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If the corporate restructuring is approved and implemented, the Company shareholders will obtain the entire 100% interest in Dragon Oil Limited. Dragon Oil Limited will make an application for admission of its entire issued share capital to the Official List of the UK Listing Authority (as a primary listing) and of the Irish Stock Exchange (as a secondary listing) and to trading on to the main markets for listed securities of the London Stock Exchange and the Irish Stock Exchange.
The Board believes that the corporate restructuring is in the best interests of Dragon Oil and the Company shareholders, and is the next step in the development of Dragon Oil as an innovative international oil and gas development and production company.
The decision to proceed with the proposed corporate restructuring is the result of extensive consideration by the Board of the advantages and disadvantages of relocating the holding company of the Group to a more logical jurisdiction of incorporation. Following the disposal of its interest in an Irish-based associated company in 2002, Dragon Oil ceased to have any commercial connection with Ireland. Approximately 96% of the Company's issued share capital is held outside Ireland and the Group's principal asset is located in Turkmenistan with further working interests in assets in the Republic of Yemen. Dragon Oil plc has for several years convened its Annual General Meeting (AGM) in London, England in order to accommodate the majority of its shareholders, and all meetings of the Board are held outside Ireland. The Group has been headquartered in Dubai since 1999 and its sole connection with Ireland has been to maintain a statutory registered office for the Company in Dublin.
The Board has given frequent consideration to choosing a more logical jurisdiction of incorporation for the Group's holding company. Having taken advice, the Board has decided that the features of an appropriate jurisdiction are that it should be an English-speaking, internationally-focussed jurisdiction, which is reasonably similar to the Irish and UK corporate environment. Bermuda is the place of registration of Dragon Oil (Turkmenistan) Limited, the principal operating company of the Group. Bermuda is also a respected location for international business and has been chosen as the jurisdiction of incorporation for several international companies that are traded on the London Stock Exchange and on other leading stock exchanges around the world.
The Board believes that the proposed corporate restructuring will have minimal impact on shareholders, as Dragon Oil Limited will have legal, regulatory, capital, financial, listing and trading arrangements largely consistent with the existing arrangements in place with Dragon Oil plc. Dragon Oil Limited will continue to adhere to UK and Irish corporate governance standards, including the Combined Code on Corporate Governance issued by the Financial Reporting Council, and will incorporate shareholder pre-emption rights and provisions from the UK Takeover Code into its Bye Laws (equivalent to Articles of Association). The Group will continue to prepare its financial statements in accordance with EU-adopted International Financial Reporting Standards. The Board expects the costs of corporate restructuring not to be material.
Furthermore, the proposed restructuring will help streamline certain management and administration processes to create efficiencies and will also allow Dragon Oil to structure future new business ventures forming part of its diversification plans in a tax efficient manner, details of which will be provided in documentation to be posted to existing shareholders of the Company shortly.
The corporate restructuring is to be implemented by way of scheme of arrangement under Section 201 of the Irish Companies Acts 1963-2006 and need to be sanctioned by the High Court of Ireland (the "Court"). It will therefore be subject, amongst other things, to approval by the Company's shareholders at an extraordinary general meeting, approval by the Company's shareholders at a separate Court-convened meeting and sanction by the Court. It is currently envisaged that these two shareholder meetings will be held on the same day as the Company's upcoming AGM.
A circular containing full details of the proposals to be considered at the shareholder meetings in connection with the corporate restructuring is expected to be shortly sent to the existing shareholders of Dragon Oil plc along with the 2008 Annual Report. A prospectus relating to the application for listing of Dragon Oil Limited on the London and Irish Stock Exchanges is also expected to be available on the date of posting of the circular on Dragon Oil's website.
If approved, the proposed corporate restructuring and listing of Dragon Oil Limited is expected to be completed during the summer.
It should be noted that all timings referred to above are subject to various Court, regulator and shareholder approvals and are therefore subject to change.
Mohammed Al Ghurair, Non-Executive Chairman, commented:
"The decision to restructure the Company is the result of extensive consideration by the Board of the advantages of relocating the Group to a more logical jurisdiction of incorporation. We believe it to be an important next step in the development of Dragon Oil as a whole and the Board will be recommending it to the Company shareholders for their approval."
Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, commented, "We are pleased to announce that the Board is proposing to restructure the Company by putting in place a Bermuda-incorporated company as the new ultimate holding company of the Group. Following the proposed corporate restructuring, the new company's primary listing will be on the London Stock Exchange with a secondary listing on the Irish Stock Exchange."
Posted by Siba Sami Ammari
