(All financial figures are approximate and in Canadian dollars
unless otherwise noted.) CALGARY, Jan. 16, 2012 /CNW/ - Pembina
Pipeline Corporation ("Pembina") and Provident Energy Ltd.
("Provident") are pleased to announce they have entered into an
agreement (the "Arrangement Agreement") for Pembina to acquire all
of the issued and outstanding common shares of Provident (the
"Provident Shares") by way of a plan of arrangement under the
Business Corporations Act (Alberta) (the "Arrangement") to create
an integrated company that will be a leading player in the North
American energy infrastructure sector. Upon the successful
completion of this transaction Pembina intends to increase its
monthly dividend rate from $0.13 per share per month (or $1.56
annualized) to $0.135 per share per month (or $1.62 annualized)
representing a 3.8% increase and reflecting management's confidence
in the significant operational and financial strength of the
combined entity going forward. Transaction Description Under the
terms of the Arrangement Agreement, Provident shareholders will
receive 0.425 of a Pembina share for each Provident share held (the
"Provident Exchange Ratio"). Based on the January 13, 2012 TSX
closing share price of Pembina of $27.90, the Provident Exchange
Ratio represents a premium of 24.7% to Provident's closing TSX
share price on January 13, 2012 of $9.51. Based on the 20-day
weighted average TSX share price of Pembina of $29.11, the
Provident Exchange Ratio represents a premium of 26.2% to
Provident's 20-day weighted average TSX share price of $9.80. The
proposed transaction is expected to immediately increase Pembina's
cash flow per share, increase its dividends per share and reduce
its dividend payout ratio. After completion of the proposed
transaction the combined assets and employees will operate under
the Pembina name and will be led by a combination of Pembina's and
Provident's executive team. Under the Arrangement Agreement,
Pembina will also assume all of the rights and obligations of
Provident relating to: (i) the 5.75% convertible unsecured
subordinated debentures of Provident maturing December 31, 2017,
and (ii) the 5.75% convertible unsecured subordinated debentures of
Provident maturing December 31, 2018 (collectively, the "Provident
Debentures"). The conversion price of each class of Provident
Debentures will be adjusted pursuant to the terms of the trust
indenture governing the Provident Debentures based on the Provident
Exchange Ratio. Following closing of the transaction, Pembina
intends to make an offer for the Provident Debentures at 100
percent of their principal values plus accrued and unpaid interest.
The repurchase offer will be made within 30 days of closing of the
proposed transaction. Should a holder of the Provident Debentures
elect not to accept the repurchase offer, the debentures will
mature as originally set out in their respective indentures.
Holders who convert their Provident Debentures following completion
of the Arrangement will receive common shares of Pembina. In
addition, Provident will immediately suspend its premium dividend
reinvestment plan and dividend reinvestment plan. The Combined
Entity Based on the Provident Exchange Ratio and Pembina's share
price quoted above, the combined company will have a market
capitalization of $7.9 billion and total enterprise value of $10
billion, making it one of the largest publicly traded energy
infrastructure companies in Canada. "Provident's assets, employees,
customers and growth projects are an outstanding fit for Pembina,"
said Bob Michaleski, President and Chief Executive Officer of
Pembina. "The proposed transaction integrates our energy
transportation and gas processing businesses with Provident's suite
of services including natural gas liquids (NGL) extraction,
fractionation, storage, transportation and logistics, and will
significantly accelerate our growth capital plans for these
business segments. Our expanded footprint will provide greater
access to natural gas liquids markets across North America, and
will allow us to offer customers a significantly expanded spectrum
of energy services." "This is a logical transaction that leverages
off Provident's strong growth as a pure play midstream business,"
said Doug Haughey, President and Chief Executive Officer of
Provident. "It generates substantial value for Provident
shareholders and brings together two organizations with
complementary strategies and assets. The result will be one
of the strongest energy infrastructure players in Canada.
