Tullow Oil plc has announced that its shareholders will on July 13, decide whether their (Tullow) $575m oil deal with Total E&P Uganda BV will take place or not.
This decision will be made ahead of the company’s General Meeting which is scheduled for July 15, at their headquarters in London.
On April 23, Tullow Oil plc (Tullow) announced that it had agreed to sell off its entire stake in the Lake Albert Development Project in Uganda to Total for US$575m.
Total was slated to pay cash of $500m at the completion of the deal and $75m when the Final Investment Decision is reached plus the post first oil contingent payments.
The transaction attracted a Capital Gains Tax of $14.6m according to the assessment that was done by Uganda Revenue Authority but this excluded the contingent payments.
In a statement, Tullow urged shareholders to vote in favour of this deal which it says is important to the company.
“As described in the Circular, the Transaction is of critical importance to Tullow and the Tullow Board unanimously recommends that all shareholders vote or procure votes in favor of the resolution being proposed at the General Meeting,” reads part of the statement.
“A shareholder circular relating to the Transaction (the Circular) has been published today, having received approval from the Financial Conduct Authority. Under the UK Listing Rules, the Transaction constitutes a Class 1 transaction and is therefore conditional on, among other things, the approval of Tullow’s shareholders, by a simple majority of votes cast,” the statement adds.
The shareholders however, will not attend the meeting in person because of COVID-19.
They have therefore been urged to instead vote in advance by proxy by appointing the Chair of the General Meeting as their proxy in respect of all of their shares to vote on their behalf.
“The General Meeting will be a closed meeting. Shareholders should not attempt to attend the General Meeting in person. Any shareholders who attempt to attend in person will be refused entry,” Tullow said.
“Shareholders will be able to listen to a live audio-cast of the General Meeting and submit questions remotely.”
In the same statement, Tullow added that the Transaction also remains subject to a number of other conditions, including customary government and other approvals and the execution of a binding tax agreement with the Government of Uganda and the Uganda Revenue Authority that reflects the agreed tax principles previously announced.
On announcement of the deal on April 23, Dorothy Thompson, the Executive Chair said that a number of stakeholders had indicated positivity in this transaction.
“Tullow has consulted with shareholders holding approximately 27.5% in aggregate of Tullow’s issued share capital and is pleased to report that they have indicated their support for the Transaction,” Thompson said
The China National Offshore Oil Company (CNOOC) one of the three oil players, who had a 50% pre-exemption rights, this month choose not to pre-empt the sales which gave the deal a smooth go ahead.
“Subject to the satisfaction of the conditions, the Transaction is expected to complete in the second half of 2020,” Tullow added.