A Review of the Nigerian Energy Industry

Seplat, Afren business combination talks continue

26 January 2015, Lagos – The discussions between Seplat Petroleum Development Company Plc and Afren are continuing following an extension granted by the United Kingdom Takeover Panel to January 30, for the companies to make final decision.

seplat-logoSeplat had last December made a highly preliminary approach regarding a possible combination with Afren.
And in accordance with Rule 2.6(a) of the UK City Code on Takeovers and Mergers, Seplat, which is also listed on the London Stock Exchange, had up till January 19, to either announce a firm intention to make an offer under Rule 2.7 of the code or announce that it does not intend to make an offer.

However, Seplat is yet to make a final announcement because discussions by both companies are continuing. In a notification to the Nigerian Stock Exchange (NSE), Seplat said the consent of the UK Takeover Panel for an extension to the deadline until January 30, to enable the parties to continue their on-going discussions.
“ By this time Seplat must either announce a firm intention to make an offer for Afren or announce that it does not intend to make an offer for Afren, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. Seplat notes that this new deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code,” the NSE quoted the company as saying in the notification.

Afren had last month said it “received a highly preliminary approach” from Seplat “regarding a possible combination.” However, warned that there was “no certainty that an offer will be made or as to the terms of any offer.”
However, it is believed that Seplat-Afren deal has the potential to begin a round of consolidation among Nigeria’s homegrown oil companies, that have witnessed significant growth past few years through the acquisition of assets from the bigger international oil companies(IOCs).
Seplat recently successfully refinance its existing debt facilities with a new $700 million seven year secured term facility and $300 million three year secured revolving credit facility. The $700 million seven year secured term facility was facilitated by a consortium of Nigerian banks comprising First Bank of Nigeria Limited, Stanbic IBTC Bank Plc, United Bank for Africa Plc and Zenith Bank Plc.

On the other hand, the $300 million three year revolving credit facility made possible by a consortium of eight international banks, which include Bank of America Merrill Lynch, Citibank, JP Morgan Limited, Natixis, Nedbank Limited, Rand Merchant Bank, Standard Bank and Standard Chartered Bank.


– This Day


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