Provident's shareholders will participate in a larger entity that
has the capability to pursue larger and more complex growth
projects, has exposure to more elements of the energy
infrastructure value chain, and offers greater liquidity and
presence in the capital markets. Based on Pembina's current
dividend rate and the Provident Exchange Ratio, Provident's
shareholders will receive an increase in dividends per share
relative to Provident's current dividend." Benefits of the
Combination The proposed transaction is expected to provide Pembina
shareholders with an increase in cash flow per share, increased
dividends per share and reduce Pembina's payout ratio, while giving
Provident shareholders a significant premium and a 27.5% increase
in monthly cash dividends on a per share basis after taking into
account the Provident Exchange Ratio (compared to the level of
dividends currently received by Provident Shareholders). The
combined entity will create one of the largest publicly traded
energy infrastructure companies in Canada, offering the following
benefits for shareholders of both Pembina and Provident: -- Scale
and Scope: A substantially larger, and more diversified portfolio
of businesses across the energy infrastructure value chain; --
Complete Value Chain: A highly integrated suite of services being
offered to customers through the combination of Pembina's liquids
transportation, gas services, and midstream and marketing segments
and Provident's capabilities in NGL extraction, fractionation,
storage, transportation and logistics permitting both a
diversification of business and strengthening the value proposition
for its shareholders and customers; -- Key Growth Areas: Extensive
energy infrastructure businesses located in key growth regions
including: Montney, Duvernay, Alberta Deep Basin, Pelican Lake
heavy oil, Athabasca oil sands, Cardium, Swan Hills, Bakken,
Marcellus and Utica; -- Expanded Footprint: Greater access to NGL
barrels as well as increased capability to store, process and
market barrels across key North America hubs including Edmonton,
Sarnia and Mont Belvieu. The pro forma company will have operations
in key market areas for NGL and crude oil in close proximity to
pipelines, rail and truck facilities, storage, fractionation,
petrochemical and refining customers; -- Strong Leadership Team: An
experienced management team with a strong focus on being a
responsible, reliable operator and a trusted member of the
community; -- Substantial Growth Opportunities: A larger entity
capable of pursuing more complex growth projects at an accelerated
pace including an aggregate capital program of approximately $700
million of announced spending in 2012 (Pembina: $550 million,
Provident: $150 million). Major near-term projects include: o
Saturn and Resthaven liquids extraction facilities; o Peace NGL
pipeline expansion; o Redwater liquids storage development; o
Redwater fractionator capacity expansion; -- Strong Synergies: The
combined entities will generate substantial synergies: o The
ability to leverage technical, commercial and operational skills
from both Pembina and Provident over the combined asset base,
achieving cost savings and operating efficiencies; o Synergies that
will be realized by more fully connecting, integrating and
utilizing the current and future asset bases of both companies; o
Corporate cost synergies through the consolidation of head offices,
the decrease of Provident debt service costs, and the elimination
of costs associated with Provident's public company costs; o
Capital efficiencies through the allocation of capital expenditures
to the highest return projects. -- Superior Financial Platform: The
pro forma company will generate a diversified stable cash flow
stream and enjoy a very strong balance sheet with pro forma 2011
senior debt to EBITDA of approximately 2.4x. Due to the continued
success of producers drilling for liquids rich natural gas and the
increase in field liquids extraction, the amount of NGL being
produced in the Western Canadian Sedimentary Basin has increased
significantly. To meet the growing need of producers in the region,
Pembina expects that on closing of the proposed transaction, it
will begin development of a new 65,000 bpd fractionator at
Provident's Redwater site, which is anticipated to be in-service by
mid 2014 pending continued customer support and subject to required
regulatory and environmental approvals. Canadian and U.S. Tax
Considerations for Provident Shareholders The Arrangement Agreement
has been structured to allow Provident shareholders to receive
Pembina shares generally on a tax-deferred basis for Canadian
income tax purposes. In addition, the Arrangement Agreement
has been structured so that the Arrangement will qualify as a
tax-free transaction for U.S. federal income tax purposes. If the
Arrangement qualifies as a tax-free transaction, Provident
shareholders who receive Pembina shares will not be required to
recognize gain and will not be permitted to recognize loss.
However, there can be no assurance that the U.S. Internal Revenue
Service will not challenge the treatment of the Arrangement as a
tax-free transaction. About the Transaction The Boards of Directors
of Pembina and Provident have each unanimously (other than the
directors who have recused themselves from the process of
considering the proposed transaction) approved the Arrangement
Agreement and have concluded that the proposed transaction is in
the best interests of Pembina and Provident, respectively.
