Recommended Cash Acquisition of Eland Oil & Gas PLC by Seplat Petroleum Development Company Plc

Source Press Release
Company Eland Oil & Gas PLCSeplat Petroleum Development Company Plc 
Tags Corporate Deals, Deals, Upstream Activities
Date October 15, 2019

1.    Introduction

The boards of Seplat and Eland are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition pursuant to which Seplat will acquire the entire issued and to be issued share capital of Eland (the "Acquisition"). The Acquisition is to be effected by means of a scheme of arrangement under part 26 of the Companies Act.

2.    The Acquisition

Under the terms of the Acquisition, which will be subject to Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document, Eland Shareholders will be entitled to receive:

                 for each Eland Share                                               166 pence in cash  

The Acquisition values the entire issued and to be issued ordinary share capital of Eland at approximately £382 million on a fully diluted basis, and represents:

○  a premium of approximately 28.5 per cent. to the Closing Price per Eland Share of 129.2 pence on 14 October 2019 (being the latest practicable date prior to this Announcement); 
○  a premium of approximately 32.6 per cent. to the three-month volume weighted average price per Eland Share as of 14 October 2019 of 125.2 pence; and 
○  a premium of approximately 32.7 per cent. to the six-month volume weighted average price per Eland Share as of 14 October 2019 of 125.1 pence. 

In addition, Eland Shareholders on the register at the close of business on 18 October 2019 will be entitled to receive and retain the interim dividend of 1 pence per Eland Share to be paid on 31 October 2019.

It is currently expected that the Scheme Document will be published as soon as practicable (and, in any event, within 28 days of this Announcement), that the Court Meeting and the General Meeting will be held in November 2019 and that the Scheme will become Effective in late 2019.

3.    Background to and Reasons for the Acquisition

Seplat is a leading indigenous E&P with a robust operational platform, experienced management team and a proven track record of operational delivery. The Seplat Board believes that a combination with Eland will create a scaled Nigerian E&P champion with the footprint and technical capabilities to further grow and consolidate in Nigeria, cementing Seplat's position as one of the leading independent players.

In line with Seplat's growth strategy to prioritise opportunities in the onshore and offshore areas of Nigeria that offer near-term production, cash flow and reserve replacement potential, the Seplat Board has followed the development of Eland for some time and believes that it is a strong business and that there is a compelling, complementary fit between Seplat and Eland. The Seplat Board believes this combination will leverage Seplat's core production and development expertise to capture potential upsides and increase growth and profitability. The combined business will have greater scale in production and reserves and should create long-term value for stakeholders.

The combination will enable:

○  Seplat's Working Interest liquids production to increase to 38Kbopd, based on Seplat's and Eland's 2019 production guidance with Seplat's gas production of 158MMscfd (26Kboepd), giving a total Working Interest production of 64Kboepd; 
○  Seplat's 2P Liquids Reserves to increase by 41MMbbls to 268MMbbls and Seplat's 2P Oil Reserves and 2C Oil Resources to increase by approximately 65MMbbls to 330MMbbls, giving total oil and gas reserves of 626MMboe; and 
○  additional upside potential with un-appraised discoveries. 

Seplat has the financial and technical capacity to develop Eland's assets and will deliver long-term benefits for employees, partners, host communities and Nigeria as a whole. As a leading indigenous operator, Seplat understands the critical role it must play to drive a positive socio-economic impact among its communities. Seplat's management team's knowledge of Eland's producing assets and operations will allow the assets to be efficiently integrated into Seplat's existing portfolio.

4.   Recommendation

The Eland Directors, who have been so advised by Evercore as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Eland Directors, Evercore has taken into account the commercial assessments of the Eland Directors. Evercore is providing independent financial advice to the Eland Directors for the purposes of Rule 3 of the Code.

Accordingly, the Eland Directors intend to unanimously recommend that Eland Shareholders vote in favour of: (i) the Scheme at the Court Meeting; and (ii) the Resolution at the General Meeting, in each case as the Eland Directors who are interested in Eland Shares have irrevocably undertaken to do in respect of those Eland Shares in respect of which they are able to control the exercise of voting rights, amounting in aggregate to 609,657 Eland Shares and representing approximately 0.28 per cent. of the issued share capital of Eland.

