TIDM88E
RNS Number : 2081M
88 Energy Limited
07 May 2020
This announcement contains inside information
7 May 2020
88 ENERGY AND XCD ENERGY TO MERGE VIA RECOMMED TAKEOVER
OFFER
Creating an Alaska-Focused Oil Company
Highlights
-- 88 Energy and XCD Energy to merge to form an oil exploration
company with operations on the North Slope of Alaska, USA with
platform of growth prospects.
-- 88 Energy to acquire XCD Energy via a unanimously recommended
off-market takeover offer with:
-- 2.4 new 88 Energy shares for every XCD Energy share held; and
-- 0.7 new 88 Energy shares for every XCD Energy listed option held.
-- The Board of Directors of XCD Energy unanimously recommend
that XCD Energy securityholders accept the improved Offers, in the
absence of a superior proposal and subject to the independent
expert concluding that the offer is fair and reasonable, or not
fair but reasonable.
-- Share Offer values the XCD Energy shares at 1.2 cents each(1) , representing a:
-- 71% premium to the closing price of XCD Energy shares on ASX on 6 May 2020 of 0.7 cents;
-- 140% premium to the closing price of XCD Energy shares on ASX
on 24 April 2020 of 0.5 cents2;
-- 143% premium to 30-day VWAP of XCD Energy shares3; and
-- 55% premium to 60-day VWAP of XCD Energy shares(3) .
-- Option Offer values the XCD Energy listed options at 0.35 cents each(1) , representing a:
-- 116% premium to the VWAP of all trades completed on ASX since
the options were listed (XCDOA) on 25 February 2020 up to and
including 6 May 2020.
-- The merger creates an Alaska focused oil explorer with:
-- a diversified portfolio of 3 key project areas; Project
Icewine, Yukon Leases and Project Peregrine at various stages of
project maturity;
-- Board, management and technical team with proven operational
capability and a track record for delivering on project objectives,
together with access to an extensive network of global and Alaskan
relationships - both business and technical; and
-- Increased scale, market presence, funding capability and
share trading liquidity across ASX and AIM.
-- XCD securityholders will hold approximately 20% of the combined group, thereby:
-- retaining exposure to the potential future upside of the
Brookian oil plays across both sets of assets;
-- mitigating and diversifying exploration risk whilst gaining
exposure to 88 Energy's assets, balance sheet and farm-out
expertise; and
-- benefiting from the combined group's strong exploration and
operating expertise, enhanced financial strength and the ability to
optimise exploration activity across an enlarged portfolio.
-- XCD Energy shareholders have entered into pre-bid acceptance
agreements with 88 Energy in respect of 18.5% of shares on issue
and 6.8% of listed options on issue.
Offer Terms
88 Energy Limited (ASX: 88E; AIM: 88E) ("88 Energy") and XCD
Energy Limited (ASX: XCD) ("XCD Energy") are pleased to announce
they have agreed to merge and have entered into a Bid
Implementation Agreement ("BIA") by which 88 Energy will offer to
acquire all of the fully paid ordinary shares and listed options on
issue in XCD Energy via and off-market takeover offer ("Offer")
under the Corporations Act 2001 (Cth) (the "Corporations Act"). A
copy of the BIA accompanies is available at the following link -
http://www.rns-pdf.londonstockexchange.com/rns/2081M_1-2020-5-6.pdf
Under the Offer, XCD Energy securityholders will receive
improved terms from 88E as outlined below:
-- 2.4 new 88 Energy shares for every XCD Energy share held ("Share Offer"); and
-- 0.7 new 88 Energy shares for every XCD Energy listed option held ("Option Offer"),
(together, the "Offers").
The Share Offer values the XCD Energy shares at 1.2 cents
each(4) , representing a:
-- 71% premium to the closing price of XCD Energy shares on ASX on 6 May 2020 of 0.7 cents;
-- 140% premium to the closing price of XCD Energy shares on ASX on 24 April 2020 of 0.5 cents5;
-- 143% premium to 30-day VWAP of XCD Energy share6; and
-- 55% premium to 60-day VWAP of XCD Energy share(6) .
Option Offer values the XCD Energy listed options at 0.35 cents
each(1) , representing an:
-- 116% premium to the VWAP of all trades completed on ASX since
the options were listed (XCDOA) on 25 February 2020 up to and
including 6 May 2020.
