Yemisi Izuora
Oando Plc, an integrated oil and gas company has entered into agreement with HV Investments II B.V. (HVI) and The Vitol Group,to acquire 51 percent of the voting rights and 60 percent of the economic rights in Oando’s downstream businesses.
The deal has been brokered at $276 million, conditional upon the receipt of regulatory approvals and subject to customary purchase price adjustments, including working capital.
Commenting on the transaction, Wale Tinubu, CEO of Oando Plc stated, “This transaction is an exciting development in downstream West Africa. By working with Vitol – a global energy and Commodities Company and the largest independent trader of energy products; and Helios – a premier Africa-focused private investment firm; Oando Plc has repositioned Oando Downstream for a new era of investment growth and profitability.
Tinubu explained that the divestment will enable Oando Plc to focus on its upstream and midstream businesses, adding “Even as proceeds of the sale will be applied almost entirely to reducing Oando’s leverage, we underscore the portfolio rationalization achieved alongside the balance sheet optimization.”
Pursuant to the Acquisition, a special purpose vehicle will hold 100 percent of the economic interests and 49 percent of the voting rights of Oando Downstream.
The total consideration of $461.3 million will be funded by a $276.8 million cash contribution from HVI, and $184.5 million in preference shares issued to Oando Plc, subject to customary purchase price adjustments, including working capital and long-term debt.
At closing, HVI will own 60 percent of the special purpose vehicle, while Oando Plc will hold a 40 percent stake.