19 August 2024
Recommended and Final* Cash and Share
Acquisition
of
i3 Energy plc ("i3 Energy")
by
Gran Tierra Energy, Inc. ("Gran
Tierra")
to be implemented by way of a scheme of
arrangement under Part 26 of the Companies Act 2006
Summary
The Boards of Gran Tierra and i3 Energy are
pleased to announce that they have reached agreement on the terms
of a recommended and final* cash and share offer by Gran Tierra for
i3 Energy pursuant to which Gran Tierra will acquire the entire
issued and to be issued share capital of i3 Energy (the
"Acquisition"), intended to be effected by means
of a court sanctioned scheme of arrangement between i3 Energy and
the i3 Energy Shareholders under Part 26 of the Companies Act (the
"Scheme").
Under the terms of the Acquisition, each i3
Energy Shareholder will be entitled to receive:
- one New
Gran Tierra Share per every 207 i3 Energy Shares held;
and
- 10.43
pence cash per i3 Energy Share,
(together, the
"Consideration")
In addition, each i3 Energy Shareholder will be
entitled to receive:
- a cash
dividend of 0.2565 pence per i3 Energy Share in lieu of the
ordinary dividend in respect of the three month period ending 30
September 2024 (the "Acquisition Dividend")
Following completion of the Acquisition, i3
Energy Shareholders will own up to 16.5 per cent. of Gran
Tierra.
Based on Gran Tierra's closing price of US$8.66
per Gran Tierra Share on the NYSE American on 16 August 2024 (being
the last Business Day before the Offer Period began), the
Acquisition implies a value of 13.92 pence per i3 Energy Share and
approximately £174.1 million (US$225.4 million) for the entire
issued and to be issued share capital of i3 Energy which
represents:
(a) a premium
of 49.0 per cent. to the Closing Price of 9.34 pence per i3 Energy
Share on 16 August 2024;
(b) a premium
of 49.7 per cent. to the volume weighted average price of 9.30
pence per i3 Energy Share for the 30-day period ended 16 August
2024;
(c) a premium
of 43.6 per cent. to the volume weighted average price of 9.70
pence per i3 Energy Share for the 60-day period ended 16 August
2024; and
(d) a premium
of 37.5 per cent. to the volume weighted average price of 10.12
pence per i3 Energy Share for the 180-day period ended 16 August
2024.
A Mix and Match Facility will also be made
available to i3 Energy Shareholders in order to enable them to
elect, subject to off-setting elections, to vary the proportions in
which they receive cash and New Gran Tierra Shares to be issued.
The maximum aggregate amount of cash to be paid and New Gran Tierra
Shares to be issued under the terms of the Acquisition will not be
varied or increased as a result of elections under the Mix and
Match Facility, in accordance with Gran Tierra’s no increase
statement made in accordance with Rule 32.2 of the Takeover Code.
Gran Tierra reserves the right to scale back elections made for the
New Gran Tierra Shares pursuant to the Mix and Match Facility if
the issuance of such New Gran Tierra Shares would result in any i3
Energy Shareholder holding 10% or more of Gran Tierra's issued
share capital (on a non-diluted basis) following completion of the
Acquisition.
If any dividend, distribution or other return of
value in respect of the i3 Energy Shares other than the Acquisition
Dividend is declared, paid, made or becomes payable on or after the
date of this Announcement and prior to the Effective Date, Gran
Tierra will reduce the cash consideration payable for each i3
Energy Share under the terms of the Acquisition by the amount per
i3 Energy Share of such dividend, distribution or other return of
value. Any exercise by Gran Tierra of its rights referred to in
this paragraph shall be the subject of an announcement. In such
circumstances, i3 Energy Shareholders would be entitled to receive
and retain any such dividend, distribution or other return of
value, which has been declared, made or paid or which becomes
payable.
It is intended that, immediately following
completion of the Acquisition, Gran Tierra will transfer the entire
issued share capital of i3 Energy to its wholly owned, indirect
subsidiary, Gran Tierra EIH. Gran Tierra EIH is the holding entity
for Gran Tierra's Colombian assets.
Following completion of the Acquisition, it is
expected that the i3 Energy Shares will be cancelled from trading
on the AIM market of the London Stock Exchange and delisted from
the TSX and that Gran Tierra will, subject to Canadian Securities
Laws, apply to have i3 Energy cease to be a reporting issuer in all
jurisdictions of Canada in which it is a reporting issuer.
No Increase Statement
Gran Tierra considers the financial terms of the
Acquisition comprising 10.43 pence per i3 Energy Share in cash, one
new Gran Tierra Share per every 207 i3 Energy Share held, and the
payment of the 0.2565 pence per i3 Energy Share Acquisition
Dividend to be full and fair and therefore that the financial terms
of the Acquisition will not be increased in accordance with Rule
32.2 of the Takeover Code. Under Rule 35.1 of the Takeover Code, if
the Acquisition lapses, except with the consent of the Panel, Gran
Tierra will not be able to make an offer for i3 Energy for at least
12 months.