The Board of Directors of XCD Energy unanimously recommend to
XCD Energy shareholders and listed optionholders that they accept
the Offers, in the absence of a superior proposal and subject to
the independent expert concluding that the offer is fair and
reasonable or not fair but reasonable.
All of the Directors of XCD Energy intend to accept, or procure
the acceptance of, the Offers in respect of any XCD Energy shares
and listed options that they own or control, which represents in
aggregate 3.4 % of XCD Energy shares in issue and 3.6 % of XCD
Energy listed options in issue7, in the absence of a superior
proposal and subject to the independent expert concluding that the
offer is fair and reasonable or not fair but reasonable.
The Offers value the equity of XCD Energy at approximately $8.9
million(4) and deliver a substantial premium to XCD Energy
Shareholders and Optionholders, who will retain a 20% ownership and
participation in the future performance of the combined group.
1 Based on the closing price of 88 Energy shares on ASX of 0.5
cents on 6 May 2020. The implied value of the Share Offer and
Option Offer will change with fluctuations in the 88 Energy share
price.
2 XCD Energy closing price on 24 April 2020, the last trading
day prior to 88 Energy announcing its intention to make the
Offers
3 VWAP of XCD Energy shares is calculated for the period up to
and including the 24 April 2020, the last trading day prior to 88
Energy announcing its intention to make the Offers
4 Based on the closing price of 88 Energy shares on ASX of 0.5
cents on 6 May 2020. The implied value of the Share Offer and
Option Offer will change with fluctuations in the 88 Energy share
price.
5 XCD Energy closing price on 24 April 2020, the last trading
day prior to 88 Energy announcing its intention to make the
Offers
6 VWAP of XCD Energy shares is calculated for the period up to
and including the 24 April 2020, the last trading day prior to 88
Energy announcing its intention to make the Offers
(7) Mr Ferguson has confirmed that he intends to exercise those
XCD Energy Performance Rights (10M) referred to in the Bid
Implementation Agreement once vested, and then accept the XCD
Energy Shares issued on exercise into the Offers.
Strategic Rationale for the Transaction
The transaction creates an Alaska-focused oil exploration and
appraisal company with a diversified portfolio of three highly
prospective project areas: Project Icewine, Yukon Leases and
Project Peregrine and provides an attractive investment proposition
for existing and new shareholders.
Key benefits of the transaction include:
-- the creation of an established oil exploration and appraisal
company with an attractive and complementary portfolio of
exploration assets - at various stages of project maturity;
-- enhanced strategic, commercial, technical and financial
strength to optimise funding of operations, including an increased
level of liquidity and exposure to a larger global investor base
giving greater financing flexibility;
-- the ability to optimise operational activity across the
combined group's highly prospective exploration / appraisal
portfolio with potential synergies associated with future project
development and infrastructure requirements; and
-- a strong board, management and technical team with a proven
track record for advancing projects and delivering on milestones,
including two 3D and one 2D seismic survey, drilling of four
exploration wells safely and on budget over a 5 year period as well
as execution of farm-in/farm-out transactions.
88 Energy Managing Director, Mr David Wall, said the strategic
merit for the combination is clear:
"In a combined company, XCD Energy shareholders and listed
option holders will be able to leverage from 88 Energy's geological
and operational expertise, specific to the North Slope of Alaska,
where we have drilled four wells as Operator, safely and within
budget, and acquired several 2D and 3D seismic surveys over the
last five years. This includes extensive technical knowledge of the
regionally successful Brookian oil plays, in which 88 Energy
retains significant upside exposure via its highly prospective
portfolio of exploration/appraisal projects covering 330,000 net
acres (480,000 gross) co-located on the North Slope."
"88 Energy's Board is confident that merging the assets of 88
Energy and XCD Energy, combined with the potential upside offered,
places the combined group in a strong position to fill the growing
investment void in the ASX / AIM listed oil and gas sector."
XCD Energy Chairman, Mr Peter Stickland, said the transaction is
compelling for XCD Energy shareholders.
"In addition to a significant premium, the transaction provides
XCD Energy shareholders with the opportunity to become shareholders
of a company with significantly increased scale and demonstrated
operational capability that is focussed on the world class oil
potential of the North Slope of Alaska," said Mr Stickland.
