Revised Proposal for Orca Exploration Group Inc

Swala OrcaSwala Oil & Gas (Tanzania) plc, has noted the announcement made by Orca Exploration Group Inc on 26 July 2019 and provides the update to its announcement on 3 June 2019

Swala presented a revised proposal (the "Revised Proposal") to the board of directors of Orca Exploration Group Inc on 15 June 2019. The Revised Proposal provided for Swala to acquire all the issued and outstanding share capital of Orca (transaction) for, either:

(a) US$6.26 per Class A Voting Common Share and US$6.26 per Class B Subordinate Voting Share (together the Orca Shares), less any dividends, distributions or extraordinary payments made by Orca from 15 June 2019 until closing

(b) US$5.88 per Orca Share, less any dividends, distributions or extraordinary payments made by Orca from 15 June 2019 until closing and one common share of Swala for each Orca Share, which if shareholders could elect for 100 per cent of this alternative, would equate to approximately 30 per cent of the equity of Swala post Transaction.

The Orca shareholders would be able to elect to receive consideration under either first or second option, subject to the proviso that 50 per cent of the Orca Shares acquired will receive consideration under option (a) and the remainder will receive consideration under option (b). In the event that the Orca shareholders elect, in aggregate, for more than 50 per cent of the Orca Shares acquired to receive consideration under a particular option, then the consideration for such Orca Shares shall be pro-rated between option (a) and option (b).

The transaction therefore contemplates:

1. 50 per cent of the Orca Shares being paid for in cash pursuant to option (a)

2. 50 per cent of the Orca Shares being paid for by way of a combination of cash and common shares of Swala, with Orca shareholders electing option (b) holding in aggregate approximately 15 per cent of Swala on closing.

Swala is exploring a number of options as part of the Revised Proposal which would provide Orca's shareholders with liquidity in respect of the Swala shares issuable pursuant to the Revised Proposal.

The Transaction is subject to customary approvals, two of which have now been secured. Swala has had initial positive discussions with the Tanzanian regulators and sees no significant impediments to securing the remaining consents in a reasonable timeframe in respect of the Transaction.

The International Finance Corporation (IFC) has a loan to Panafrican Energy Tanzania Limited which is fully guaranteed by Orca. The IFC has the right to require repayment on a defined change of control and can restrict the transfer of Orca Shares by Shaymar Limited while the loan is outstanding, other than with IFC consent. Swala has engaged with the IFC with a view to securing its consent to the final agreed transaction.

The Revised Proposal was made following extensive discussions with a number of major shareholders of Orca owning in aggregate over 50 per cent of the outstanding Class B Subordinated Voting Shares. Swala welcomes Orca's statement that it intends to engage meaningfully with Swala in a manner that reflects the views of those shareholders owning the majority of Orca's issued shares.

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

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