Shareholder Circular

RNS Number : 2862W

Roxi Petroleum Plc

27 July 2009

 



Roxi Petroleum plc

('Roxi' or the 'Company')

Shareholder Circular and Notice of General Meeting

The Company has today posted a circular to shareholders regarding the proposed sale of part of its interest in the BNG Contract Area. As announced on Friday 17 July regarding the extension of the sale agreement, under the terms of the agreement signed with Canamens and announced in January 2009 and because of the size of the proposed farm-out Roxi shareholder approval is required by 14 August 2009.  

The Company will hold a General Meeting at 10am on 12 August.

The Circular is available on the Company's website at www.roxipetroleum.com 

The full text of the circular is inserted below

24 July 2009

Enquiries: 

Roxi Petroleum plc

Rob Schoonbrood, CEO                       [phone]

College Hill (Financial PR)

Paddy Blewer / Nick Elwes                  [phone]

WH Ireland (NOMAD and broker)

James Joyce                                      [phone]

Dear Shareholder,

Disposal of part of BNG.

On 19 January 2009 Roxi Petroleum plc ('Roxi' or the 'Company') announced that it had entered into a farm out agreement with Canamens BNG B.V. ('Canamens'), a non-related natural resources investment company, conditional on Roxi shareholder approval, to help fund the development of Roxi's 58.4% indirect interest in the BNG Contract Area assets, held through Roxi's BNG Energy B.V. subsidiary ('BNG B.V.') ('the Proposed Sale').

Under the AIM Rules the size of the assets to be sold compared to the market capitalisation of Roxi is such that Roxi shareholder approval is required to complete the agreement. Completion of the agreement is also subject to certain conditions being fulfilled, including the approval of the Company's shareholders.

The purpose of this circular is to set out the reasons why the Directors believe the Proposed Sale is in the best interests of the Company and to convene the General Meeting to consider the resolution required to complete the Proposed Sale.

Background

Roxi acquired its interest in the BNG Contract Area through the acquisition of Eragon Petroleum Limited ('Eragon') in March 2008. Under the obligations of the BNG work programme, Roxi is required to fund a minimum of $15.9 million in respect of the 2009 work programme and a further minimum $35.9 million in respect of the 2010 work programme.

Despite an extensive search for new investment during the summer and autumn of 2008, it was clear to the board, by late 2008, that Roxi was unlikely to be able to raise sufficient funds on appropriate terms from the conventional debt and equity markets to meet these obligations. Accordingly, the board sought finance from within the industry to maximise the value of the BNG Assets.

Canamens is well known to Roxi as a result of the sale of 32.5% of Roxi's interest in the Ravninnoe

Contract area to an affiliate of Canamens, which was announced on 19 November 2008 and approved by Roxi Shareholders in a General Meeting in December 2008.

The sale and purchase agreement with Canamens in respect of the BNG Contract Area was recently renegotiated and a new sale and purchase agreement was entered into on 1 July by the Company with Eragon, BNG B.V. and Canamens ('the Agreement'). The sale and purchase agreement was subsequently amended by an amendment agreement dated 17 July 2009.

Details of the Proposed Sale

Under the terms of the Agreement, completion is due to take place in 2 stages. At Stage 1 completion, Canamens commits to provide $27 million funding of the work programme to develop the BNG Contract Area and will pay BNG B.V. a performance bonus of $2 million provided that Stage 1 completion takes place on or before 14 August 2009. On completion, Canamens will receive 23% of BNG B.V.'s interest in the BNG Contract Area and will acquire 23% of Roxi and BNG B.V. loan receivables in respect of loans made to BNG ltd LLP.

Canamens may before 1 January 2010, elect to proceed to Stage 2 completion. Stage 2 completion is subject to the prior approval of the Company's shareholders. If Stage 2 completion takes place, Canamens will commit to provide $23 million funding of the work programme to further develop the BNG Contract Area for the sale of a further 12% of BNG B.V.'s interest in the BNG Contract Area and will acquire further 12% of Roxi and BNG BV loan receivables. Subject to completion of both stages, Roxi's interest in the BNG Contract Area will reduce to 37.96%.

To date, Canamens has advanced Roxi some $8 million of the amount due under Stage 1.

Recommendation

It is the view of all of the Directors of the Company, that the sale of this investment is in the best interests of the Company and recommend you vote in favour of the resolution to allow the Company to complete the Proposed Sale.

Attached hereto is a Notice of General Meeting of Shareholders and a Proxy Form.

Yours faithfully

CLIVE CARVER

CHAIRMAN

 

END

 

 

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