"It allows our shareholders to continue to have a material
interest in the upside associated with the Brookian oil plays,
while mitigating and diversifying the subsurface and execution
exploration risks," he said.
"The XCD Energy Board believes that this transaction is in the
best interests of XCD Energy and unanimously recommends it to our
shareholders, in the absence of a superior proposal and subject to
the independent expert concluding that the offer is fair and
reasonable, or not fair but reasonable."
Transaction Details
The Offers are subject to only a limited number of conditions,
including a 90% minimum acceptance condition. The full list of
conditions to the Offers are set out in Schedule 2 of the BIA
attached to this announcement. Details of which conditions have
been varied from those advised in 88 Energy's initial ASX
announcement on 27 April 2020 are set out below.
The Share Offer will extend to all XCD Energy shares which come
into the bid class during the Offer period as a result of the
exercise of listed or unlisted options or the conversion of
performance rights held by XCD Energy executives (subject to
obtaining any necessary ASIC modifications), during the Offer
period. An Option Offer will be made in respect of the XCD Energy
listed options currently on issue.
88 Energy and XCD Energy have agreed to a deal protection regime
including no shop and no talk rights, a right to match any superior
offer and payment of an agreed break fee or reverse break fee of
A$150,000 in certain circumstances.
Further details regarding the Offers will be contained in the
Bidder's Statement, which will be sent to XCD Energy
securityholders. 88 Energy currently expects the Bidder's Statement
to be dispatched to XCD Energy securityholders in the coming
weeks.
Independent Board Committee
As advised in 88 Energy's initial ASX announcement on 27 April
2020 in relation to the Offers, the 88 Energy board of directors
has established an independent board committee to consider, amongst
other things, the terms of the revised takeover offer and the
application of ASX Listing Rule 10.1 and Chapter 2E of the
Corporations Act to the Offer ("Independent Board Committee"). The
Independent Board Committee is comprised of each of the directors
of 88 Energy, other than David Wall, the Managing Director, who
currently holds 29,395,800 XCD Energy shares and 2,500,000 XCD
Energy listed options.
The Independent Board Committee has independently assessed Mr
Wall's personal interest in XCD Energy and has determined that
Listing Rule 10.1 does not apply to the revised takeover offer
because Mr Wall's XCD Energy shares and listed options do not have
sufficient value for them to be classified as a "substantial asset"
for the purposes of Listing Rule 10.1.
Additionally, the Independent Board Committee has also
determined that Chapter 2E of the Corporations Act does not apply
because Mr Wall will receive the same consideration as all other
XCD Energy shareholders and listed option holders.
The Independent Board Committee approved the bid consideration
payable under the Offers based on its own determination on the
relative values of 88 Energy shares, and XCD Energy shares and
listed options, having taken advice from 88 Energy's corporate
adviser.
Michael Evans (through his controlled entities, Tevlo Pty Ltd
and Tour Holdings Pty Ltd) holds 4,000,000 shares in XCD Energy.
The Independent Board Committee formed the view (and Michael Evans
confirmed) that this holding was not significant enough to
constitute a material personal interest under the Corporations Act
and therefore did not preclude Mr Evans from being a member of the
Independent Board Committee.
Owing to Mr Wall's and Mr Evan's interest in XCD Energy shares
and XCD listed options, as detailed above, the Offers represent a
related party transaction pursuant to the AIM Rules for Companies.
Accordingly, Dr Steve Staley, the remaining independent director of
88 Energy, having consulted with the Company's nominated adviser,
Cenkos Securities plc, consider that the terms of the Offers are
fair and reasonable insofar as the Company's shareholders are
concerned.
88 Energy's Intentions
If the Offers are successful, XCD Energy will become a
wholly-owned subsidiary of 88 Energy.
Upon completion of the Offer, 88 Energy intends to continue to
pursue the exploration activities across both sets of assets,
including evaluation of their prospects, strategic relevance,
funding requirements and financial performance as soon as
possible.
Further details of 88 Energy's intentions will be included in
its Bidder's Statement.
Bid Implementation Agreement
As noted above, 88 Energy and XCD Energy have entered into the
BIA, a copy of which is available at the link above.
