TIDMIAE
RNS Number : 3325Z
Ithaca Energy Inc
14 March 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS IN THAT JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014).
Ithaca Energy Inc.
Directors' Circular Issued - Recommended Takeover by Delek
14 March 2017
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the
"Company") announces that it will today mail to shareholders the
Directors' Circular in respect of the previously announced cash
takeover offer by Delek Group Ltd ("Delek") for all of the issued
and to be issued common shares of the Company not currently owned
by Delek or any of its affiliates for C$1.95 per share (the
"Offer"). This Offer equates to GBP1.19 per share based on the
exchange rate on 10 March 2017(1) .
The Offer is being made by DKL Investments Limited (the
"Offeror"), an affiliate of Delek, which is currently Ithaca's
largest shareholder and holds approximately 19.7% of the currently
issued and outstanding common shares of the Company.
As previously announced, the Board of Directors excluding the
Delek related party directors (the "Directors"), after consulting
with its financial and legal advisers, considers the terms of the
Offer to be in the best interests of Ithaca and its shareholders
and accordingly unanimously recommends that shareholders accept the
Offer and deposit their shares.
The Directors of Ithaca have agreed to an initial deposit period
of 36 days. As such, the Offer will be open for acceptance until
17.00 (Toronto time) on 20 April 2017 (the "Expiry Time").
Shareholders wishing to accept the Offer must take action to
deposit their shares.
Successful completion of the Offer is conditional upon, amongst
other things, more than 50% of the common shares outstanding
(excluding the shares already owned by the Offeror and its
affiliates) being validly deposited under the Offer prior to the
Expiry Time (the "Minimum Tender Condition"). No deposited shares
will be purchased by the Offeror if the Minimum Tender Condition is
not satisfied.
The Offeror has today also launched the Offer by mailing the
takeover bid circular containing the Offer and other related
documents to Ithaca shareholders.
Full details of the Offer are contained in the documents noted
above, all of which are available on the Company's website
(www.ithacaenergy.com) and on SEDAR (www.sedar.com).
Brad Hurtubise, Non-Executive Chairman, commented:
"The unanimous recommendation of the independent Directors to
support the takeover offer was made after careful evaluation and
deliberation. The principal reasons for this recommendation are
based on the fullness of the Offer relative to the future upsides
and execution risks of the business. We firmly believe that it
provides all shareholders with a highly attractive opportunity to
secure a premium, risk free cash value for their investment at a
favourable point in the Company's evolution."
Reasons to Accept the Offer
In reaching its unanimous recommendation to shareholders to
accept the Offer, the Directors evaluated multiple factors,
including those summarised below. The evaluation and its conclusion
was made in light of the Directors' own knowledge of the business,
the industry and the financial condition and prospects of the
Company and based upon the recommendation of a special committee of
independent directors ("the Special Committee"), which has been
advised by RBC Capital Markets ("RBC") in its capacity as financial
advisor to the Company.
The principal reasons for the recommendation are centred on an
evaluation of the fullness of the Offer relative to the future risk
profile of the business.
-- Offer Price at the Upper End of Independent Valuation Range.
The Special Committee engaged GMP FirstEnergy, as an independent
valuator, to prepare a formal valuation in connection with the
Offer in accordance with Multilateral Instrument 61-101 Protection
of Minority Security Holders in Special Transactions ("MI 61-101").
GMP FirstEnergy was of the opinion that, as of 9 March 2017, the
fair market value of the common shares was in the range of C$1.60
to C$2.10 per common share.
-- Premium to Analyst Consensus Price Targets. The Offer price
represents a premium of approximately 20% to the average analyst
consensus target price of C$1.60 per share as at 3 February 2017(2)
.
-- Favourable Transaction Timing. The consideration payable for
oil and gas company transactions is driven predominantly by
calculations of discounted future cash flows, with risk factors
applied to development projects dependent on remaining
uncertainties. For this reason, the Directors consider entering
into the transaction shortly before Stella first hydrocarbons to be
highly advantageous for realizing full value without taking
exposure to post start-up operational risk.
