CIP Merchant Capital takes Saffron Energy stake – CIP Merchant Capital has made its first investment following its admission to trading on AIM in December 2017, agreeing to subscribe for, in aggregate, GBP6.0 million worth of shares in Saffron Energy Plc. Saffron is an AIM quoted European gas company with interests in Northern Italy. It is raising GBP14.0 million through an equity placing to help fund the acquisition of the Italian oil and gas assets of both Sound Energy Plc and Po Valley Energy Limited.
Saffron
Saffron is currently interested in three gas fields in Northern Italy, being the Sillaro and Bezzaco gas fields, which are both currently producing, and the Sant’Alberto gas field which is currently being developed. Following discussions with both Sound Energy and Po Valley, Saffron announced on 5 October 2017 that it had entered into non-binding conditional heads of terms with both parties, to acquire their respective Italian oil and gas interests and permits, with the aim of significantly increasing Saffron’s portfolio of Italian assets and positioning itself as a mid-cap regional gas producer and explorer.
Further to Saffron’s announcement of 5 October 2017, Saffron announced earlier today that it had entered into binding conditional sale and purchase agreements with each of Sound Energy and Po Valley under which it is proposed that Saffron acquires both Sound Energy’s and Po Valley Energy’s portfolio of Italian interests and permits. The proposed acquisition adds significant larger assets to the Saffron portfolio, including the Selva onshore gas field, which recently reported strong gas flows resulting from successful flow testing of the Podere Maiar 1dir exploration well which confirmed a net pay of 41 metres from two identified gas reservoirs and a peak flow rate of over 148,000 scm/day, the Teodorico offshore Adriatic gas field (47 bcf) development and the large Torre del Moro and Santa Maria Gorretti and Dalla gas exploration licences, plus two smaller gas production fields.
On completion, Saffron will continue to develop its Italian assets. In addition, it will look to acquire assets which enhance its portfolio and where there are operating and other synergies. Saffron believes that these assets will be located both in Europe and elsewhere, and that in particular there will be opportunities to acquire exploration licenses in South East Asia. Saffron therefore intends to pursue a combined European and South East Asian regional exploration strategy focused on multi Tcf (trillion cubic feet), low cost, onshore gas piped to high value, growing markets.
By virtue of their size, the deals constitute a reverse takeover under Rule 14 of the AIM Rules for Companies, and will require Saffron shareholder approval. The Saffron Shares will remain suspended from trading on AIM, pending publication of an AIM admission document. Subject to shareholder approval, Saffron will also be re-named Coro Energy Plc. In the six months ended 30 June 2017, Saffron reported revenues of EUR0.56 million and a loss of EUR0.92 million and as at 30 June 2017 had total assets of EUR12.5 million and net assets of EUR5.2 million.
On completion, CIP will be interested in approximately 16.45% of Saffron’s then enlarged share capital and will be interested in 68,493,150 warrants.
Marco Fumagalli and Carlo Sgarbi are both directors of the company and Merchant Capital Manager Limited, the company’s investment manager. In addition, Mr Fumagalli and Mr Sgarbi, are both beneficiaries of Continental Investment Partners SA (“CIP”), an affiliate of the company’s investment manager. CIP, through certain associates is interested in, in aggregate, approximately 6.6% of Sound Energy. Mr Fumagalli is also a non-executive director of Sound Energy and Saffron and it is proposed that Mr Fumagalli will, along with the other directors of Saffron, be issued options over 10 million Saffron Shares at the Placing Price.
CIP : CIP Merchant Capital takes Saffron Energy stake