The Board of Caspian Sunrise is pleased to announce that the re-registration of the shares in Prosperity Petroleum, the UAE company which is the sole shareholder of KC Caspian Explorer LLP the Kazakh registered entity which owns a 100 per cent interest in the Caspian Explorer, has been finalised. Accordingly, the acquisition of the Caspian Explorer may now be completed.
Background
The Caspian Explorer is a drilling vessel designed to operate in the extreme shallow waters of the northern Caspian Sea.
The Caspian Explorer was conceived of by a consortium of leading Korean companies including KNOC, Samsung and Daewoo Shipbuilding. The vessel was assembled in the Ersay shipyard in Kazakhstan between 2010 and 2011 for a construction cost believed to be approximately $170 million. The total costs after fit-out are believed to have been approximately $200 million.
The Caspian Explorer became operational in 2012 at a time of relatively low oil prices and reduced exploration activity in the Northern Caspian Sea. In 2017, the Korean consortium decided to sell the Caspian Explorer by way of a competitive tender with the buyer being KC Caspian Explorer LLP.
In 2017, the Caspian Explorer was hired out to a KazMunaiGas / Indian state oil company joint venture for $28 million after costs and drilled one exploration well to a depth of 3.5 km. In 2018, the Caspian Explorer was hired out KazMunaiGas for up to $24 million drilling one exploration well to a depth of 1.8 km. The Caspian Explorer did not operate in 2019 or to date in 2020.
Acquisition terms
The $25 million headline consideration is to be satisfied by the issue of 160,256,410 new Caspian Sunrise shares at a price of 12p per share (the “Consideration Shares”), which in January 2020 was a 28% premium to the prevailing share price. The acquisition was approved by independent shareholders in February 2020. Given the sharp decline in the Company’s share price the Caspian Explorer purchase price for accounting purposes based on current prices is approximately $3.2 million.
To date there are no confirmed bookings for the Caspian Explorer. We believe however, that as exploration activities resume in the shallow northern Caspian Sea we shall over time see interest in chartering the drilling vessel.
Lock-in arrangements
Pursuant to the Share Purchase Agreement, each of the Sellers have undertaken to the Company, subject to certain exemptions, not to dispose of any of the Consideration Shares for a period of three months from Completion.
Resultant shareholdings
The majority owner of the Caspian Explorer is Aibek Oraziman, a director of the Company and a member of the Oraziman family. Following the completion of the acquisition Aibek Oraziman will own 450,364,489 Caspian Sunrise shares representing 21.6% of the enlarged total. The immediate Oraziman family shareholding will increase to 903,429,585 shares representing 43.3% of the enlarged total.
Admission and Settlement
The Consideration Shares will be issued, credited as fully paid, and will rank pari passu with the existing Ordinary Shares in issue in the capital of the Company, including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of such shares after the date of their issue.
Application will be made for the admission to trading on the AIM market (“AIM”) of London Stock Exchange plc (“LSE”) (“Admission”). Admission is expected to occur on or around 22 October 2020.
Following Admission, the Company will have 2,088,219,494 Ordinary Shares in issue. There are no shares held in treasury.
The total voting rights in the Company is therefore 2,088,219,494 and Shareholders may use this figure as the denominator by which they are required to notify their interest in, or change to their interest in, the Company under the Disclosure Guidance and Transparency Rules.
Comment:
Clive Carver, Chairman said
“It is good to finally complete the acquisition approved by shareholders back in February. We look forward to the barge once again being active in the shallow northern Caspian Sea.”
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