BAAR, Switzerland and
CALGARY, Alberta, April 17, 2014 /PRNewswire/ --
--Caracal Terminates Proposed
Merger with TransGlobe--
Glencore Xstrata plc ("Glencore") (LSE: GLEN; Hong Kong: GLEN.HK; Johannesburg:GLN.J) and
Caracal Energy Inc. ("Caracal" or the "Company") (LSE:CRCL),
announced today that they have reached a definitive agreement for a
wholly owned subsidiary of Glencore to acquire Caracal for an all
cash consideration of £5.50 per common share by way of Plan of
Arrangement (the "Arrangement").
As a result of the Arrangement, Caracal is also announcing that
it has terminated a prior agreement under which it proposed to
merge with Calgary-based
TransGlobe Energy Corporation (the "Proposed TransGlobe Merger").
Termination is on the basis that the unsolicited proposal from
Glencore constitutes a Superior Proposal. Caracal has paid to
TransGlobe a termination fee of US$9.25
million as required under the terms of the Proposed
TransGlobe Merger.
The Arrangement, which is expected to close in the second
quarter of 2014, provides Caracal shareholders many compelling
benefits including:
- A 61% premium to the £3.42 closing price of Caracal's common
shares on April 11, 2014, the last
trading day prior to the announcement of the Arrangement
- A 54% premium to £3.57, being the volume-weighted average price
of Caracal's common shares for the 30 trading days up to and
including the last trading day prior to the announcement of the
Arrangement
- Certainty of value for shareholders through 100% cash
consideration paid for their common shares
- Elimination of risks associated with business plan execution
and ultimate realization of Caracal's fundamental value
Mr. Gary Guidry, Caracal's
President and Chief Executive Officer, commented:
"The premium all-cash offer from Glencore is strong recognition
of the significant value Caracal has created for its shareholders
since inception. This transaction and the significant premium it
places on our shares is an excellent outcome for our shareholders.
Glencore has been an important supporter and partner of Caracal in
Chad and this is a natural
progression in the development of this portfolio."
From Glencore's perspective, the Arrangement will allow it to
take on operatorship and a larger working interest to more fully
benefit from the development of Caracal's Chad oil development and exploration
operations.
Mr. Alex Beard, Glencore's
Head of Oil, commented:
"Both companies have had a successful partnership since 2012.
This transaction deepens our relationship, adding further value and
expertise to our growing oil business in Africa. We believe the combined business will
be even better placed to take advantage of the long term
opportunities across the African oil sector."
Further Details of the Arrangement
Full details of the Arrangement will be included in an
information circular, which will be mailed to Caracal shareholders.
The Arrangement will be carried out under the Canada Business
Corporations Act and will require the approval of two-thirds of
the votes cast by shareholders of Caracal voting at a special
meeting to be called to consider the Arrangement, as well as a
court and other regulatory approvals and certain other conditions
for an arrangement of this nature.
The Arrangement provides that Caracal is subject to
non-solicitation provisions and provides that the Board of
Directors of Caracal may, under certain circumstances, terminate
the Arrangement in favour of an unsolicited superior proposal,
subject to payment of a termination fee of US$15 million to Glencore and subject to a right
in favour of Glencore to match the superior proposal. In addition,
Caracal has agreed to pay the termination fee to Glencore in the
event the Arrangement is terminated in certain other circumstances.
Glencore has also agreed to provide for a reciprocal
termination fee of US$15 million to
Caracal in certain circumstances.
It is expected that the Caracal shareholder meeting will take
place in early June 2014, with
closing expected to occur as soon as possible thereafter, subject
to receipt of approval pursuant to the Investment Canada Act and
Competition Act and any other necessary regulatory approvals and
satisfaction of other customary closing conditions. The Arrangement
is not subject to financing conditions or due diligence and is not
subject to the approval of the Government of Chad.
The Arrangement also provides that Glencore and its affiliates
are entitled to acquire additional Caracal common shares through
purchases over a stock exchange provided (i) that Glencore does not
acquire more than an additional 4.1% of the outstanding Caracal
common shares on a non-diluted basis and (ii) such purchases do not
commence before April 16, 2014.
Caracal's Board of Directors has unanimously approved the
Arrangement with Glencore and has concluded that it is in the best
interests of Caracal. Caracal's financial advisors, Goldman, Sachs
& Co. and RBC Capital Markets have also each provided opinions
to the Caracal Board of Directors that, as of April 14, 2014, and subject to the assumptions
and limitations on which the opinions are based, the consideration
to be received under the Arrangement is fair, from a financial
point of view, to Caracal's shareholders, excluding Glencore and
its affiliates. The Board of Directors and Management of Caracal
have signed support agreements to vote their shares in favour of
the Arrangement.
Upon completion of the Arrangement, Caracal's convertible
debentures with an aggregate principal amount of US$173.6 million (the "Caracal Debentures") will
continue to be an obligation of Caracal, as a wholly-owned
subsidiary of Glencore. After completion of the Arrangement,
holders of Caracal Debentures who exercise their conversion rights
in accordance with the terms of the indenture for the Caracal
Debentures will not receive Caracal shares (which shall be issued
to Glencore or its affiliates) and will, rather, receive £5.50 in
cash for each Caracal share which the holder would have received
upon conversion in accordance with the terms of the indenture for
the Caracal Debentures.
