Energy Tanzania Limited Invests in Swala Oil & Gas (Tanzania) plc

Swala Oil & Gas (Tanzania) plc has announced that it has entered into a definitive agreement for an initial investment of US$30 million from Energy Tanzania Limited (ETL). ETL is owned by Dr. Reginald Mengi, the well-known Tanzanian entrepreneur and philanthropist, and the funds will be used to develop the Company’s current projects.

The investment, which is contemplated to close in two tranches, consists of a US$30 million Convertible Note that must be converted into ordinary shares of the Company on the earliest of 90 days from the date of subscription or a crosslisting of Swala Ordinary Shares on another stock exchange and in any event no later than one year from the date of subscription. The conversion rate will be on the basis of an agreed 30/75, implying a pre-money valuation of Swala of US$45 million and a 125% premium to its current market capitalization. Upon conversion, ETL will own approximately 46% of the Company.

Swala adds it is in the process of closing the additional sources of funding with institutional investors and individuals, to be used together with the announced funding to further progress the Company’s current projects. This includes a further senior debt investment that is contemplated to rank equally alongside the US$25 million of senior debt already raised as well as additional subscriptions to the Convertible Notes. There are no assurances given that one or more of the transactions will be completed on the terms previously disclosed.

“We are pleased to have secured a significant strategic investment by Energy Tanzania Limited, which has been a supportive shareholder since the Company’s listing on the Dar es Salaam Stock Exchange four years ago. Dr. Mengi has identified the Tanzania energy sector as a strategically important sector with significant opportunity for Tanzanians, and Swala is privileged that he has chosen our Company as his investment vehicle of choice. With the support of ETL we aim to continue developing Swala to address the energy demands of Tanzania as it seeks to grow into a middle-income economy, an objective in which the Company, through its direct and indirect investments, can play an enabling role,” said Swala CEO Dr. David Mestres Ridge.

The Company’s equity is now primarily owned by approximately 1,500 Tanzanian investors (accounting for 45% of the Company’s issued capital), followed by Australian investors (27% of the Company’s issued capital) and by investors in Spain (9%), Kenya and the United Kingdom (each with 7%).