29 January 2018
Watson Farley & Williams (“WFW”) has advised AIM-traded Saffron Energy Plc (“Saffron Energy”) on its agreements to acquire the Italian oil & gas portfolios of each of Sound Energy Plc, listed on AIM (“Sound Energy”) and Po Valley Energy Ltd, listed on ASX (“Po Valley”).
The transactions will be structured as a purchase of the entire issued share capital of Sound Energy’s wholly owned subsidiary, Sound Energy Holdings Italy Ltd, and Po Valley’s wholly owned subsidiary, Po Valley Operations Pty Ltd. Each acquisition will constitute a reverse takeover under Rule 14 of the AIM Rules for Companies and will require Saffron Energy shareholder approval. The acquisitions will also require approval of capital reductions by the shareholders of each of Sound Energy and Po Valley to enable the Saffron Energy consideration shares to be issued or distributed to such shareholders.
Saffron Energy is a natural gas producer with interests in Northern Italy. Its portfolio includes two producing gas fields: Sillaro (100% owned) and Bezzecca (90% owned), and a field currently under development called Sant’Alberto. The proposed acquisitions will significantly increase Saffron Energy’s Italian oil and gas portfolio and Saffron Energy will continue to develop its Italian assets after its re-admission to AIM following completion of the proposed acquisitions. In addition, Saffron has announced its intention to acquire additional assets in Europe and elsewhere, particularly South East Asia, which enhance its portfolio and where there are operating and other synergies. Subject to shareholder approval, the enlarged company will be re-named Coro Energy Plc (“Coro Energy”), and will position itself as a mid-cap, European and South East Asian gas producer and explorer.
WFW has also advised Saffron Energy on a firm placing and a conditional placing to raise a total amount of £14m before expenses from institutional and other investors, including AIM listed cornerstone investor CIP Merchant Capital Limited (via a subsidiary).
Jan Mellmann, WFW’s Head of Natural Resources who led on the transactions, commented: “I am delighted that WFW has assisted Saffron Energy on these transformative transactions, which will see the creation of a leading, Europe and South East Asia-focused oil and gas explorer and producer. WFW has worked on multiple high-profile oil & gas transactions in the last 12 months, and this appointment, which involved aligning the interests of four listed companies and will require three shareholder meetings, further strengthens our reputation as a leading legal adviser in the sector. We look forward to continuing to advise Saffron Energy on finalising these transactions and its readmission to AIM”.
Eugenio Tranchino, Head of WFW Italy added: “This deal demonstrates the consolidation opportunities in the oil and gas sector available in the Italian market, the strength of our energy practice in Italy and highlights WFW’s cross-border expertise”.
Sara Edmonson, the CEO of Saffron, commented: “WFW have done an extraordinary job in coordinating a complex transaction across 4 listed entities in 3 different jurisdictions. Jan and his exceptional team played a crucial role in building the momentum necessary to get us to this first critical milestone and continue to set the pace as we complete the re-admission process”.
The WFW London corporate team advising Saffron Energy was led by Partner Jan Mellmann, assisted by Senior Associate Jenny Hodges, Associate Alex Green and Trainee Stuart Bolton. They were supported by members of WFW’s Italian corporate team: Partner Eugenio Tranchino, Counsels Luca Sfrecola and Giuseppe Franch, Associate Anthony Bellacci and Trainee Giovanni Benedetto. In addition, London-based Partner Tom Jarvis and Senior Associate Claire Miles advised on tax matters, while Senior Associate Devan Khagram provided employment advice.