SacOil, South African based independent African oil and gas company, has acquired 100% of Phembani Oil Proprietary Limited from Gentacure Proprietary Limited and its holding company, Moopong Investments Holdings Proprietary Limited.
Phembani Oil’s only asset is a 71% direct interest in Afric Oil Group, one of the largest independent fuel distributors in South Africa, distributing over 30 million litres of fuel product (diesel, petrol and paraffin) monthly to a diversified client base that include local and national government, mining, construction, transport, manufacturing, parastatals, resellers and agricultural clients.
Following completion of the Acquisition, SacOil will hold a 71% indirect interest in Afric Oil, with the remaining 29% interest held by The Compensation Fund, a fund managed by the Public Investment Corporation SOC Limited (PIC), the largest fund manager on the African continent.
The purchase consideration for the Acquisition (the Consideration) will be up to a maximum of ZAR200 million ($15.4m), split into an unconditional initial consideration of ZAR147.3 million ($11.3m) (the Initial Consideration) and a conditional consideration of up to ZAR52.7 million ($4.1 million) (the Contingent Consideration), conditional upon Afric Oil attaining performance related targets for the year ending 31 December 2017 that include achieving a consolidated EBITDA of ZAR100 million ($7.7m) and recovering certain accounts receivable existing as at 31 December 2016.
The Acquisition is subject to the fulfilment of certain conditions precedent. Details of the conditions precedent and settlement of the Consideration are set out later in this announcement. SacOil intends to fund the cash component of the Consideration from the proceeds of a debt facility to be secured by the Company.
The Acquisition is fully in line with the Company’s stated strategy of focussing on cash generating opportunities that expand SacOil’s operations across the oil and gas value chain on the African continent.
Following completion of the Acquisition, SacOil’s portfolio will comprise of operated production activities in Egypt, exploration in Democratic Republic of Congo, alongside partner TOTAL E&PRDC, Malawi and Botswana, a crude trading allocation with Nigerian National Petroleum Company and fuel distribution operations in Southern Africa.
The Acquisition also provides SacOil with its first operational footprint in South Africa thereby enabling the Company to play a meaningful role in the socioeconomic development of the country.