Following the announcement of 23rd January, 2018, the Boards of Po Valley Energy Limited (“Po Valley”) and Saffron Energy Plc (“Saffron”) have reached a mutual agreement to not proceed with the sale of Po Valley Operations Pty Ltd (“PVO”) and its northern Italian gas assets to Saffron for a consideration of 200 million Saffron shares.
The mutual decision was reached following recent discussions with Po Valley’s tax advisers and the Australian Taxation Office, and receipt of the Independent Experts Report (“IER”). The IER was required under chapter 10 of the ASX listing rules.
Following a number of discussions with the ATO, and having regard to the recent valuation of these shares, Po Valley’s tax advisers are of the view that a favorable class ruling to grant demerger relief to Po Valley shareholders will be unlikely for the in-specie distribution of the 200m Saffron shares.
Furthermore, the Independent Expert, BDO Corporate Finance (WA) Pty Ltd, operating under ASIC guidelines, found that the abovementioned transaction was “neither fair nor reasonable” in particular as a result of the independent experts valuations of the Selva and Teodorico gasfields.
Following receipt of the above information the Board of Po Valley informed the Board of Saffron that it would not be able to recommend the transaction to Po Valley shareholders and in accordance with the PVO sale and purchase agreement both parties agreed to mutually terminate the PVO sale and purchase agreement.
Po Valley remains highly supportive of the proposed Saffron/Coro transaction and acquisition of Sound Energy Italy Holdings Limited by Saffron. Po Valley currently holds 100 million shares in Saffron and intends to vote its shares in favour of the Saffron/Coro transaction and associated authorisations.
A lot of effort has been put in by both parties to progress the PVO sale transaction and the Board of Po Valley wishes to thank everyone for their tireless efforts. The Board of Po Valley has every confidence that Saffron (to be renamed Coro) will be successful in their separate endeavors.
The Board is equally confident that Po Valley shareholders will benefit from less dilution of, and increased focus on the PVO assets. These assets include its 63% interest in the recently successfully drilled Selva gas development field, its 100% owned Teodorico offshore gas development field (for which it recently announced a major reserve upgrade), and the 100% owned Torro del Morro oil and condensate exploration field. A full copy of the SRK Valuation of the PVO assets, used by both the Board and the Independent Expert in relation to the evaluation of the proposed sale of PVO, is attached.