary Shares |
| "Arrangement Agreement" | the agreement dated 2 June 2010 between Afren and Black Marlin setting out the terms and conditions of, and the arrangements for the implementation of the Acquisition as amended by an amended and restated arrangement agreement between the same two parties dated 11 August 2010, summarised in Part 10 of the Prospectus |
| "BDO" | BDO Chartered Accountants & Advisors, which is a civil company operating under a professional license issued by the Government of Dubai and the United Arab Emirates Ministry of Economy |
| "Black Marlin" | Black Marlin Energy Holdings Limited and its subsidiary undertakings from time to time |
| "Black Marlin Energy" | Black Marlin Energy Limited |
| "Black Marlin Shareholders" | holders of Black Marlin Shares |
| "Black Marlin Shares" | the ordinary shares without par value in the capital of Black Marlin |
| "Board" | the board of directors of Afren from time to time including a duly constituted committee thereof |
| "Break Fee" | defined in Part 2 |
| "BVI" | British Virgin Islands |
| "BVI BCA" | British Virgin Islands Business Companies Act, 2004 (as amended) |
| "Circular" | this document |
| "Company" or "Afren" | Afren plc |
| "Court" | the Commercial Division of the High Court of Justice of the Eastern Caribbean Supreme Court of the BVI |
| "Court Hearing" | defined in Part 2 |
| "Court Order" | defined in Part 2 |
| "CREST" | the relevant system (as defined in the Uncertified Securities Regulations 2001 (SI 2001 No. 3755) operated by CRESTCo Limited |
| "Deloitte" | Deloitte LLP |
| "Disclosure and Transparency Rules" | the Disclosure and Transparency Rules as published by the FSA |
| "Directors" | the directors of Afren, whose names are set out on page 5 of this Document |
|---|---|
| "Document" | this Circular |
| "Ebok" or "Ebok (OML67)" | the Ebok field located in OML 67 |
| "Effective" | the Scheme having become effective pursuant to its terms |
| "Effective Date" | the date of which the Acquisition becomes effective, which is expected to be 8 October 2010 |
| "Enlarged Group" | the Group following completion of the Acquisition of Black Marlin |
| "FSA" | the UK Financial Services Authority |
| "FSMA" | the Financial Services and Markets Act 2000, as amended |
| "GBP" or "£" | pound sterling |
| "GCA" | Gaffney, Cline and Associates Ltd. |
| "GCA Report" | the report by GCA on Black Marlin set out in Part 12 of the Prospectus |
| "General Meeting" | The shareholder general meeting convened on 21 September 2010 to approve the Acquisition to which this Circulate relates |
| "Group" | Afren and its subsidiary undertakings from time to time |
| "IFRS" | International Financial Reporting Standards as adopted by the European Union |
| "Interim Order" | defined in Part 2 |
| "LIBOR" | London Interbank Offered Rate |
| "Lion" | the Lion field located in Block CI-11 |
| "Listing Rules" | the rules and regulations made by the UK Listing Authority pursuant to Part VI FSMA, as amended from time to time |
| "London Stock Exchange" or "LSE" | London Stock Exchange plc |
| "McDaniel" | McDaniel & Associates Consultants Ltd. |
| "McDaniel Report" | the report by McDaniel on Black Marlin set out in Part 13 of the Prospectus |
| "Merrill Lynch International" | Merrill Lynch International, which is authorised and regulated in the United Kingdom by the FSA and is a member of the London Stock Exchange |
| "New Ordinary Share Admission" | the admission of the New Ordinary Shares to listing on the Official List becoming effective in accordance with the Listing Rules and admission to trading having been granted and becoming effective on the London Stock Exchange's market for listed securities |
| "New Ordinary Shares" | the new ordinary shares of one penny each in the capital of Afren proposed to be issued and credited as fully paid to Black Marlin Shareholders pursuant to the Acquisition |
| "NI 45-106" | Canadian National Instrument 45-106 – Prospectus and Registration Exemptions |
| "Official List" | the Official List of the UK Listing Authority |
| "Okoro" or "Okoro (OML 112)" | the Okoro field located in OML 112 |