Gran Tierra reserves the right to revise the
financial terms of the Acquisition in the event: (i) a third party,
other than Gran Tierra, announces a firm intention to make an offer
for i3 Energy on more favourable terms than Gran Tierra’s
Acquisition; or (ii) the Panel otherwise provides its consent.
Background to and reasons for the
Acquisition
Over the last five years, Gran Tierra has looked
to diversify into specific oil and gas basins where it is confident
it can create shareholder value focused on operated, high-quality
assets with large resources in place and access to infrastructure.
The Western Canadian Sedimentary Basin (“WCSB”)
being one of the basins on Gran Tierra’s priority list. The
majority of the Gran Tierra team has worked in the WCSB and, with
its headquarters located in Calgary, is well positioned to do so
again.
Gran Tierra believes that the Acquisition offers
significant benefits to both companies and their respective
shareholders, including the following:
- A
business with increased scale and relevance: The
Acquisition will create an independent energy company of scale in
the Americas with significant production, reserves, cash flows and
development optionality. This increased scale is expected to
facilitate access to capital, allow for optimised capital
allocation, enhance shareholder returns and increase relevance to
investors:
- i3 Energy has
guided to 2024 working interest production of 18,000 to 19,000
BOEPD from its Canadian assets with exit rate guidance of 20,250 –
21,250 BOEPD and Gran Tierra has announced 2024 guidance production
of 32,000 to 35,000 BOPD (100 per cent. oil).
- i3 Energy has
1P working interest reserves of 88 MMBOE as at 31 July 2024 and
Gran Tierra had 1P working interest reserves of 90 MMBOE as at 31
December 2023.
- i3 Energy has
2P working interest reserves of 175 MMBOE as at 31 July 2024 and
Gran Tierra had 2P working interest reserves of 147 MMBOE as at 31
December 2023.
- i3 Energy has
an independently valued 2P net present value discounted at 10 per
cent. ("NPV10") (after tax) of C$994 million
(approximately US$725 million) as at 31 July 2024 and Gran Tierra
has an independently valued 2P NPV10 (after tax) of US$1.9 billion
as at 31 December 2023. On a 1P (after tax) basis, i3 Energy’s
NPV10 is C$469 million (approximately US$342 million) and Gran
Tierra’s NPV10 is US$1.3 billion.
- i3 Energy has
announced full year 2024 EBITDA guidance of US$50 – 55 million
after considering hedges and Gran Tierra has announced full year
2024 EBITDA guidance of US$335 – US$395 million in its low case (at
US$70/bbl Brent oil pricing), US$400 – US$460 million in its base
case (at US$80/bbl Brent oil pricing), and US$480 – US$540 million
in its high case (at US$90/bbl Brent oil pricing).
- i3 Energy has
over 250 net booked drilling locations (374 gross booked drilling
locations) associated with 2P reserves which, coupled with Gran
Tierra’s substantial booked reserves, recent exploration
discoveries and significant prospective acreage across Colombia and
Ecuador, provides development and exploration upside potential to
shareholders.
-
Increased diversity across geographies and product
streams: The Acquisition will create a more diverse
international energy company operating across the Americas in
regions with substantial oil and gas production, well-established
regulatory regimes, stable contracts, access to markets and
attractive fiscal terms. The Combined Group will offer a more
diversified proposition to both i3 Energy Shareholders and Gran
Tierra shareholders. Gran Tierra's and i3 Energy's Q2 2024
production imply an approximate geographic split of 62 per cent.
Colombia, 36 per cent. Canada, and 3 per cent. Ecuador for the
Combined Group, with a commodity mix of 81 per cent. liquids and 19
per cent. natural gas. The addition of new geographies and
commodities, along with the exposure to an investment grade
country, is expected to benefit the Combined Group in terms of
increased development optionality, risk diversification and credit
profile. The Combined Group would have approximately 1.4 million
net acres in Colombia, 138 thousand net acres in Ecuador and 584
thousand net acres in Canada including 298 thousand net acres in
Central Alberta, 102 thousand net acres in Wapiti/Elmworth, 50
thousand net acres in Simonette, and 69 thousand net acres in North
Alberta (Clearwater).
-
Optimised capital allocation and investment: The
Combined Group will have exposure to high return projects across
Canada, Colombia and Ecuador, enabling capital allocation and
investment across the portfolio to be optimised, using Gran
Tierra’s balance sheet strength to accelerate production and cash
flow growth from i3 Energy’s 250 net booked drilling locations
associated with 2P reserves and additional unbooked Canadian
drilling locations and Gran Tierra’s high-impact exploration and
low decline oil assets currently under waterflood. Gran Tierra
further believes that the strength of the Combined Group will
provide an excellent platform for future consolidation, both in
Canada and internationally, with significant management expertise,
free cash flow, a strong balance sheet and borrowing base
potential.