The Boards of Directors of each Pembina and Provident are expected
to provide written recommendations that their respective
shareholders vote their shares in favor of the Arrangement (or, in
the case of Pembina, the issuance of Pembina shares in connection
with the Arrangement) in the joint information circular to be
prepared and mailed by Pembina and Provident in connection with the
proposed transaction. In addition, each of the Directors
(other than those that have recused themselves from the process of
considering the transaction) and Executive Officers of Pembina and
Provident have agreed to vote their shares in favor of the proposed
transaction. The proposed transaction will be carried out by way of
a court-approved plan of arrangement and will require the approval
of at least 66 2/3% of holders of Provident Shares represented in
person or by proxy at a special meeting of Provident shareholders
(the "Provident Meeting") to be called to consider the
Arrangement. It is expected that the proposed transaction
will be exempt from the registration requirements of the U.S.
Securities Act of 1933, as amended, pursuant to the court approval
exemption afforded by section 3(a)(10) under that Act. The proposed
transaction is also subject to obtaining the approval of a majority
of the votes cast by the holders of Pembina Shares at a special
meeting of Pembina shareholders (the "Pembina Meeting") to be
called to consider the issuance of Pembina shares in connection
with the proposed transaction. In addition to shareholder and court
approvals, the proposed transaction is subject to applicable
regulatory approvals and the satisfaction of certain other closing
conditions customary in transactions of this nature, including
compliance with the Competition Act (Canada) and the acceptance of
the Toronto Stock Exchange (the "TSX"). Further information
regarding the proposed transaction will be contained in a joint
information circular that Pembina and Provident will prepare, file
and mail in due course to their respective shareholders in
connection with the Pembina Meeting and Provident Meeting. It is
expected that the Provident Meeting and the Pembina Meeting will
take place in late March, 2012, with closing expected to occur as
soon as possible thereafter subject to regulatory approval.
All shareholders are urged to read the information circular once it
becomes available as it will contain additional important
information concerning the proposed transaction and the
Arrangement. A copy of the Arrangement Agreement will be filed on
Pembina and Provident's SEDAR profile and will be available for
viewing at www.sedar.com. Pembina expects to apply to list Pembina
shares issuable under the proposed transaction on the Toronto Stock
Exchange ("TSX") on closing and Pembina will apply to list its
shares on the New York Stock Exchange ("NYSE"). It is anticipated
that the Provident Shares will be delisted from the TSX and the
NYSE following completion of the Arrangement. Management and Staff
The combined entity will be led by Bob Michaleski, President and
Chief Executive Officer of Pembina, and a combination of Pembina's
and Provident's executive teams. Due to the complementary nature of
the businesses, Pembina plans to make employment offers to
substantially all of Provident's employees. Board of Directors
Subject to a successful completion of the proposed transaction,
each of Mr. Grant D. Billing and Mr. Jeffrey T. Smith, current
members of the Provident Board of Directors, have advised that they
will accept positions on the Pembina Board. Mr. Billing is
currently Chairman and formerly CEO of Superior Plus Corp. Mr.
Smith is an independent businessman and is currently a director of
Pace Oil & Gas Ltd. Mr. Billing and Mr. Smith have
extensive experience in operations, finance, mergers and
acquisitions, governance, human resources and compensation, and
environment, health and safety. Mr. Randy Findlay, currently a
director of both Pembina and Provident, will continue as a director
of Pembina. Advisors Scotia Waterous Inc. is acting as financial
advisor to Pembina with respect to the proposed transaction. Scotia
Waterous Inc. has advised the Board of Directors of Pembina that it
is of the opinion, as of the date hereof, that the consideration to
be offered to Provident's shareholders pursuant to the proposed
transaction is fair to Pembina's shareholders from a financial
point of view. Blake, Cassels & Graydon LLP is acting as
Canadian legal advisor to Pembina and Paul, Weiss, Rifkind, Wharton
& Garrison LLP is acting as United States legal advisor to
Pembina. TD Securities Inc. is acting as financial advisor to
Provident with respect to the proposed transaction. The Board of
Directors of Provident have received a verbal opinion from TD
Securities Inc. that the consideration to be paid to the Provident
shareholders is fair from a financial point of view to the
Provident shareholders and that the Arrangement is fair from a
financial point of view to Provident Debentureholders. Norton Rose
Canada LLP is acting as Canadian legal advisor to Provident and
Andrews Kurth LLP and Dorsey and Whitney LLP are acting as United
States legal advisors to Provident. Conference Call & Webcast A
conference call and webcast to discuss the proposed transaction has