|---|---|
| "Okwok" or "Okwok (OML 67)" | the Okwok field located in OML 67 |
| "OPL 310" | Oil Prospecting Licence 310 located in the Niger Delta, offshore Nigeria |
| "Ordinary Shares" | the ordinary shares of one penny each in the capital of Afren, including the New Ordinary Shares |
| "p" | Pence |
| "Prospectus" | Prospectus with respect to the proposed issue of up to 76,776,564 Ordinary Shares in Afren plc in connection with the proposed Acquisition with Black Marlin and application for admission of up to 76,776,564 New Ordinary Shares in Afren plc to the Official List and to trading on the London Stock Exchange's main market for listed securities dated 24 August 2010 |
| "Prospectus Rules" | the prospectus rules made by the FSA pursuant to Part VI of FSMA |
| "Regulations" | the Uncertificated Securities Regulations 2001 (including any modification, re enactment or substitute regulations for the time being in force) |
| "Requisite Approval" | defined in Part 2 |
| "Scheme" | defined in Part 2 |
| "Scheme Document" | the document sent to Scheme Shareholders proposing the Scheme |
| "Scheme Shareholders" | the holders of Scheme Shares on the register of Black Marlin |
| "Scheme Shares" | the Black Marlin Shares in issue immediately prior to the Effective Time |
| "SEC" | US Securities and Exchange Commission |
| "Securities Act" | the US Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder |
| "SEDAR" | the System for Electronic Document Analysis and Retrieval, a mandatory document filing and retrieval system for Canadian public companies |
| "Shareholder" | a holder of Ordinary Shares |
| "Shareholder Meeting" | the meeting of the Scheme Shareholders to be held to consider and, if thought fit, approve the Scheme |
| "Significant Shareholder" | defined in Part 3 |
| "TSXV" | TSX Venture Exchange |
| "UK" | the United Kingdom of Great Britain and Northern Ireland |
| "UK Listing Authority" | the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of FSMA |
| "United States" or "US" or "USA" | United States of America |
| "UPSL" | Upstream Petroleum Services Limited |
| "US\$" or "\$" or "USD" | US dollars |
(Incorporated in England and Wales with Registered No. 05304498)
NOTICE IS HEREBY GIVEN that an General Meeting of the Company will be held at 11.00 a.m. on 21 September 2010 at the offices of White & Case LLP, 5 Old Broad Street, London EC2N 1DW, United Kingdom ("Notice") for the purposes of considering and, if thought fit, passing the following Resolution:
the proposed acquisition ("Acquisition") of Black Marlin Energy Holdings Limited ("Black Marlin") to be effected pursuant to a scheme of arrangement ("Scheme") under section 179A of the British Virgin Islands Business Corporations Act 2004 (as amended), substantially on the terms and subject to the conditions summarised in Part 2 of the circular to shareholders of the Company dated 24 August 2010 ("Circular") outlining the Acquisition (a copy of which is produced to the meeting and signed for identification purposes by the chairman of the meeting), including the acquisition of shares in Black Marlin from certain Directors and/or persons related to them, be approved and the Directors (or any duly constituted committee thereof) ("Board") be authorised (1) to take all such steps as the Board considers to be necessary or desirable in connection with, and to implement, the Acquisition (including arrangements in respect of options and warrants granted in relation to Black Marlin securities ("Black Marlin Shares")); and (2) to agree such modifications, variations, revisions, waivers, extensions or amendments to any of the terms and conditions of the Acquisition and/or to any documents relating thereto (provided such modifications, variations, revisions, waivers, extensions or amendments are non-material), as they may in their absolute discretion think fit.
Dated 24 August 2010
London SW1Y 5AU
Registered office: By Order of the Board Kinnaird House Elekwachi Ukwu 1 Pall Mall East Joint Company Secretary
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