Alliance Group Launches Recommended Cash Offer for Alliance Oil
OREANDA-NEWS. The Boards of Directors of Lambros Overseas S.A. and OJSC Alliance Group (together “Alliance Group”) and Alliance Oil Company Ltd. (“AOC”, the “Company”) announce a recommended cash offer, pursuant to which Alliance Group, through its jointly owned subsidiary Alford Financial Ltd (“Alford”), would acquire all of the ordinary shares in AOC (the “Ordinary Shares”), represented by Swedish Depositary Receipts (“SDRs”), and all the preference shares in AOC (the “Preference Shares”), represented by SDRs, which are held by parties other than Alliance Group and its affiliates (the 'Transaction”).
Prior to the Transaction, Alliance Group and its affiliated companies control 45 per cent. of the SDRs over Ordinary Shares in AOC, and 7 per cent. of the SDRs over Preference Shares in AOC.
SDRs representing the Ordinary Shares and the Preference Shares are listed on NASDAQ OMX Stockholm Large Cap under the ticker symbols AOIL SDB and AOIL SDB PREF, respectively. Upon successful completion of the Transaction, all of the SDRs will be delisted and cancelled in exchange for cash payment.
Summary of the Transaction:
Under the terms of the Transaction, holders of Ordinary Shares and Preference Shares (together referred to herein as the ''Shares”) in AOC (the “Shareholders”), except for the holder(s) of Shares held by or on behalf of Alliance Group and its affiliated companies, are offered a cash consideration consisting of:
SEK 60 in cash for each Ordinary Share; and
SEK 313 in cash for each Preference Share, plus SEK 7.5 for each Preference
Share multiplied by the percentage of the period between the most recent dividend record date and the subsequent dividend record date, which has elapsed at the registration of the Amalgamation (the cash consideration for all Shares together referred to as the “Cash Consideration”);
The Independent Directors (as defined below) unanimously recommend the Transaction. Merrill Lynch International (“BofA Merrill Lynch”) and Carnegie Investment Bank (“Carnegie”) have acted as financial advisors to the Company in connection with the
Transaction, and BofA Merrill Lynch has provided the Independent Directors with an opinion in relation to the fairness of the value, from a financial point of view, of the Cash Consideration to be received by the holders of Ordinary Shares and Preference Shares. For more details, see Recommendation by the Independent Directors of AOC, page 4.
The Independent Directors have confirmed that they intend to undertake irrevocably to vote in favour of the Transaction at the SGM in respect of their own beneficial holdings of 264,718 of AOC's Ordinary Shares (representing approximately 0.2 per cent. of the total number of votes in AOC as of 30 September 2013).
Two of the directors of AOC, Arsen Idrisov (a beneficiary of Alliance Group) and Isa Bazhaev (Managing Director of one of Alliance Group's subsidiaries), have absented themselves from all deliberations of the board in connection with the Transaction.
The cash offer represents a premium for each Ordinary Share of approximately:
4 per cent. to the closing price of the relevant SDRs on 30 October 2013 (being the last trading day before this announcement);
17 per cent. to the volume weighted average closing price of the relevant SDRs over the 3 month period prior to 31 October 2013;
25 per cent. to the volume weighted average closing price of the relevant SDRs over the 6 month period prior to 31 October 2013; and
48 per cent. to the closing price on 24 July 2013, which is the last date prior to press speculation about a potential third party acquisition of a significant stake in
the Company or its assets.
The cash offer represents a premium for each Preference Share of approximately:
4 per cent. to the closing price, net of accrued dividend, of the relevant SDRs on 30 October 2013;
6 per cent. to the volume weighted average closing price, net of accrued dividend, of the relevant SDRs over the 3 month period prior to 31 October 2013; and
6 per cent. to the volume weighted average closing price, net of accrued dividend, of the relevant SDRs over the 6 month period prior to 31 October 2013.
The Transaction is proposed to be made by way of amalgamation between AOC and Alford under Bermuda law (the “Amalgamation”), which requires the approval of Shareholders at a Special General Meeting of AOC (the “SGM”). The threshold for approval at the SGM is at least 75 per cent. of the votes cast at the SGM for which the required quorum is two persons at least holding or representing by proxy more than one third of the issued Shares.
Upon approval of the Amalgamation at the SGM, AOC and Alford will be permitted to amalgamate under Bermuda law and continue as one company (the “Amalco”).
Alliance Group and its affiliated companies controlling 45 per cent. of the total votes in AOC will utilize their right to vote in favour of the Amalgamation at the SGM.
An SGM has been scheduled for and is expected to take place on or around 2 December 2013.
The Transaction will be funded by a committed debt facility, as described in more detail below, which will be provided by Gazprombank (Open Joint-Stock Company) as lender (the “Lender”).
The Transaction is conditional on, inter alia, approval at the SGM, receipt of relevant Antitrust clearances in Russia, Germany and Cyprus, and that no bona fide third party offer is made for all the Shares that is deemed more attractive in the view of the Independent Directors.
The board of directors of Repsol Exploration S.A., one of the largest holders of SDRs, representing 3 per cent. of the total number of SDRs representing the Shares, corresponding to 3 per cent. of the total number of votes in AOC as of 30 September 2013, has approved to vote in favour of the Transaction at the SGM.
An information memorandum detailing the Transaction (the “Information Memorandum”) will be made available on AOC's website at the latest around 4 November 2013.
As part of the Transaction, a tender offer of a total of USD 278,250,000 in cash and a related consent solicitation (the “Convertible Bond Tender Offer and Consent Solicitation”) is intended to be launched on 4 November 2013 by AOC for its outstanding USD 265,000,000 convertible bonds due 2014 (the “Convertible Bonds”).
“The Independent Directors of AOC have carefully considered the offer from Alliance Group. We believe the offer provides all AOC's independent shareholders with an opportunity to realise cash value of their investment at a fair price that reflects the future prospects for the Company”, says Eric Forss, Chairman of AOC.
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