been scheduled for today, January 16, 2012, at 8:00 AM MT (10:00 AM
ET) for interested investors, analysts, brokers and media
representatives. The conference call dial-in numbers for Canada and
the U.S. are 1-647-427-7450 or 1-888-231-8191. A recording of
the conference call will be available for replay until January 23,
2012 at 11:59 p.m. ET. To access the replay, please dial either
1-416-849-0833 or 1-855-859-2056 and enter the password 43679009. A
live webcast of the conference call can be accessed on Pembina's
website at www.Pembina.com under Investor Centre, Presentation
& Events, or by entering
http://event.on24.com/r.htm?e=396357&s=1&k=B3214FEB4EF90682F77930394EBC6A16
in your web browser. Shortly after the call, an audio archive will
be posted on the website for 90 days. About Pembina Pembina
Pipeline Corporation transports crude oil and natural gas liquids
produced in western Canada, owns and operates oil sands pipelines,
and has a growing presence in the midstream and marketing and gas
services sectors. Pembina's common shares and convertible
debentures are traded on the Toronto Stock Exchange under the
symbols PPL and PPL.DB.C respectively. About Provident Provident
Energy Ltd. is a Calgary-based corporation that owns and manages a
natural gas liquids (NGL) infrastructure and logistics business.
Provident's facilities are strategically located in Western Canada
and in the premium NGL markets in Eastern Canada and the U.S.
Provident provides monthly cash dividends to its shareholders and
trades on the Toronto Stock Exchange and the New York Stock
Exchange under the symbols PVE,PVE.DB.E,PVE.DB.F and PVX,
respectively. Forward-Looking Statements & Information This
press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws and are based on the expectations, estimates and
projections of management of the parties as of the date of this
news release unless otherwise stated. The use of any of the words
"expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends" and similar expressions are intended to identify
forward-looking statements or information. More particularly and
without limitation, this press release contains forward-looking
statements and information concerning: the anticipated benefits of
the Arrangement to Provident and its securityholders and to Pembina
and its securityholders, including anticipated synergies; the
timing and anticipated receipt of required regulatory, court and
securityholder approvals for the transaction; the ability of
Provident and Pembina to satisfy the other conditions to, and to
complete, the Arrangement; the anticipated timing of the mailing of
the joint information circular regarding the Arrangement, the
holding of the Provident Meeting and the Pembina Meeting and the
closing of the Arrangement, the listing of Pembina's shares on the
NYSE, and the development and anticipated in service date of the
planned fractionator at Provident's Redwater site. In respect of
the forward-looking statements and information concerning the
anticipated benefits and completion of the proposed Arrangement,
the anticipated timing for completion of the Arrangement and the
listing of Pembina's shares on the NYSE, Pembina and Provident have
provided such in reliance on certain assumptions that they believe
are reasonable at this time, including assumptions as to the time
required to prepare and mail securityholder meeting materials,
including the required joint information circular; the ability of
the parties to receive, in a timely manner, the necessary
regulatory, court, securityholder, stock exchange and other third
party approvals, including but not limited to the receipt of
applicable competition approvals; the ability of the parties to
satisfy, in a timely manner, the other conditions to the closing of
the Arrangement; and expectations and assumptions concerning, among
other things: customer demand for the combined company's services;
commodity prices and interest and foreign exchange rates; planned
synergies, capital efficiencies and cost-savings; applicable tax
laws; future production rates; the sufficiency of budgeted capital
expenditures in carrying out planned activities; and the
availability and cost of labour and services. The anticipated
dates provided may change for a number of reasons, including
unforeseen delays in preparing meeting materials, inability to
secure necessary securityholder, regulatory, court or other third
party approvals in the time assumed or the need for additional time
to satisfy the other conditions to the completion of the
Arrangement. In respect of the forward-looking statements and
information concerning the development and anticipated in service
date of the planned fractionator at Provident's Redwater site,
Pembina and Provident have provided such in reliance on certain
assumptions that they believe are reasonable at this time,
including assumptions that there are no unforeseen events
preventing or hindering the development of the fractionator; and
that there are no unforeseen construction complications related
thereto the facility. Accordingly, readers should not place undue
reliance on the forward-looking statements and information
contained in this press release. In respect of the forward-looking
