Heritage Oil Advised That Asset Disposal Not Taxable In Uganda

7th Jul 2010 07:18

LONDON (Dow Jones)--Heritage Oil PLC (HOIL.LN), an independent upstream exploration and production company, said Wednesday the Government of the Republic of Uganda has provided conditional consent for the disposal of its assets in Uganda, and has received advice that the disposal of the assets is not taxable in Uganda. MAIN FACTS: -The transaction is expected to complete within five working days following finalization with Government of a mechanism, including arbitration, for dealing with any taxes lawfully payable from the disposal of the assets. -On completion of the transaction Heritage will receive $1.35 billion in cash from Tullow Uganda Ltd (TLW.LN), with deferred consideration of up to $150 million in cash or an interest in a mutually agreed asset. -In accordance with the Petroleum Exploration and Production Act Cap 150, Mr. Hilary Onek, Minister of Energy & Mineral Development, has given consent to Heritage's disposal of the Assets. -This consent is conditional on HOGL demonstrating to Government that it will pay any taxes on demand which may arise from the disposal of the Assets. -In a separate letter Mr. Kabagambe-Kaliisa, Permanent Secretary to the Ministry of Energy & Mineral Development, advised that if HOGL was to resolve the tax matter by arbitration in London, then such arbitration would be on the basis that HOGL deposit approximately U.S.$121.5 million, representing 30% of the disputed amount of U.S.$404,925,000 with the Uganda Revenue Authority and provide a bank guarantee for the balance. -Heritage's position, based on comprehensive advice from leading tax experts in Uganda, the United Kingdom and North America, is that the disposal of the assets is not taxable in Uganda. -Heritage is considering Government's response and will update the market in due course. -Shares closed Tuesday at 414 pence. -By Tommy Stubbington, Dow Jones Newswires; 44-20-7842-9268; [email protected] (END) Dow Jones Newswires July 07, 2010 02:18 ET (06:18 GMT)