West Perth-based Lion Energy Ltd, a wholly owned subsidiary of Lion International Investments Ltd, has entered into a share purchase agreement to acquire 20.7 million ordinary shares in Papua Petroleum Ltd.
West Perth-based Lion Energy Ltd, a wholly owned subsidiary of Lion International Investments Ltd, has entered into a share purchase agreement to acquire 20.7 million ordinary shares in Papua Petroleum Ltd.
Lion will acquire 19.49 per cent of PP's issued capital from Gas Link Global Limited a subsidiary of ASX listed company, Liquefied Natural Gas Limited.
PPU has extensive oil and gas interests in Papua New Guinea.
As well as the purchase of the Shares, LII also has the potential to acquire a 10% or 50% interest in the PPU's licences in certain circumstances involving a capital raising by PPU.
The acquisition of the Shares is subject to the following principal terms and conditions:
Confirmation that at the time of transfer of ownership of the Shares to LII, PP has only 106m ordinary shares on issue, with no other equity securities, options or convertible securities on issue.
Confirmation that at the time of transfer of ownership of the Shares to LII, the Shares are unencumbered.
Confirmation that LI will have a representative director in the PPU Board once the share purchase is completed.
A deposit of $300,000 has been paid to GLG. This deposit will only be refunded by GLG to LII if LII have substantially complied with their obligations under the share purchase agreement and GLG fail to complete the transaction on the date specified.
It is anticipated that final settlement of the acquisition will be on or before the
6 June 2008.
LII already has the funds to complete this acquisition for A$3 million. However, LII prefers to retain its cash in its current configuration and it has been offered the opportunity by a significant shareholder and director to borrow
$2,100,000 from him on an interest free basis in order to assist in the funding of the purchase.
This loan is repayable on the earlier of 30 days after a notice of demand or could be applied to satisfy any liability to subscribe funds to Lion Energy Limited to take up shares in Lion Energy Limited. Given this opportunity, LII has entered into a loan agreement with the director for these funds. The remaining cash held by LIO and its subsidiaries includes approximately 43.3 million Renminbi held in HSBC bank in China with the remaining cash funds held in Australian dollars and US dollars in Australia and Hong Kong.
PPU has executed four Petroleum Prospecting Licences ("PPL's"), numbered 285, 286, 287 & 288 with the Independent State of Papua New Guinea, covering a combined area of approximately 38,000 square kilometres ("Licences").
PPU's participating interest in PPL's 285, 286, 287 & 288 is 100%.
To date only 8 wells have been drilled in PPL's extensive underexplored
acreage portfolio. The Licences are located in the foreland area, where exploration costs are considerably less than in the rugged foldbelt region.
There are some 30 prospects and leads identified within the four PPL's.
