156
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Save as disclosed below and elsewhere in this Offering Memorandum, no members of the Group entered into related
party transactions during the financial year ended 31 December 2013 or during the period from 31 December 2013 to the
date of this Offering Memorandum.
Share Purchase Arrangement with COO
In January 2011, KEC Kuwait (the then holding company of the Group) entered into an arrangement (the “
Share
Purchase Arrangement
”) to acquire 19.3 million of the outstanding ordinary shares of KEC Kuwait, to be used to
incentivize and maintain key employees. Under the terms of the Share Purchase Arrangement, Mohammad Al Howqal,
the Group’s Chief Operating Officer (the “
COO
”), acting on behalf of the employees of KEC Kuwait, entered into an
agreement with the acquirer of the ordinary shares, Al Tijari Investment Company K.S.C(C) (“
Al Tijari
”) under which
the COO committed to purchase the 19.3 million ordinary shares of KEC Kuwait then held by Al Tijari prior to the end
of January 2012 at an agreed price. Because KEC Kuwait anticipated at that time that it would undertake an initial public
offering (“
IPO
”) of its ordinary shares during the course of 2011, the arrangement was intended to allow key employees
to purchase shares from Al Tijari at a favourable price after the IPO.
As a result of the restructurings in 2011 and 2014, the employee incentive structure underlying the Share Purchase
Arrangement became obsolete in the context of a Jersey company, and the Share Purchase Arrangement was also
amended to substitute Securities Group K.S.C.C. (“
SG
”) for Al Tijari and effectively substitute the 19.3 million ordinary
shares of KEC Kuwait with 4,825,001 shares of the Issuer. In May 2014, the COO was required by SG to purchase
792,741 shares of the Issuer for approximately $1.9 million pursuant to the Share Purchase Arrangement (with the
assistance of a loan from the Issuer until such time as the COO is able to sell such shares and repay the loan), leaving
4,032,260 shares of the Issuer remaining to be purchased.
Under the Share Purchase Arrangement now in place, upon notice by SG of the exercise of its option to put the ordinary
shares to the COO on or before 1 May 2015, the COO will be obliged to pay the value of the remaining ordinary shares,
or approximately $9 million, to SG. Unless otherwise agreed, in the event of SG exercising its rights to put the ordinary
shares to the COO, the Issuer has agreed to lend the COO the purchase price until such time as the COO is able to sell
the 4,032,260 ordinary shares of the Issuer and repay the loan to the Issuer. As a result, as at 31 December 2013, the
Issuer’s obligation to pay an amount of approximately $11 million to the COO represented an off balance sheet
obligation of the Issuer. See note 31(d) to the consolidated financial statements of Kuwait Energy plc Group for the year
ended 31 December 2013 included herein.
Shareholders’ Agreement
In 2012, an agreement was proposed to establish terms for the relationship among the Issuer and certain of its major
shareholders. Although the agreement has not been fully executed, it nevertheless provides a framework for the
relationship between the Issuer and certain shareholders.
The Shareholders’ Agreement provides, among other things:
For the constitution and maintenance of the audit and risk, compensation and nomination committees;
For the appointment of at least two Independent Directors to the Board;
That certain corporate actions will not be taken without the approval of at least 67% of all the voting shares of
the Issuer then issued or outstanding;
That the Issuer will furnish periodic reports and certain other information as requested to the shareholders party
to the agreement; and
For the implementation of certain environmental and social measures.
The Shareholders’ Agreement also includes certain covenants by all parties not to engage in sanctionable practices.