statements and information concerning the potential increase in
Pembina's dividend following completion of the Arrangement, Pembina
and Provident have provided such in reliance on certain assumptions
that they believe are reasonable at this time, including
assumptions in respect of: prevailing commodity prices, margins and
exchange rates; that Pembina's and Provident's future results of
operations will be consistent with past performance and management
expectations in relation thereto; the continued availability of
capital at attractive prices to fund future capital requirements
relating to existing assets and projects, including but not limited
to future capital expenditures relating to expansion, upgrades and
maintenance shutdowns; the success of growth projects; future
operating costs; that counterparties to material agreements will
continue to perform in a timely manner; that there are no
unforeseen events preventing the performance of contracts; and that
there are no unforeseen material construction or other costs
related to current growth projects or current operations. Since
forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to the risks associated with the
industries in which Pembina and Provident operate in general such
as: operational risks; delays or changes in plans with respect to
growth projects or capital expenditures; costs and expenses;
health, safety and environmental risks; commodity price, interest
rate and exchange rate fluctuations; environmental risks;
competition; failure to realize the anticipated benefits of the
Arrangement and to successfully integrate Pembina and Provident;
ability to access sufficient capital from internal and external
sources; and changes in legislation, including but not limited to
tax laws and environmental regulations. Risks and uncertainties
inherent in the nature of the Arrangement include the failure of
Provident or Pembina to obtain necessary securityholder,
regulatory, court and other third party approvals, or to otherwise
satisfy the conditions to the Arrangement, in a timely manner, or
at all. Failure to so obtain such approvals, or the failure
of Provident or Pembina to otherwise satisfy the conditions to the
Arrangement, may result in the Arrangement not being completed on
the proposed terms, or at all. In addition, the failure of
Provident to comply with the terms of the Arrangement Agreement may
result in Provident being required to pay a non-completion or other
fee to Pembina, the result of which could have a material adverse
effect on Provident's financial position and results of operations
and its ability to fund growth prospects and current operations.
Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on other factors that could
affect the operations or financial results of the parties, and the
combined company, are included in reports on file with applicable
securities regulatory authorities, including but not limited to;
Provident's Annual Information Form for the year ended December 31,
2010 and Pembina's Annual Information Form for the year ended
December 31, 2010 each of which may be accessed on Provident's and
Pembina's SEDAR profile, respectively, at www.sedar.com. The
forward-looking statements and information contained in this press
release are made as of the date hereof and the parties undertake no
obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise, unless so required by applicable
securities laws. Non-GAAP Measures: In this news release, the term
EBITDA (earnings before interest, taxes, depreciation and
amortization) is used, which is a term that is not defined by
Generally Accepted Accounting Principles (GAAP). EBITDA is
commonly used by management, investors and creditors in the
calculation of ratios for assessing leverage and financial
performance and is calculated as results from operating activities
plus share of profit from equity accounted investees (before tax)
plus depreciation and amortization (included in operations and
general and administrative expense). Investors should be cautioned
that EBITDA should not be construed as alternatives to net
earnings, cash flow from operating activities or other measures of
financial results determined in accordance with GAAP as an
indicator of performance. Furthermore, non-GAAP measures may not be
comparable to similar measures presented by other issuers. IRS
Circular 230 disclosure: To ensure compliance with requirements
imposed by the IRS, we inform you that any U.S. federal tax advice
contained in this communication (including any attachments) is not
intended or written to be used, and cannot be used, for the purpose
of (i) avoiding penalties under the Internal Revenue Code or (ii)
promoting, marketing or recommending to another party any
transaction or matter addressed herein. Pembina Pipeline
Corporation CONTACT: Pembina Provident Investor Inquiries: Investor
and Media Inquiries:Scott Burrows Raina VitanovManager, Corporate
Development Manager, Investor Relations(403) 231-7500 Ashley
Nuell1-888-428-3222 Investor Relations &e-mail:
investor-relations@pembina.com Communications Analyst(403)
231-6710Media Inquiries: email: info@Providentenergy.comShawn
DavisManager, Communications & PublicAffairs(403) 231-7500
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