5.    Background to and Reasons for the Recommendation

Eland is an independent oil and gas company focused on production, development and exploration in West Africa, particularly the Niger Delta region of Nigeria. Eland was founded in 2009 and listed on AIM in 2012.

Led by its experienced senior management and operating team, Eland's strategy has been to deliver exceptional shareholder returns through a combination of asset development, production growth and exploration success on its assets.

In 2012, Eland through its joint venture company, Elcrest, completed the acquisition of a 45 per cent. equity stake in OML 40. Development activities on OML 40 continued throughout 2013, and in early 2014, production recommenced from Opuama. In late 2015 and 2016 Eland executed a successful workover campaign, taking production on Opuama from approximately 3,500bopd to in excess of 11,500bopd. In 2017, Eland began a continuous drilling campaign, drilling five wells on Opuama before moving to Gbetiokun.

Production from Gbetiokun (on OML 40) commenced this year, having received regulatory approval for the Gbetiokun development plan from the Nigerian Department of Petroleum Resources earlier in 2019. The first two wells were successfully flow tested with cumulative rates up to 12,000bopd with the third well in the initial six-well programme, Gbetiokun-4, near completion.

The continuous drilling campaign on both Opuama and Gbetiokun has led to OML 40's average net production increasing for five consecutive half year periods with average net production of 9,948bopd seen during the first half of 2019.

Eland acquired a 40 per cent. stake in a second licence, Ubima, in 2014, and appraisal of Ubima was carried out in 2018 via the Ubima-1 re-entry, successfully increasing Ubima's gross 2P Reserves to 9.3MMbbls of oil (as set out in Netherland Sewell & Associates' Competent Persons Report dated 31 December 2018).

Led by its experienced senior management and operating team, the Eland Group took gross production on OML 40 from 3,338bopd average daily production for producing days in 2014 to a peak 2018 production rate of over 31,000bopd, an increase of over 800 per cent. This process has been achieved together with the help of Eland's partners and local host communities and Eland believes they will continue to benefit from ongoing investment in its asset portfolio as part of Seplat.

In 2019, the Eland Board also approved a debut dividend of one pence per Eland Share.

The Eland Board believes that its management team has done an excellent job executing the company's strategy with a strong track record of operational delivery and value creation in Nigeria from high-quality assets. The Acquisition allows Eland Shareholders to benefit from an accelerated and enhanced realisation of this value through a cash offer at a significant premium to the current market value. In addition, the business will benefit from the opportunity to become part of a more significant player in the Nigerian oil and gas market.

For these reasons, the Eland Board intends to unanimously recommend the offer to Eland Shareholders.

The Eland Board welcomes Seplat's recognition of the importance and value of the skills and experience of existing Eland employees, and Seplat's commitment to safeguard the contractual rights of Eland's management and employees. The Eland Board notes Seplat's intention to continue to operate Eland as a standalone business within the combined company immediately following completion and to initiate an integration process over time, and that the integration process would be subject to comprehensive planning and appropriate engagement with stakeholders and employees.

The Eland Board notes that the functional currency of Company is US$. As a result, the Sterling value of the business can be affected by movements in the US$/Sterling exchange rate. As the Acquisition is priced in Sterling, any such exchange rate movements prior to the Effective Date will not affect the value placed on Eland Shares by the Acquisition.

6.    Irrevocable Undertakings

Seplat has received irrevocable undertakings from each of the Eland Directors who are interested in Eland Shares to vote in favour of the Scheme at the Court Meeting and the Resolution at the General Meeting, in respect of those shares in respect of which they are able to control the exercise of voting rights, being a total of 609,657 Eland Shares, representing approximately 0.28 per cent. of the share capital of Eland in issue. These irrevocable undertakings remain binding in the event of a competing offer. Further details of these irrevocable undertakings are set out in Appendix III to this Announcement.

In addition to the above-mentioned irrevocable undertakings from the Eland Directors, Seplat has also received irrevocable undertakings from Helios Natural Resources Limited ("Helios"), Lombard Odier Asset Management (Europe) Limited ("LOAME") and Richard I Griffiths to vote, or procure the voting, to approve the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolution at the General Meeting or, if (with the consent of the Panel) Seplat exercises its right to implement the Acquisition by way of a Takeover Offer, to accept, or procure the acceptance of such Takeover Offer in respect of a total of 129,118,048 Eland Shares representing approximately 59.89 per cent. of the existing issued ordinary share capital of Eland.

