Camac Energy to list in S.Africa after pension-fund rescue

JOHANNESBURG Fri Feb 14, 2014 11:14am EST

JOHANNESBURG Feb 14 (Reuters) - U.S. oil firm Camac Energy said on Friday it planned to list in Johannesburg, just months after the Africa-focused company was thrown a $270 million lifeline by South Africa's state pension fund.

The Public Investment Corporation (PIC), which manages 1.4 trillion rand ($127 billion) of South African government employee retirement funds, agreed in November to buy a stake in Camac, days after the Houston-based firm warned it could go bankrupt, filings show.

Camac, which explores for oil and gas in Nigeria, Kenya and Gambia, has said the PIC investment would fund the purchase of the remaining 60 percent it does not already own in Nigeria's Oyo oil field.

Camac's share price has risen nearly 60 percent since the PIC investment, valuing it at $245 million - below the pension fund's purchase price of $270 million for 30 percent.

The company - which is not covered by analysts according to Thomson Reuters data - warned investors it required additional finance to stay in business just a week before the PIC deal was announced, saying its debt outweighed assets by $13.4 million.

"Internal cash flow models do not forecast enough operating cash flows to fund operations and pay outstanding liabilities for the next 12 months," it said in its July-September earnings filing with the U.S. Securities and Exchange Commission.

"These factors raise substantial doubt about the company's ability to continue as a going concern."

Camac Chief Executive and chairman Kase Lawal, a 58-year-old Nigerian with U.S. citizenship, holds 57 percent of the company according to its filing.

Prior to the recent deal the PIC had expressed concerns about investing in businesses controlled by a few individuals, citing that in December as a reason for opposing a Chilean takeover of a local drug firm.

"Given our experience of corporate governance challenges with some family-controlled businesses locally, we believe this introduces risks to the investment," it said at the time.

The PIC and Camac Energy did not respond to questions from Reuters.

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Comments (4)
bobJohnson52 wrote:
Looks like the author never read this…

CAMAC Energy Inc. to Acquire Interests From Allied Energy Plc
Announces US$270 Million Equity Investment and Intention to List on Johannesburg Stock Exchange
Marketwired
CAMAC Energy Inc. November 20, 2013 7:00 AM

HOUSTON, TX–(Marketwired – Nov 20, 2013) – CAMAC Energy Inc. (NYSE MKT: CAK) (the “Company” or “CAMAC Energy”) today announced that it has entered into a definitive agreement to acquire the remaining economic interests that it does not currently own in the production sharing contract covering Oil Mining Leases 120 and 121 (the “OMLs”) offshore Nigeria, which include the currently producing Oyo Field, from Allied Energy Plc (“Allied”). Allied is a wholly owned subsidiary of CAMAC Energy Holdings Limited (“CEHL”), the 57.2% majority stockholder of the Company. To acquire the interests, CAMAC Energy will issue 497,454,857 shares of common stock, pay US$170 million in cash and issue a US$50 million convertible subordinated note.

To fund the cash portion of the consideration for the transaction with Allied and a portion of anticipated capital expenditures for development of the Oyo Field, CAMAC Energy also announced that it has entered into a definitive agreement with the Public Investment Corporation (SOC) Limited (“PIC”) of South Africa for a US$270 million equity investment through a private placement of 376,884,422 shares of common stock, representing an approximate 30% ownership interest in the Company after completion of the transactions. In connection with the investment by the PIC, the Company has agreed to list its common stock on the Johannesburg Stock Exchange (“JSE”). These transactions are subject to stockholder and regulatory approvals and are each conditional upon the closing of the other transaction and listing on the JSE.

“We are honored that the PIC has placed their trust and confidence in us by investing in our organization,” said Chairman and Chief Executive Officer of CAMAC Energy, Dr. Kase Lawal. “The Allied acquisition, investment by the PIC and secondary listing on the JSE will completely change the complexion of our Company, and we look forward to beginning 2014 as a stronger organization with increased production, revenues and scale. Being dual-listed on the NYSE and JSE will provide increased liquidity and transparency for our shareholders. With 100% economic ownership of our high-impact, deepwater offshore assets, we will be well positioned to pursue our goal of producing approximately 14,000 barrels of oil per day once Oyo-7 and Oyo-8 are completed next year.”

