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Bowleven (LSE:BLVN), an Africa-focused oil and gas exploration and production company, has announced plans to delist its ordinary shares from the AIM market, re-register as a private limited company, and adopt new articles of association. The proposed changes come as the company faces ongoing challenges in its key project, the Etinde Permit in offshore Cameroon.
Key Details of the Proposed Exit Opportunity
- Purchase Price: The purchase price for Bowleven's ordinary shares listed on AIM is set at 0.225 pence per share. This price reflects a 3.93% premium to the three-month Volume Weighted Average Price (VWAP) and a 17.32% premium to the six-month VWAP as of 8 August 2024.
- Exit Window: The exit opportunity for shareholders will remain open from 9 August 2024 until 1:00 p.m. on 11 September 2024.
- Conditional Approval: The completion of the exit opportunity and the subsequent purchase of ordinary shares from minority shareholders by Crown Ocean Capital is conditional upon the resolutions being passed at the upcoming General Meeting.
It is important to note that this exit opportunity is provided independently by Crown Ocean Capital, and Bowleven has not entered into any agreements with Crown Ocean in connection with the cancellation or the exit opportunity.
Rationale Behind the Cancellation and Re-registration
Bowleven's primary interest lies in a 25% strategic equity stake in the offshore shallow water Etinde Permit in Cameroon. Over recent years, the company has been working with its joint venture partners to advance the development plan for the Etinde Permit towards a final investment decision (FID). However, progress has been hindered by several challenges, particularly following New Age’s agreement in June 2022 to sell its 37.5% stake and operatorship in the Etinde Permit. Since then, no definitive work plan or budget has been approved, and operations have been largely suspended, with minimal ongoing activity.
The situation worsened in January 2024 when New Age's sale of its stake was terminated, leaving the Etinde project in a state of care and maintenance. Despite some outline agreements for moving forward, progress has been slow, and Bowleven had to complete a $2 million fundraising in March 2024 to fund its overheads and share of the Etinde expenditure through to mid-2025.
Given the uncertainty around future project expenditures, which depend on JV partner agreements and approvals from the Government of Cameroon, the Board of Bowleven does not expect significant progress toward FID by mid-2025. The company anticipates the need for additional capital to fund its obligations until the $25 million payment due at FID is received.
Strategic Considerations
The decision to cancel the AIM listing and re-register as a private company follows a comprehensive review by the Board of Bowleven, which weighed the benefits and drawbacks of remaining listed. The review concluded that maintaining the AIM listing is no longer in the best interests of the company or its shareholders. The Board believes that the proposed cancellation and re-registration will help reduce the company’s cost base, extend its cash runway, and allow it to focus on its strategic priorities.