Therefore, as at the date of this Announcement, Seplat has received irrevocable undertakings to vote, or procure the voting, to approve the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolution at the General Meeting or, if (with the consent of the Panel) Seplat exercises its right to implement the Acquisition by way of a Takeover Offer, to accept, or procure the acceptance of such Takeover Offer with respect to a total of 129,727,705 Eland Shares, representing approximately 60.17 per cent. of the existing issued ordinary share capital of Eland. Further details of the above-mentioned irrevocable undertakings are set out in Appendix III to this Announcement.

7.    Information on Seplat

Seplat is a leading independent oil and natural gas producer in the Niger Delta area of Nigeria, and a leading supplier of processed natural gas to the domestic market, fully listed on both the Nigerian Stock Exchange and the London Stock Exchange since April 2014.

As a full cycle upstream oil and gas exploration and production company, Seplat's focus is on maximising hydrocarbon production and recovery from existing production and development assets, realising the upside potential within the portfolio through focused appraisal and exploration activities and farm-in into new opportunities in Nigeria (specifically those which offer production, cash flow and reserve replacement potential with a particular focus on the onshore and shallow water offshore areas).

Seplat's existing portfolio comprises of direct interests in five blocks in the Niger Delta area and a revenue interest in an additional block. Since acquiring its first interests in 2010, Seplat has grown oil production through the drilling of new wells and employing advanced and proven technologies. Alongside the oil business, Seplat also prioritises the commercialisation and development of the substantial natural gas reserves identified at Seplat's existing blocks, which is supplied to the domestic market. For the financial year ended 31 December 2018, Seplat generated revenue of US$746.1 million, operating profit of US$309.9 million and profit before tax of US$263.3 million.

A strong track record of operational delivery, portfolio integration and capital raising has enabled Seplat to balance its organic growth initiatives with complementary acquisitions delivering value for stakeholders.

8.    Information on Eland

Eland is an AIM-quoted independent oil and gas company focused on production and development in West Africa, particularly the Niger Delta region of Nigeria.

Through its joint venture company, Elcrest, Eland holds its core asset, a 45 per cent. interest in OML 40 which is in the Northwest Niger Delta approximately 75 kilometres northwest of Warri and which has an area of 498 kilometres. Elcrest completed its acquisition of the 45 per cent. equity stake in OML 40 in September 2012 and has been producing oil from Opuama since 2014. Gbetiokun was discovered in 1987 and further appraised in the early 1990s. Following a field development plan approved in early 2019, Gbetiokun came onstream in July 2019.

In addition, Eland has a 40 per cent. interest in Ubima, onshore Niger Delta, in the northern part of Rivers State and which covers an area of 65 square kilometres. Ubima was discovered in 1963 but was never developed. Eland acquired the licence in August 2014 and after a period of assessment, commenced appraisal operations in July 2018 with a re-entry and flow test of the discovery well, Ubima-1. Further flow testing from an extended well test is being executed in H2 2019 which will allow the reservoir model to be fine-tuned and the resulting development design to be optimised.

Eland's headquarters are in Aberdeen, with additional offices in London, Lagos, Benin City and Abuja.

OML 40 holds gross 2P Reserves of 82.2MMbbls, gross 2C Resources of 50.7MMbbls and a best estimate of 252.1MMbbls of gross un-risked prospective resources (as set out in Netherland Sewell & Associates' Competent Persons Report dated 31 December 2018).

Ubima holds gross 2P Reserves of 9.3MMbbls of oil and gross 2C Resources estimates of 4.2MMbbls (as set out in Netherland Sewell & Associates' Competent Persons Report dated 31 December 2018).

Net production figures relate to Elcrest, Eland's joint venture company. Production rates, when oil is exported via the Forcados oil terminal in Nigeria, are as measured at the Opuama PD Meter and are subject to reconciliation and will differ from sales volumes.

9.   Intentions with regard to Eland's Employees, Directors, Management, Pensions and Location of Eland

Eland employees and management

Seplat believes that Eland is a strong business and recognises the importance and value of the skills and experience of existing Eland employees and believes they will be a key factor in maximising the success of the combined group following the Scheme becoming Effective.