-- Avoidance of Operational and Refinancing Risks. The Company
has near term operational and re-financing execution risks ahead of
it, the most immediate of which include: bringing the Stella field
into full production in line with expectations; executing Harrier
development drilling on budget and with reservoir performance in
line with expectations; and, refinancing the aggregate
approximately US$910 million(3) of existing bank facilities, senior
notes and prepayment facilities. While the Company expects it would
be able to successfully navigate such risks, the Directors do not
consider that the resultant shareholder value creation is likely to
be sufficiently in excess of the Offer Price to compensate for
taking such risks.
-- Reliance on Greater Stella Area Satellites. The Company
intends to build out the Greater Stella Area ("GSA") production hub
through securing satellite field tie-backs. If these are not
secured, the potential benefits of the hub will be diluted. One of
the anticipated near term tie-backs, Vorlich, is not solely under
the control of the Company. While the Company believes the most
efficient development solution for the Vorlich field is a tie-back
to the GSA infrastructure, the field development plan has yet to be
agreed with the operator, who owns other infrastructure in the
area, and the UK Oil and Gas Authority. The potential impact of
this risk has been considered by the Directors in recommending the
Offer.
-- Future Growth Potential. Notwithstanding the successful track
record of the Company, at this point in the lifecycle of the UK
Continental Shelf oil and gas sector, the Directors believe that
there are limited prospects for delivering a step change in the
scale and operations of the Company without the addition of
significant capital. There can be no guarantee that such capital
would be available to the Company in the timeframes or on the terms
required to provide shareholders with the prospect of a
satisfactory equity rate of return.
-- Review of Alternatives. The Special Committee, after thorough
review and discussion with its financial advisor, believes that
there are limited prospects for alternative transactions that
provide an immediate premium cash consideration to shareholders
given the lack of potential acquirers of UK North Sea oil and gas
companies.
-- Immediate Cash Premium to Shareholders. The Offer provides
shareholders with the opportunity to crystallise the value of their
holdings in cash, with the Offer price representing a 12% premium
to the Toronto Stock Exchange closing price on the 3 February 2017
(being the last trading day before announcement of the Offer) and a
27% premium to the 60 day volume weighted average trading price to
3 February 2017.
-- Capitalising on Share Price Appreciation. The Offer allows
shareholders to capitalise in cash on the value of the Company's
sustained share price growth over the last 12 months, with the
Offer price of C$1.95 per share being more than 360% higher than
the 30 day volume weighted average trading price to 6 February
2016.
A fuller explanation of the reasons underlying the
recommendation to accept the Offer is contained in the Directors'
Circular, along with a full summary of the definitive support
agreement entered into between Ithaca and Delek on 6 February
2017.
The Directors' Circular also sets out other factors concerning
the Offer that shareholders should be aware of, including:
-- There is no obligation on the Offeror to complete a
compulsory acquisition of any shares not tendered to the Offer.
-- While the AIM Rules for Companies ("AIM Rules") do not
prescribe the required levels of free float for a company to be
eligible for trading on AIM, depending on the number of shares
purchased pursuant to the Offer it is possible that the subsequent
remaining free float could be insufficient to satisfy the criteria
for continued admission of the shares for trading on AIM.
-- If the Offeror acquires sufficient shares under the Offer it
could be in a position to force delisting or cancellation of the
Company's shares from AIM. Under the AIM Rules, cancellation of a
company's shares from trading on AIM is generally conditional upon
the consent of not less than 75% of votes cast by its shareholders
given in a shareholder meeting.
-- The rules of the Toronto Stock Exchange ("TSX") establish
certain criteria, which if not met, could lead to the cessation of
trading and delisting of the Company's shares from the TSX.
Lock-Up Agreements
Based on the reasons underpinning the Directors' recommendation,
all the Directors and officers of Ithaca have entered into lock-up
agreements under which they have irrevocably undertaken to tender
their own beneficial shareholdings in the Company, which amount in
aggregate to 11,275,940 common shares (excluding common shares
issued under options with an exercise price higher than the Offer
price), representing approximately 2.6% of the entire issued and to
be issued common shares of Ithaca. The lock-up agreements are
subject to customary termination provisions. There are no
agreements or arrangements in place between the Directors and
officers of Ithaca and Delek providing any payment or other benefit
proposed to be made or given by way of compensation for loss of
office or their remaining in or retiring from office if the Offer
is successful.