Full details of the Arrangement will be available in an
information circular that Caracal will mail to shareholders in due
course. The information circular will also be available on
Caracal's website and at http://www.sedar.com. All Caracal
shareholders are urged to read the relevant information circular
once it becomes available as it will contain additional important
information concerning the Arrangement. There is no action required
for Caracal shareholders to take today.
Delisting and Cancellation of Trading
It is intended that the London Stock Exchange and the Financial
Conduct Authority will be requested respectively to cancel trading
in Caracal's shares on the London Stock Exchange's market for
listed securities and the listing of Caracal's shares from the
Official List on closing of the Arrangement.
It is expected that at that time share certificates in respect
of Caracal's shares will cease to be valid and entitlements to
Caracal's shares held within the CREST system will be
cancelled.
Advisors
For Caracal, financial advisors are Goldman, Sachs & Co. and
RBC Capital Markets. Caracal's legal advisor is Stikeman Elliott
LLP.
For Glencore, the legal advisors are Torys LLP and McCarthy
Tetrault LLP for North America and
Clifford Chance LLP for the UK.
About Glencore
Glencore is one of the world's largest global diversified
natural resource companies. As a leading integrated producer and
marketer of commodities with a well-balanced portfolio of diverse
industrial assets, we are strongly positioned to capture value at
every stage of the supply chain, from sourcing materials deep
underground to delivering products to an international customer
base. The Group's industrial and marketing activities are supported
by a global network of more than 90 offices located in over 50
countries. The Group's diversified operations comprise over 150
mining and metallurgical sites, offshore oil production assets,
farms and agricultural facilities. We employ approximately 190,000
people, including contractors.
About Caracal Energy Inc.
Caracal Energy Inc. is an international exploration and
development company focused on oil and gas exploration, development
and production activities in the Republic
of Chad, Africa. In 2011,
Caracal entered into three production sharing contracts ("PSCs")
with the government of the Republic of
Chad. These PSCs provide exclusive rights, along with its
partners, to explore and develop reserves and resources over a
combined area of 26,103 km2 in southern Chad. The PSCs cover two world-class oil
basins with oil discoveries, and numerous exploration
prospects.
CAUTIONARY STATEMENTS:
This announcement contains certain forward-looking information
and statements. Forward-looking information typically contains
statements with words such as "intend", "target", "anticipate",
"plan", "estimate", "expect", "potential", "could", "will", or
similar words suggesting future outcomes. Information relating to
reserves and resources is deemed to be forward-looking information,
as it involves the implied assessment, based on certain estimates
and assumptions, that the reserves and resources described exist in
the quantities predicted or estimated, and can be profitably
produced in the future. The Company cautions readers not to place
undue reliance on forward-looking information which by its nature
is based on current expectations regarding future events that
involve a number of assumptions, inherent risks and uncertainties,
which could cause actual results to differ materially from those
anticipated by the Company.
In addition, any forward-looking information is made as of the
date hereof, and each of the Company and its affiliates expressly
disclaim any obligation or undertaking to update, review or revise
such forward-looking information contained in this announcement to
reflect any change in its expectations or any change in events,
conditions or circumstances on which such information is based
unless required to do so by applicable law.
Forward-looking information is not based on historical facts but
rather on current expectations and assumptions regarding, among
other things, the timing and scope of certain of the Company's
operations and the timing and level of production from the
Company's properties, plans for and results of drilling activity
and testing programs, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
continued political stability, and timely receipt of any necessary
government or regulatory approvals. Although the Company believes
the expectations and assumptions reflected in such forward-looking
information are reasonable, they may prove to be incorrect.
Forward-looking information involves significant known and unknown
risks and uncertainties. A number of factors could cause actual
results to differ materially from those anticipated by the Company
including, but not limited to, risks associated with the oil and
gas industry (e.g. operational risks in exploration and production;
inherent uncertainties in interpreting geological data; changes in
plans with respect to exploration or capital expenditures;
interruptions in operations together with any associated insurance
proceedings; reductions in production capacity, the uncertainty of
estimates and projections in relation to costs and expenses and
health, safety and environmental risks), the risk of commodity
price and foreign exchange rate fluctuations, the uncertainty
associated with negotiating with foreign governments, risk
associated with international activity, including the risk of
political instability, the risk of adverse economic market
conditions, the actual results of marketing activities and the risk
of regulatory changes. Forward-looking information cannot be relied
upon as a guide to future performance. The Company does not assume
responsibility for the accuracy and completeness of the
forward-looking information or statements and such information and
statements should not be taken as guarantees of future outcomes.
Subject to applicable securities laws, the Company does not
undertake any obligation to revise this forward-looking information
or these forward-looking statements to reflect subsequent events or
circumstances. This cautionary statement expressly qualifies the
forward-looking information and statements contained in this press
release.
For further information:
Glencore
Charles Watenphul (Media)
t: +41(0)41-709-2462
m: +41(0)79-904-33-20
charles.watenphul@glencore.com
Paul Smith (Investors)
t: +41(0)41-709-2487
m: +41(0)79-947-1348
paul.smith@glencore.com
Caracal
Gary Guidry, President and Chief
Executive Officer
Trevor Peters, Chief Financial
Officer
+1-403-724-7200
Longview Communications - Canadian Media Enquiries
Alan Bayless, +1-604-694-6035
Joel Shaffer, +1-416-649-8006
Nick Anstett, +1-416-649-8008
FTI Consulting - UK Media Enquiries
Ben Brewerton / Ed Westropp
+44(0)20-3727-1000
caracalenergy.sc@fticonsulting.com