Following completion of the Acquisition, the existing contractual and statutory employment rights of existing management and employees of Eland will be safeguarded, and existing pension obligations complied with.

Immediately following completion of the Acquisition, Seplat's intention is for Eland to continue to operate as a standalone business, within the combined company. Within 12 months of completion, Seplat intends to carry out a review of the Eland business in order to assess any organisational and structural changes that may benefit the combined company. As part of this review Seplat will make an assessment of the strengths and fit of Eland's management team and employees.

The review will be subject to comprehensive planning and appropriate engagement with stakeholders and employees. Any employees affected by the review, the number of whom is expected to be non-material, will be treated in a manner consistent with Seplat's high standards, culture and practices.

The Acquisition will affect participants in the Eland Share Plans, further details of which are set out in paragraph 10 below.

It is intended that the non-executive Eland Directors will resign as directors of Eland on completion of the Acquisition.

Eland headquarters

Eland has offices in Aberdeen, London, Lagos, Abuja and close to the field location in Benin. There is significant overlap of office locations between Eland and Seplat. Following the review period mentioned above, Seplat intends to maximise the integration of both companies by re-locating Eland's staff to Seplat's locations where possible.

The exception is Eland's head office based in Aberdeen where Seplat is not present. Seplat's intention is to determine how best to integrate key staff members of Eland into Seplat and whether the retention of the physical Aberdeen office is critical in achieving this.

AIM quotation

Seplat also intends to seek the cancellation of the trading of Eland's Shares on AIM from or shortly after completion of the Acquisition. As a result, Eland's "plc"-related functions will no longer be required and following completion of the review referred to above, some central corporate and support functions of Eland will see a reduction or change in scope, although it is expected that the impact on overall headcount from this would be limited.

Re-deployment of fixed assets

Seplat does not intend, as a consequence of the Acquisition, to make any material changes to the deployment of Eland's fixed assets. Eland has no research and development function.

10.  Eland Share Plans

The Acquisition will affect participants in the Eland Share Plans.

In summary, Seplat will make appropriate proposals to the holders of options and awards under the Eland Option Plans in accordance with Rule 15 of the Code. Participants in the Eland Share Plans shall be contacted with further details of these arrangements in due course. Any Eland Shares which are allotted and issued or transferred to participants in the Eland Options Plans prior to the Scheme Record Time will be subject to the Scheme. Further details of the terms of such proposals shall be included in the Scheme Document.

Any Eland Shares held in the Eland SIP on behalf of participants at the Scheme Record Time will be subject to the Scheme.

Seplat operates standard "plc"-type equity incentives in which selected employees will be able to participate.

11.  Financing

The cash consideration payable under the Acquisition is being wholly funded through a combination of existing cash resources of Seplat and a new loan facility available to Seplat.

In accordance with Rule 2.7(d) of the Code, Citi, as sole financial adviser to Seplat, is satisfied that sufficient resources are available to Seplat to satisfy in full the cash consideration payable to Eland Shareholders under the terms of the Acquisition.

12.  Deferred Shares

Eland has in issue 155,263,214 fully paid non-voting deferred shares ("Deferred Shares"). The Deferred Shares are not listed on any exchange and effectively have no rights, in particular they do not confer on their holders any right to any dividend nor the right to receive notice of, attend, speak or vote at general meetings of Eland. The holders of Deferred Shares are technically entitled, on a distribution of assets on a winding-up or other return of capital, to receive the amount paid up on their Deferred Shares, however, first, £100,000,000 would have to have already been distributed to the holders of the ordinary shares in respect of each ordinary share, rendering this right to receive amounts practically non-existent.

The Deferred Shares will not form part of, and will be unaffected by, the Acquisition and the Scheme. In accordance with Eland's Articles, Eland shall procure the transfer of the Deferred Shares to Seplat on the Scheme becoming Effective.