Information on Depositing Your Shares
The Offeror has engaged Computershare Trust Company of Canada to
act as depositary (the "Depositary") for the Offer. If assistance
is required with depositing shares, the Depositary can be contacted
on +1 800 564 6253 or +1 514 982 7555 (collect calls accepted) or
by e-mail at corporateactions@computershare.com. Shareholders who
hold AIM market Depository Interests who require assistance
depositing their shares should contact the Depository on +44 (0)370
703 6347 or RD:IR at corporateactions@rdir.com.
Questions can also be directed to the information agents, Laurel
Hill Advisory Group and RD:IR. Laurel Hill Advisory Group can be
contacted on +1 877 452 7184 (within North America) or +1 416 304
0211 (outside of North America) or by e-mail at
assistance@laurelhill.com. RD:IR can be contacted on +44 (0)207 492
0518 or by email at corporateactions@rdir.com.
2016 Financial Results
The Company is scheduled to release its full year 2016 financial
results on 23 March 2017 along with the results of its year-end
independent reserves evaluation, which is being performed by
Sproule International Limited ("Sproule"). A full operations update
will also be provided, including up to date information on the
initial performance of the Stella field and the status of
operations on the on-going dynamic commissioning programme of the
FPF-1 gas processing and compression facilities.
A conference call and webcast for investors and analysts will be
held on the same day at 12.00 GMT (08.00 EDT), with a playback
facility being made available on the Company's website later that
day. Listen to the call live via the Company's website
(www.ithacaenergy.com) or alternatively dial-in on one of the
following telephone numbers and request access to the Ithaca Energy
conference call: UK +44 (0)203 059 8125 ; Canada +1 855 287 9927;
US +1 724 928 9460.
-S -
Enquiries:
Ithaca Energy
Les Thomas lthomas@ithacaenergy.com +44 (0)1224 650 261
Graham Forbes gforbes@ithacaenergy.com +44 (0)1224 652 151
Richard Smith rsmith@ithacaenergy.com +44 (0)1224 652 172
FTI Consulting
Edward Westropp edward.westropp@fticonsulting.com +44 (0)203 727 1521
Kim Camilleri kim.camilleri@fticonsulting.com +44 (0)203 727
1349
RBC Capital Markets
Matthew Coakes matthew.coakes@rbccm.com +44 (0)207 653 4000
Martin Copeland martin.copeland@rbccm.com +44 (0)207 653 4000
Cenkos Securities
Neil McDonald nmcdonald@cenkos.com +44 (0)207 397 8900
Beth McKiernan bmckiernan@cenkos.com +44 (0)131 220 9778
Nick Tulloch ntulloch@cenkos.com +44 (0)131 220 9772
Notes
1. Closing exchange rate source: Capital IQ
2. The average analyst consensus target price as of 3 February
2017, being the last trading day prior to announcement of the
Offer, is calculated based on the targets produced by the
institutions that cover the Company, being: Barclays, BMO,
Canaccord Genuity, Cenkos, FinnCap, GMP FirstEnergy, Investec,
Mackie Research Capital Corporation, Macquarie, Peel Hunt, RBC.
Price targets quoted in pounds sterling have been converted to
Canadian dollars using the exchange rate on 3 February 2017.
3. The aggregate amount includes the Company's existing US$535
million senior reserves base lending facility, US$300 million
senior unsecured loan notes and approximately US$75 million oil and
gas prepayment facilities.
Advisors
RBC is acting as financial advisor to the Company and has
delivered a fairness opinion addressed to the Special Committee.
GMP FirstEnergy is acting as the formal valuator under the terms of
MI 61-101. Pinsent Masons LLP and Burstall Winger Zammit LLP are
acting as legal counsel to Ithaca. The Company has also received
strategic advice from Geopoint Advisory Limited.
About Ithaca Energy
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) is a North Sea oil
and gas operator focused on the delivery of lower risk growth
through the appraisal and development of UK undeveloped discoveries
and the exploitation of its existing UK producing asset portfolio.
Ithaca's strategy is centred on generating sustainable long term
shareholder value by building a highly profitable 25kboe/d North
Sea oil and gas company. For further information please consult the
Company's website www.ithacaenergy.com.