In order to achieve the post-closing share ownership percentages negotiated between the parties, the agreement with Allied requires the Company to declare a dividend in the form of additional shares of CAMAC Energy common stock, equal to approximately 1.435 shares per share outstanding. The declaration of the stock dividend will not occur if the conditions to the transactions are not fulfilled. As a result of the Allied and PIC transactions and the issuance of shares pursuant to the anticipated stock dividend, Allied and CEHL will own approximately 56.97% (or approximately 57.15%, including the shares owned by individuals controlling Allied and CEHL) of the outstanding common stock of the Company, PIC will own approximately 30% and the existing public stockholders of CAMAC Energy not affiliated with Allied or CEHL will own approximately 13.03% (or approximately 12.85%, excluding the shares owned by individuals controlling CEHL and Allied). The percentages exclude the 69,793,411 shares into which the subordinated note will initially be convertible.

Dr. Lawal added, “This strategic acquisition is a transformational event for our company, and significantly increases our current production and cash flow. With this acquisition, we will be transitioning our company from a minor economic interest holder into a significant growth platform targeting the prolific Pliocene and Miocene reservoirs in this region.”

After the closing of the transactions, the Company will own a 100% economic interest in the production sharing contract covering the OMLs. Current production from the Oyo Field within the OMLs is approximately 2,000 barrels of oil per day, and CAMAC Energy will become the technical operator.

The transactions were approved by the board of directors of the Company, upon the prior recommendation and approval of a special committee composed entirely of independent and disinterested directors that was formed to review, evaluate and negotiate (as it deemed appropriate) the transactions or any alternatives. The special committee’s recommendation and approval followed a thorough examination of the transactions, which occurred over a four-month period. Canaccord Genuity Limited acted as financial advisor and Andrews Kurth LLP acted as legal counsel to the special committee. Sasfin Capital is acting as corporate adviser and sponsor in connection with the Company’s secondary listing on the JSE. Sidley Austin LLP is acting as legal counsel to the Company and Vinson & Elkins LLP is acting as legal counsel to Allied.

The transactions are subject to approval by the Company’s stockholders and are expected to be consummated in the first half of 2014. CEHL, the Company’s majority stockholder, has agreed to vote the shares of CAMAC Energy common stock that it owns, approximately 57.2% of the outstanding shares that will be eligible to vote, in favor of the transactions. The transactions are also subject to a non-waivable condition that a majority of the outstanding shares of the Company that are not owned by CEHL or its affiliates must vote in favor of the transactions.

About the Public Investment Corporation (SOC) Limited

The PIC is a state-owned company registered and incorporated in South Africa. Established in 1911, the PIC is one of the largest investment managers in Africa, managing assets of over US$140 billion, and manages funds on behalf of The Government Employees Pension Fund.

About CAMAC Energy

CAMAC Energy Inc. is an independent exploration and production company engaged in the acquisition and development of energy resources in Africa. The Company’s principal assets include interests in a production sharing contract covering Oil Mining Leases (“OMLs”) 120 and 121 in Nigeria, which include the currently producing Oyo Field, and additional exploration blocks in Kenya and Gambia. CAMAC Energy is based in Houston, Texas. For more information about CAMAC Energy, visit www.camacenergy.com.

Feb 14, 2014 11:32am EST  --  Report as abuse
bobJohnson52 wrote:
This article is doesn’t analyze the deal correctly at all.

http://finance.yahoo.com/news/camac-energy-inc-acquire-interests-120000092.html

Feb 14, 2014 11:39am EST  --  Report as abuse
bobJohnson52 wrote:
This article should be retracted it’s factually incorrect

Feb 14, 2014 11:39am EST  --  Report as abuse
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