13.  Offer-related Arrangements

Confidentiality Agreement

On 24 April 2015, Seplat and Eland entered into a confidentiality agreement as amended and restated on 2 July 2019 and 12 September 2019 (the "Confidentiality Agreement"). Pursuant to the Confidentiality Agreement, Seplat and Eland has each undertaken to keep confidential any information relating to Seplat, Eland, any joint venture opportunities between the two companies and the Acquisition, and not disclose such to third parties. Unless terminated earlier by mutual agreement, the Confidentiality Agreement will terminate on 23 April 2021. Seplat's and Eland's confidentiality undertakings under the Confidentiality Agreement will remain in force until three (3) years after the date of termination. The Confidentiality Agreement further includes customary standstill obligations on Seplat from the period commencing on 12 September 2019 and ending on 11 September 2020.

Cooperation Agreement

On 15 October 2019, Seplat and Eland entered into a cooperation agreement (the "Cooperation Agreement"), pursuant to which, and conditional on release of this Announcement, Seplat will use reasonable endeavours to: (i) implement the Acquisition; (ii) make the notifications or filings described in the Cooperation Agreement to satisfy the Conditions referred to in paragraph 3 and 4 of Part 1 of Appendix I to this Announcement as promptly as practicable; (iii) provide Eland with advance drafts of all notifications or filings and to take into account any reasonable comments made by Eland; (iv) notify Eland of, and provide copies of, any material communications with a relevant regulatory authority in connection with the satisfaction of the Conditions referred to in paragraphs 3 and 4 of Part 1 of Appendix I to this Announcement; and (v) promptly pay all filing fees, costs, charges and expenses arising in connection with and incidental to the Conditions referred to in paragraphs 3 and 4 of Part 1 of Appendix I to this Announcement.

Eland undertakes to Seplat, subject to Seplat's compliance with its obligations under the Cooperation Agreement, to make all such notifications to satisfy the Conditions referred to in paragraph 3 and 4 of Part 1 of Appendix I to this Announcement.

For the purposes of preparation of the Scheme Document, Seplat agrees to promptly provide relevant information about itself and reasonable assistance with preparation of the Scheme Document.

Eland and Seplat agree that the principal terms of the Acquisition shall be as set out in this Announcement and shall proceed by way of the Scheme. However, Seplat may elect at any time (subject to the consent of the Panel) to implement the Acquisition by way of a Takeover Offer on the same terms as those set out in this Announcement.

Seplat confirms it is unaware at the time of entering into the Cooperation Agreement of the existence of any circumstances which would entitle Seplat to invoke any Conditions, and undertakes to confirm to Eland prior to the Court Hearing either that all Conditions have been satisfied or that it intends to invoke one or more of the Conditions.

Seplat and Eland agree to contact participants of Eland Options Plans at or around the time of posting of the Scheme Document with Seplat's proposals.

The Cooperation Agreement will terminate if: (i) agreed in writing; (ii) the Effective Date has not occurred by the Long Stop Date; (iii) upon the occurrence of the Effective Date; (iv) if the Scheme is not approved by the requisite majority of Eland Shareholders at the Court Meeting or the Resolution is not passed by the requisite majority at the General Meeting and Seplat has not elected, within ten Business Days of the date of the relevant meeting, to implement the Acquisition by means of a Takeover Offer; (v) if the Scheme is not sanctioned at the Court Hearing and Seplat has not elected, within ten Business Days of the date of the relevant hearing, to implement the Acquisition by means of a Takeover Offer; (vi) save where Seplat has effected a switch from the Scheme to a Takeover Offer (a "Switch"), if the Eland Board: (A) does not include the Eland Board Recommendation in the Scheme Document; (B) withdraws, adversely qualifies or adversely modifies the Eland Board Recommendation prior to the Court Hearing or General Meeting; or (C) prior to the publication of the Scheme Document, withdraws, adversely qualifies or adversely modifies its intention to give the Eland Board Recommendation in any such statement or announces that it intends not to post the Scheme Document or convene the Court Meeting or the General Meeting; (vii) following a Switch which has been made with Eland's prior written consent, if the Eland Board: (A) does not include the Eland Board Recommendation in the Offer Document, (B) withdraws, adversely qualifies or adversely modifies the Eland Board Recommendation prior to the date on which the Offer is declared unconditional as to acceptances, or (C) prior to the publication of the Offer Document, withdraws, adversely qualifies or adversely modifies its intention to give the Eland Board Recommendation in any such document; (viii) upon notice prior to the Long Stop Date by Seplat to Eland that any Condition is incapable of satisfaction and will not be waived in circumstances where the invocation of the relevant Condition has been permitted by the Panel; (ix) upon notice prior to the Long Stop Date by either party if a competing proposal is recommended by the Eland Board; (x) if a competing proposal completes, becomes effective or is declared or becomes unconditional in all respects; (xi) on written notice by Eland to Seplat where Seplat effects a Switch without Eland's prior consent; or (xii) if, with the permission of the Panel, the Scheme lapses or is withdrawn prior to the Long Stop Date (other than in connection with a Switch or a different offer on equal or improved terms).