About Delek
The Delek Group, Israel's dominant integrated energy company, is
the pioneering leader of the natural gas exploration and production
activities that are transforming the Eastern Mediterranean's Levant
Basin into one of the energy industry's most promising emerging
regions. Having discovered Tamar and Leviathan, two of the world's
largest natural gas finds since 2000, Delek and its partners are
now developing a balanced, world-class portfolio of exploration,
development and production assets. Delek's head office is located
at 19 Abba Eban Blvd., P.O.B. 2054, Herzeliya 4612001, Israel.
Forward-Looking Statements
This announcement may contain, in addition to historical
information, certain forward-looking statements related to the
Company, including anticipated future events and circumstances,
including in particular, but not limited to, statements relating to
the Offer, satisfaction of the conditions to the Offer, certain
strategic and financial benefits expected to result from the
completion of the proposed acquisition by the Offeror of more than
50% of the outstanding common shares not already owned by the
Offeror or its affiliates and the intentions, and plans and future
actions of the Company, the Offeror and Delek. Forward-looking
information is provided to assist the reader with understanding the
Company's expectations, plans and priorities for future periods or
with respect to applicable events. Readers are cautioned that such
information may not be appropriate for other purposes. This
information is based on the estimates, beliefs and assumptions of
the directors and management of the Company regarding the markets
in which the Company operates. In some cases, forward-looking
information may be identified by words such as "anticipate",
"believe", "could", "expect", "plan", "seek", "may", "intend",
"will", "forecast" and similar expressions.
Such forward looking statements are subject to known and unknown
risks, uncertainties and other factors that could cause actual
results, performance or achievements of Ithaca to differ materially
from any future results, performance or achievements expressed or
implied by such forward looking statements, including the risk that
all conditions of the Offer will not be satisfied. Many of these
risks and uncertainties relate to factors that are beyond Ithaca's
ability to control or estimate precisely, such as future market
conditions, changes in regulatory environment, the behaviour of
other market participants and the failure to satisfy the conditions
to completion of the Offer (including the Minimum Tender Condition
and receiving any required regulatory approvals), the risk of
unexpected costs or liabilities relating to the Offer. Some of
these risk factors are largely beyond the control of the Company.
These are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in
any of the Company's forward-looking statements. Other unknown and
unpredictable factors could also impact its results. Ithaca cannot
give any assurance that such forward-looking statements will prove
to have been correct. The reader is cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this announcement. Ithaca disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
For additional information on assumptions used to develop
forward-looking information and risk factors that could cause
actual results to differ materially from forward-looking
information, please refer to the "Risks and Uncertainties" section
of the Company's Management Discussion & Analysis for the
period ended September 30, 2016, and the "Forward-Looking
Statements" and "Risk Factors" sections of the Company's Annual
Information Form for the year ended December 31, 2015, which are
available under the Company's SEDAR profile at www.sedar.com.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. Such an offer may only be made pursuant to an
offer and takeover bid circular filed with the securities
regulatory authorities in Canada and pursuant to registration or
qualification under the securities laws of any other applicable
jurisdiction. The distribution of this press release in or into
certain jurisdictions may be restricted by law and therefore
persons into whose possession this press release comes should
inform themselves about, and observe, such restrictions. Any
failure to comply with the restrictions may constitute a violation
of the securities law of any such jurisdiction.
This material is not a substitute for the offer and takeover bid
circular or the Directors' Circular which will be filed with the
securities regulatory authorities in Canada regarding the proposed
transaction or for any other document which Ithaca or Delek or the
Offeror may file with securities regulators and send to Ithaca
shareholders in connection with the proposed transaction. SECURITY
HOLDERS OF ITHACA ARE URGED TO READ ANY SUCH DOCUMENTS CAREFULLY IN
THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. If
and when they become available to eligible viewers, the offer and
takeover bid circular and the Directors' Circular, along with any
related documents, will be available free of charge under the
profile of Ithaca on the website maintained by the Canadian
securities regulators at www.sedar.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
OUPSFDFUDFWSELD
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March 14, 2017 03:00 ET (07:00 GMT)
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