Swala Oil and Gas (Tanzania) plc (DAR:SWALA) entered into an agreement to acquire 40% stake in Panafrican Energy Tanzania Limited from Orca Exploration Group Inc. (TSXV:ORC.B) for $130 million on December 29, 2017. Orca would sell shares representing 7.93% stake that it holds to Swala for gross proceeds of $25.8 million ($21 million net of certain purchase adjustments) payable in $17.1 million cash and approximately $4 million of Swala convertible preferred shares. The cash portion of the purchase price for the first investment transaction has been deposited into escrow under an escrow agreement with Orca, Swala and Swala's investors. Subject to the completion of the first investment transaction, Orca would agree to sell an additional shares representing 32.07% for gross proceeds of $104 million ($84.9 million net of certain purchase adjustments) payable in $72.6 million cash and $12.3 million face amount of Swala convertible preferred shares. The purchase price will be reduced by the product obtained by multiplying the percentage of Shares represented by Investment Shares by the outstanding balance of the IFC Loan on the effective date.

Orca will retain the right to appoint a majority of the directors to the board of Panafrican Energy Tanzania notwithstanding the completion of Swala's entire 40% investment in Panafrican Energy Tanzania. Subject to certain exceptions, decisions of Panafrican Energy Tanzania shall be made by a simple majority vote of the directors of Panafrican Energy Tanzania. Upon the completion of the first investment transaction, Swala will hold a 7.93% interest in Panafrican Energy Tanzania. Orca will retain the nomination rights for directors. Assuming completion of all the investment transactions, Swala will own a 40% interest in Panafrican Energy Tanzania and will have two nomination rights, with orca retaining three nomination rights.

The issuance of the Swala convertible preferred shares is subject to receipt of the approval of the shareholders of Swala and approval of the Dar es Salaam Stock Exchange. If Swala is unable to obtain such approvals within 45 days of the effective date of the investment agreement, then that portion of the purchase price payable in Swala convertible preferred shares must be paid in US dollars plus interest on the balance of the purchase price owing at a rate of 10% per annum from the closing date until the date of payment. Closing of the second and third tranches would be subject to the satisfaction or waiver of certain conditions precedent, including Swala raising the necessary funds to complete the remaining investment transactions and approval by the boards of directors of Orca and Swala. In addition to receiving the approval of the TSX Venture Exchange, completion of the investment transactions is subject to the approval of IFC.

Orca expects to enter into an amendment and consent letter with Panafrican Energy Tanzania and IFC pursuant to which Panafrican Energy Tanzania will agree to repay the IFC loan facility in part based on the proportion to the total percentage of Shares sold to Swala and, in any event, all of the outstanding principal amount by no later than December 10, 2019, upon each closing occurring under the Investment Agreement, IFC's 7% participation interest would be reduced pro rata with the percentage of the shares sold to Swala in consideration for Panafrican Energy Tanzani paying IFC the sum equal to the liquidity participation interest (10%) of the proportion of Panafrican Energy Tanzani sold based on a valuation of $325 million and the parties would agree to make certain amendments to the IFC loan agreement and related financing documents in connection with the foregoing. The first investment transaction must be completed on or before January 12, 2018. The remaining investment transactions must be completed on or before February 28, 2018.

On January 16, 2018, Orca announced that the escrow release conditions had been met regarding the first tranche. As a result, the definitive agreements for the Investment were released from escrow, were delivered and became effective and the first tranche of the Investment was completed. As of March 1, 2018, Orca Exploration agreed to extend the date by which the second closing and third closing must be completed to March 29, 2018. As of April 3, 2018, Orca Exploration agreed to extend the date by which the second closing and third closing must be completed to May 11, 2018. As of May 14, 2018, Orca Exploration agreed to extend the date by which the second closing and third closing must be completed to June 29, 2018. As of June 29, 2018, Orca Exploration agreed to extend the date by which the second closing and third closing must be completed to July 13, 2018. As of April 1, 2019, Swala Oil and Gas cancelled the acquisition of remaining 32.07% in PanAfrican Energy Tanzania Limited. Conyers Dill & Pearman (Mauritius) Limited acted as legal advisor to Orca. Sean Korney, Randon Slaney, Kelsey C. Clark and Riley O'Brien of Burnet, Duckworth & Palmer LLP acted as legal advisors to Orca.

Swala Oil and Gas (Tanzania) plc (DAR:SWALA) completed the acquisition of 7.93% stake in Panafrican Energy Tanzania Limited from Orca Exploration Group Inc. (TSXV:ORC.B) for $19.4 million on January 15, 2018.