14.  Structure of the Acquisition

It is intended that the Acquisition will be effected by means of a Court-sanctioned scheme of arrangement between Eland and the Eland Shareholders under Part 26 of the Companies Act. The Scheme is an arrangement between Eland and the Scheme Shareholders. Seplat reserves the right to elect to implement the Acquisition by way of a Takeover Offer (subject to Panel consent), as described in further detail in paragraph 20 below.

The purpose of the Scheme is to provide for Seplat to become the holder of the entire issued and to be issued share capital of Eland on the Effective Date.

Under the Scheme, the Eland Shares will be transferred to Seplat in consideration for which the Eland Shareholders will receive cash consideration on the basis set out in paragraph 2 of this Announcement.

To become Effective, the Scheme will require the approval of Eland Shareholders by the passing of a special resolution at the Court Meeting. This special resolution must be approved by a majority in number of the Eland Shareholders present and voting (and entitled to vote) at the Court Meeting, either in person or by proxy, representing not less than 75 per cent. of the Eland Shares held by such Eland Shareholders. To become Effective, the Scheme will also require a special resolution to be passed at the General Meeting, to deal with certain matters ancillary to the Scheme, which will require the approval of Eland Shareholders representing at least 75 per cent. of the votes cast at the General Meeting (either in person or by proxy). The General Meeting will be held immediately after the Court Meeting.

The Scheme will also be subject to the Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document.

Following the Meetings, the Scheme must be sanctioned by the Court (without modification, or with modification on terms agreed by Seplat and Eland). The Scheme will only become Effective once a copy of the Scheme Court Order is delivered to the Registrar of Companies. Upon the Scheme becoming Effective, it will be binding on all Eland Shareholders, irrespective of whether or not they attended or voted at the Meetings (and if they attended or voted, whether or not they voted in favour or against the Scheme at the Court Meeting or the Resolution at the General Meeting). Subject to, among other things, the satisfaction or the waiver of the Conditions, the Scheme is expected to become Effective in late 2019.

If the Scheme does not become Effective by the Long Stop Date (or such later date as Seplat and Eland may, with the consent of the Panel, agree), it will lapse and the Acquisition will not proceed (unless the Panel otherwise consents).

Further details of the Scheme, including an indicative timetable for its implementation and the necessary steps to be taken by the Eland Shareholders, will be set out in the Scheme Document, which is expected to be dispatched (together with the notice of the Court Meeting and the General Meeting and the Forms of Proxy) to Eland Shareholders and, for information only, to persons with information rights and to holders of options and awards granted under the Eland Share Plans, as soon as reasonably practicable and, in any event, within 28 days of the date of this Announcement, unless Seplat and Eland otherwise agree, and the Panel consents to, a later date.

15.  Conditions

The Acquisition is conditional, amongst other things, upon receiving the required shareholder approvals at the Court Meeting and the General Meeting. Further information on the Conditions and further terms are set out in Appendix I to this Announcement. The full terms and conditions of the Acquisition will be set out in the Scheme Document.

16.  De-listing and Re-registration

Prior to the Scheme becoming Effective, Eland will make an application to the London Stock Exchange for the cancellation of the listing of Eland Shares on AIM, in each case to take effect from or shortly after the Effective Date. The last day of dealings in Eland Shares on AIM is expected to be the Business Day immediately prior to the date of the Court Hearing and no transfers will be registered after 6:00 p.m. (London time) on that date.

On the Effective Date, Eland will become a wholly-owned subsidiary of Seplat and the share certificates in respect of Eland Shares will cease to be valid and of value and should be destroyed. In addition, entitlements to Eland Shares held within the CREST system will be cancelled.