Under the terms of the BIA, the parties have agreed to customary
terms in relation to the conduct of the Offers, exclusivity and
break fees. In addition, the parties have agreed to certain
variations/waivers to the original conditions to the Offers
proposed by 88 Energy in its announcement on 27 April 2020 as set
out in clause 3.8 of the BIA. An update on the status of the
conditions to the Offers will be included in 88 Energy's Bidder's
Statement.
Pre-Bid Acceptance Deeds
88 Energy has entered into pre bid acceptance deeds with major
XCD Energy shareholders and listed option holders in respect of
18.5% of the XCD Energy shares and 6.8% of the XCD Energy listed
options on issue. Pursuant to these deeds, the relevant XCD listed
security holders have undertaken to accept the Offers, in the
absence of a superior proposal. Details of the security holders who
have executed pre-bid acceptance deeds with 88 Energy are set out
in 88 Energy's initial ASX announcement on 27 April 2020 in
relation to the Offers.
Timetable
It is expected that 88 Energy's Bidder's Statement and XCD
Energy's Target's Statement, containing further information about
the Offers, will be posted to XCD Energy Shareholders and Listed
Optionholders in around late-May 2020, with the Offers to open for
acceptance around that time.
Advisers
88 Energy is being advised by Longreach Capital as corporate
adviser and Steinepreis Paganin as the legal adviser in relation to
the Offers.
XCD Energy is being advised by Taylor Collison as corporate
adviser and GTP Legal as the legal adviser in relation to the
Offers.
Forward Looking Statements and Disclaimers
This announcement is for information purposes only and does not
constitute a prospectus or prospectus equivalent document. It is
not intended to and does not constitute, or form part of, an offer,
invitation or the solicitation of an offer to purchase or otherwise
acquire, subscribe for, sell or otherwise dispose of any
securities, or the solicitation of any vote or approval in any
jurisdiction, nor shall there be any offer, sale, issuance or
transfer of securities in any jurisdiction in contravention of any
applicable law.
This announcement contains forward looking statements. Forward
looking statements are often, but not always, identified by the use
of words such as "seek", "anticipate", "forecast", "believe",
"plan", "estimate", "expect" and "intend" and statements that an
event or result "may", "will", "should", "could" or "might" occur
or be achieved and other similar expressions.
The forward-looking statements in this announcement are based on
current expectations, estimates, forecasts and projections about 88
Energy and XCD Energy and the industry in which they operate. They
do, however, relate to future matters and are subject to various
inherent risks and uncertainties. Actual events or results may
differ materially from the events or results expressed or implied
by any forward-looking statements. The past performance of 88
Energy or XCD Energy is no guarantee of future performance.
None of 88 Energy, XCD Energy, or any of their directors,
officers, employees, agents or contractors makes any representation
or warranty (either express or implied) as to the accuracy or
likelihood of fulfilment of any forward looking statement, or any
events or results expressed or implied in any forward looking
statement, except to the extent required by law.
You are cautioned not to place undue reliance on any
forward-looking statement. The forward-looking statements in this
announcement reflect views held only as at the date of this
announcement.
This announcement has been authorised by the respective Boards
of 88 Energy and XCD Energy as well as the Independent Board
Committee of 88 Energy.
88 Energy Limited
Dave Wall Longreach Capital (Adviser to the
Managing Director Transaction)
88 Energy Ltd Darren Martin
Tel: +61 412 144 719
Media and Investor Relations:
88 Energy Ltd
Dave Wall, Managing Director Tel: +61 8 9485 0990
Email: admin@88energy.com
Finlay Thomson ,
Investor Relations Tel: +44 7976 248471
Cenkos Securities Cenkos Securities Tel: + 44 131 220 6939
Neil McDonald/Derrick Lee
XCD Energy Limited
Dougal Ferguson Taylor Collison (Adviser to the
Managing Director Transaction)
XCD Energy Ltd Matthew Davies
Tel: +61 8 8217 3912
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCKKABDNBKBAPK
(END) Dow Jones Newswires
May 07, 2020 02:00 ET (06:00 GMT)
Grafico Azioni 88 Energy (LSE:88E)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni 88 Energy (LSE:88E)
Storico
Da Apr 2023 a Apr 2024