Hector Igbikiowubo
14 October 2008
AFREN, a UK quoted oil exploration and production company with upstream assets in Nigeria has entered into a three- year strategic alliance with Sojitz Corporation of Japan to jointly pursue significant acquisition opportunities in Africa, with the later set to invest a whooping $500m (about N58.5 billion).
While Sojitze Corporation provides the financing, Afren is expected to identify material and strategic assets which it believes should be acquired by the parties.
As appropriate, Sojitz will provide financial support to the Strategic Alliance, including among other things, securing the participation of Japanese Governmental funds.
To further align interests, Afren has agreed to Sojitz investing US $45 million in Afren in the form of loan notes (the "Notes").
The Notes become convertible bonds (the "Bonds") at the time of entering into, or announcing Joint Acquisitions.The amount of Bonds issued is pro-rata to Joint Acquisitions made and the Sojitz Investment.
The Notes and the Bonds bear an annual coupon of Libor plus 2%, and mature on the third anniversary of the date of the agreement. The conversion price of the Bonds is calculated by reference to the 30 day volume weighted average price of Afren shares ending on the earlier of the time of entering into, and announcing, each Joint Acquisition.
Hiroshi Kanematsu (President of the Energy and Mineral Resources Division and Senior Executive Managing Officer of Sojitz) will join Afren's International Advisory Board where he will join Brian Ward, the former Regional Chief Executive for Shell Africa and Ennio Sganzerla, the ENI Group's former Senior Vice President for Africa. Kanematsu is President of the Energy & Mineral Resources Division at Sojitz Corporation and Senior Managing Executive Officer of Sojitz. Kanematsu has been involved in international energy and mining projects for over 25 years.
Speaking on the development, Osman Shahenshah, Chief Executive of Afren, said the Afren was honored to welcome Sojitz, Japan's major diversified industrials and investment conglomerate, as a long term investor and strategic partner of Afren.
"The strategic alliance is highly complementary given Sojitz financial backing and imperative to secure strategic reserves, and Afren's unparalleled access to opportunities in Africa. The Strategic Alliance with Sojitz will place Afren, the largest independent pure-play African Independent Oil and Gas Company, in an even stronger financial and strategic position as we look to realise opportunities of scale in the region."
In his response, Hiroshi Kanematsu, President, Energy and Mineral Resources Division, Senior Managing Executive Officer Sojitz Corporation, commented, "We are delighted to have formalized our existing relationship with Afren.
We view the relationship as a marriage of strategic values - our desire to secure strategic oil and gas reserves/production and Afren's unparalleled access in Africa. As International Oil Companies and Super Majors undergo a rationalization of their portfolios, we recognize Afren's ability as 'The African Player of choice' for National Oil Companies, the International Oil Companies and indigenous operators."
Sojitz, is a major Japanese diversified industrials and investment conglomerate with total assets of US $27 billion. In a related development, Afren plc has appointed Jack M. McFarland as Director of Operations for Afren Cote d'Ivoire. McFarland will be responsible for the Company's oil and gas operational activities in Cote d'Ivoire, including optimizing day-to-day production levels; controlling field capital and operational budgets; and managing the allocation of resources to meet the priorities of the business.
Be the first to Write a Comment!
Copyright © 2008 Vanguard. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