It is also proposed that, following the Effective Date and after its shares are delisted, Eland will be re-registered as a private limited company.

17.  Disclosure of Interests in Eland Shares

Save in respect of the irrevocable undertakings referred to in paragraph 6 above, as at the close of business on 14 October 2019 (being the last practicable date prior to the date of this Announcement) neither Seplat, nor any of its directors, nor, so far as Seplat is aware, any person acting in concert (within the meaning of the Code or the NSE Rules) with it:

(a)  has any interest in or right to subscribe for any relevant securities of Eland; 
(b)  has any short positions in respect of relevant Eland Shares (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery; 
(c)  has borrowed or lent any relevant Eland Shares (including, for these purposes, any financial collateral arrangements of the kind referred to in Note 4 on Rule 4.6 of the Code) save for any borrowed shares which have been either on-lent or resold; or 
(d)  is a party to any dealing arrangement of the kind referred to in Note 11 on the definition of acting in concert in the Code. 

18.  Dividends

Eland Shareholders on the register at the close of business on 18 October 2019 will be entitled to receive and retain the 1 pence per share dividend declared on 11 September 2019 and payable on 31 October 2019. If any additional dividend is paid or becomes payable in respect of Eland Shares on or after the date of this Announcement and prior to closing of the Acquisition, Seplat has the right to reduce the amount of consideration payable in respect of such Eland Shares by the amount of all or part of such dividend or other distribution.

19.  Overseas Shareholders

The availability of the Acquisition and the distribution of this Announcement to persons who are not resident in the United Kingdom may be affected by the laws and regulations of the relevant jurisdictions. Such persons should inform themselves about and observe any applicable requirements. Eland Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

This Announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities. Eland Shareholders are advised to read carefully the Scheme Document and the Forms of Proxy once these have been dispatched.

20.  General

Seplat reserves the right, subject to the prior consent of the Panel, to elect to implement the Acquisition by way of a Takeover Offer for the entire issued and to be issued share capital of Eland not already held by Seplat, as an alternative to the Scheme. In such an event, such Takeover Offer will be implemented on substantially the same terms (subject to appropriate amendments as described in Part 2 of Appendix I to this Announcement), so far as applicable, as those which would apply to the Scheme, or if Seplat so decides, on such other terms being no less favourable, so far as applicable, as those which would apply to the Scheme and subject to the amendment referred to in Part 2 of Appendix I to this Announcement.

If the Acquisition is effected by way of a Takeover Offer and such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Seplat intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act to acquire compulsorily the remaining Eland Shares in respect of which the Acquisition has not been accepted.

In deciding whether or not to vote or procure votes in favour of the Scheme at the Court Meeting and the Resolution at the General Meeting, Eland Shareholders should rely on the information contained in, and follow the procedures described in, the Scheme Document.

Investors should be aware that Seplat may purchase Eland Shares otherwise than under any takeover offer or scheme of arrangement relating to the Acquisition, such as in open market or privately negotiated purchases.

In recognition of his contribution to the creation of shareholder value since his appointment as Chairman of Eland, particularly in connection with the Acquisition by Seplat, the Eland Board has entered into an agreement with Russell Harvey under which Mr Harvey will receive a cash bonus of £800,000 in the event that an acquisition of Eland completes by 31 March 2020. This agreement with Mr Harvey has been approved in writing by each of Helios, LOAME and Richard I Griffiths.

Citi and Evercore have given and not withdrawn their consent to the publication of this Announcement with the inclusion herein of the references to their respective names in the form and context in which they appear.

21.  Documents available on website

Copies of the following documents will be made available on Seplat's website at , and Eland's website at  by no later than 12:00 noon (London time) on the Business Day following the date of this Announcement and will remain available until the end of the Offer Period:

·     the irrevocable undertakings referred to in paragraph 6 above;

·     the Confidentiality Agreement;

·     the Cooperation Agreement;

·     documents relating to the financing of the Scheme referred to in paragraph 11 above; and

·     a copy of this Announcement.

Further Information

White & Case LLP and Olaniwun Ajayi LP are providing legal advice to Seplat. Mayer Brown International LLP, Stronachs LLP and Streamsowers & Köhn are providing legal advice to Eland.

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