Reconnaissance Energy Africa (ReconAfrica) has recently made a strategic move to streamline its operational focus and financial position by divesting its Mexico operations. The company has entered into a definitive agreement with Chame Energy Corp for the sale of all issued and outstanding shares of Renaissance Oil Corp. (RenCan), which is a wholly-owned subsidiary of ReconAfrica. RenCan, through its subsidiaries, holds all of ReconAfrica’s assets in Mexico.
The agreement, which became effective on October 25, 2023, is subject to approval by the TSX Venture Exchange (TSXV). Importantly, Chame Energy Corp is not considered a Non-Arms Length Party of ReconAfrica under the TSXV’s policies, ensuring that the transaction aligns with regulatory standards.
The transaction’s deemed purchase price stands at US$7,500,000. One notable aspect of the agreement is the resolution of inter-company loans. As per the terms, all Inter-Company Loans and any other inter-company loans between ReconAfrica and RenCan and its subsidiaries are considered satisfied in full and will be terminated upon closing, eliminating further obligations.
Additionally, Chame Energy Corp will undertake the responsibility of all debts incurred by RenCan and its subsidiaries. This includes shouldering all present and future liabilities of these entities, further simplifying ReconAfrica’s financial structure.
In accordance with a finder’s fee agreement between ReconAfrica and individuals Willem Veltman and Kevin Smith (collectively referred to as the ‘Finders’), ReconAfrica will pay the Finders a total of US$200,000 upon the successful closing of the transaction.
Brian Reinsborough, President and CEO of ReconAfrica, expressed his satisfaction with the transaction’s outcome. He emphasized the significant benefits it brings to the company, notably providing access to working capital. The divestment from Mexico allows ReconAfrica to exit the Mexican market and eliminate legacy liabilities from its balance sheet, which collectively surpass US$100 million. This strategic move effectively streamlines ReconAfrica’s portfolio and positions the company to focus its resources on advancing joint venture partnerships and preparing for a high-impact exploration program in Namibia.
This exploration program, slated to commence in the first quarter of 2024, represents a critical step in ReconAfrica’s growth strategy. By optimizing its portfolio and financial position, ReconAfrica is better positioned to capitalize on the opportunities in the energy sector, driving future growth and success.
Source: [Review Oil Africa]
