Thursday 13 December 2018

€12m loan from Toscafund helps Fanning's San Leon end dispute

San Leon chief executive Oisin Fanning. Photo: Ger Foy/ Collins
San Leon chief executive Oisin Fanning. Photo: Ger Foy/ Collins
Gavin McLoughlin

Gavin McLoughlin

San Leon Energy's largest shareholder has provided the Irish oil and gas explorer with a loan that enables it to finally settle a long-running dispute.

San Leon - run by former Smart Telecom chief executive Oisin Fanning - has paid off its debt to Avobone, a former partner in a Polish asset with whom relations deteriorated.

The £11m (€12.3m) loan has been provided by Toscafund, a London-based hedge fund run by Martin 'The Rottweiler' Hughes - one of the best-known fund managers in the City of London.

Toscafund owns around 60pc of the oil and gas explorer.

The loan has a 10pc annual interest rate as well as an "arrangement fee" of 5pc that must be paid to Toscafund. It falls due next Friday, or at a later date if agreed by the parties.

San Leon also has the option to repay outstanding amounts via the issuing new shares.

It has already had to renegotiate the payment schedule regarding outstanding amounts to Avobone on a number of occasions. In November Avobone presented a petition seeking to have the company would up at the High Court, before later withdrawing it.

"It is advantageous for all stakeholders in San Leon that the company enters 2018 with a robust balance sheet which this proposal has addressed," Hughes said in a statement.

Fanning said the company was "very grateful to Toscafund for its continued support".

"This facility removes certain matters that proved to be an extensive drain on management time - time which can now be focused on increasing the value of the company's interest in OML 18."

OML 18 is a producing block in Nigeria where San Leon has an indirect stake. It has faced delays in receiving cash flows from the project but payments have recently begun to arrive.

San Leon has told the market it has received takeover interest from a number of parties including a business called Midwestern, a partner in the Nigerian project.

"Discussions continue between San Leon and Midwestern about a transaction that, if concluded, could constitute a reverse takeover," San Leon told the market earlier this month. Its shares remain suspended from trading on foot of this.

The company has also said it received interest from a Chinese company that had made an indicative takeover offer at a substantial premium to the share price.

It said the Chinese company was expecting to be able to make a formal offer within 45 days but that period elapsed without a formal offer being made. San Leon then said it was still in dialogue with the company.

Sunday Independent

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