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Home Economic

DSE listed oil and gas company Swala commences liquidation process  

by Editor
03/05/2023
in Economic, Investment
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DSE listed oil and gas company Swala commences liquidation process  
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Swala Oil and Gas Plc trading as Swala on the Dar es Salaam Stock Exchange (DSE) is now facing liquidation following a decision by creditors holding approximately 75% of the company’s liabilities.

This follows a meeting held on the 31st March 2023 that resolved that the Company should be placed in liquidation with the creditors pursuant to that resolution unanimously agreeing to appoint Daniel Welwel, of Assyla Attorneys, as liquidator and shall engage with the company’s creditors and shareholders in due course.

This development comes in the wake of the resignation of the company’s CEO earlier this year.

Conover Investment LP, which purchased senior notes issued by SWALA (PAEM), a wholly-owned subsidiary of SWALA Oil and Gas Plc, has assumed control of PAEM. This occurred after Apex Corporate Trustees (UK) Limited, acting as trustee for Conover Investments LP, appointed Sarah O’Toole and Jason Bell from Grant Thornton (UK) LLP to serve as administrators for SWALA (PAEM).

As a result, the Kilosa-Kilombero license, in which SWALA held a 75% stake, will revert to TPDC in accordance with the production sharing agreement with TPDC.

Under the terms of the Production Sharing Agreement with TPDC and the Government of Tanzania, Swala’s interests in the Kilosa-Kilombero license will revert to TPDC.

Swala Oil and Gas Plc trading as Swala on the Dar es Salaam Stock Exchange (DSE) is now facing liquidation following a decision by creditors holding approximately 75% of the company’s liabilities. PHOTO | COURTESY

Background to the resolution

In 2017 the Company, through its wholly owned subsidiary Swala (PAEM) Limited (“Swala (PAEM)”), entered into an agreement with Orca Energy Corporation (“Orca”) to acquire a 7.933% interest in PAE PanAfrican Energy Corporation (“PAEC”).

PAEC owns 100% of PanAfrican Energy Tanzania Limited (“PAET”), the operator of the Songo Songo gas field.

PAET is challenging tax claims in Tanzanian totaling $55 million (as of the 31st of December 2022), some of which date to 2008.

Despite requests to do so, Orca has failed to justify to Swala (PAEM) the commercial rationale behind these challenges.

Orca, through its control of PAET, misappropriated funds and dissipated assets belonging to PAET to pay for costs that were the sole responsibility of Orca.

PAEC, controlled by Orca, failed to remedy this matter, and repeatedly and consistently breached the Shareholder Agreement dated 29th of December 2017 between Orca, PAEC and Swala (PAEM).

It also breached its obligations under Mauritian law to issue IFRS-compliant accounts, as Swala set out in its press release of the 8th of August 2022, depriving Swala of information that may have assisted it in determining the extent of any breach. As Orca, it has benefitted at the expense of Swala (PAEM) by using funds that would otherwise have been attributed to Swala (PAEM) to pay its ongoing tax challenges in Tanzania.

These actions resulted in Swala (PAEM) being deprived of funds that would have been credited to it under the investment and shareholder agreements. In turn, this deprived Swala itself of funds and this situation resulted in the resolution by creditors that the Company should be liquidated as it is unable to pay its debts.

“The Board regrets being forced to take this step, particularly as it affects the first listed oil and Gas Company in Tanzania and its ca. 2,000 Tanzanian shareholders, and wishes to thank its regulators, shareholders and creditors for their support,” the company said in a statement seen by The Business Wiz.

Tags: #LatestBusinessNews#LatestTanzaniaBusinessNews#LatestTBWNews#TanzaniaBusinessNews
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