- Balance
sheet strength: Gran Tierra has a strong balance sheet and
ample liquidity to fund growth projects and shareholder returns. As
of 30 June 2024, Gran Tierra had twelve month trailing net debt to
adjusted EBITDA of 1.3x and a cash balance of US$115 million.
Approximately 70 per cent. of Gran Tierra's debt is due in 2028 and
2029. The addition of i3 Energy’s production and cash flows would
enhance Gran Tierra’s balance sheet and enable accelerated
investment and shareholder returns. i3 Energy’s assets would add
production, cash flows, reserves and a diversified drilling
inventory in an investment grade country, Gran Tierra expects this
enhanced scale and diversity to provide enhancements to the credit
profile of the business and, ultimately, lower its cost of capital.
As at 30 June 2024 i3 Energy had zero debt and a C$75 million
undrawn credit facility.
-
Increased trading liquidity and investor access:
Gran Tierra maintains a primary listing on the NYSE American, where
it trades significant volume, with additional listings on the
London Stock Exchange and the TSX. With i3 Energy Shareholders
expected to own up to 16.5 per cent. of Gran Tierra on completion
of the Acquisition, the Acquisition is expected to provide enhanced
trading liquidity for the Combined Group's shareholders across
exchanges and provide continuity of trading venues for i3 Energy
Shareholders. Additionally, with increased scale, Gran Tierra
expects to be increasingly relevant to a larger pool of
international equity and credit investors, with the potential for
this to have further benefits in terms of trading liquidity and
valuation multiple expansion.
- Cash
return for i3 Energy Shareholders with upside potential:
Gran Tierra’s offer provides i3 Energy Shareholders with a
significant premium, in cash, to the current value of their
holdings with material upside potential through equity ownership of
the Combined Group. Gran Tierra intends to use the Combined Group's
scale and enhanced financial capacity to accelerate development of
i3 Energy’s Canadian assets as well as Gran Tierra's existing
Colombian and Ecuadorian assets and expects this to provide
meaningful long-term returns to shareholders of the Combined Group.
Since 1 January 2023 Gran Tierra has purchased approximately 11 per
cent. of its Gran Tierra Shares outstanding from free cash
flow.
Recommendation and irrevocable
undertakings
The i3 Energy Directors, who have been so
advised by Zeus Capital as to the financial terms of the
Acquisition, consider the terms of the Acquisition to be fair and
reasonable. In providing its advice to the i3 Energy Directors,
Zeus Capital has taken into account the commercial assessments of
the i3 Energy Directors. In addition, the i3 Energy Directors
consider the terms of the Acquisition to be in the best interests
of the i3 Energy Shareholders as a whole. Zeus Capital is providing
independent financial advice to the i3 Energy Directors for the
purposes of Rule 3 of the Takeover Code.
Accordingly, the i3 Energy Directors intend to
recommend unanimously that the i3 Energy Shareholders vote in
favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the i3 Energy General Meeting as those i3 Energy
Directors who hold i3 Energy Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of in aggregate
32,139,532 i3 Energy Shares representing approximately 2.7 per
cent. of the existing issued ordinary share capital of i3 Energy on
the Last Practicable Date (excluding any i3 Energy Shares held in
treasury).
Gran Tierra has also received irrevocable
undertakings to vote (or, in relation to the i3 Energy CFDs, to use
best endeavours to procure votes) in favour of the Scheme at the
Court Meeting and the resolutions to be proposed at the i3 Energy
General Meeting from the Polus Funds and Graham Heath in respect of
a total of 238,537,465 i3 Energy Shares and 118,006,332 i3 Energy
CFDs, which represent, in aggregate, approximately 19.84 per cent.
and 9.81 per cent. respectively, of i3 Energy's existing issued
ordinary share capital on the Last Practicable Date (excluding any
i3 Energy Shares held in treasury). Therefore, the total number of
i3 Energy Shares and i3 Energy CFDs that are subject to irrevocable
undertakings received by Gran Tierra from the Polus Funds and
Graham Heath is 356,543,797 i3 Energy Shares and i3 Energy CFDs,
representing in aggregate approximately 29.65 per cent. of i3
Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in
treasury).
Therefore, Gran Tierra has received irrevocable
undertakings to vote (or, in relation to the i3 Energy CFDs, to use
best endeavours to procure votes) in favour of the Scheme at the
Court Meeting and the resolutions to be proposed at the i3 Energy
General Meeting from holders of 270,676,997 i3 Energy
Shares and 118,006,332 i3 Energy CFDs, which represent, in
aggregate, approximately 22.51 per cent. and 9.81 per cent.
respectively, of i3 Energy's existing issued ordinary share capital
on the Last Practicable Date (excluding any i3 Energy Shares held
in treasury). The total number of i3 Energy Shares and i3 Energy
CFDs that are subject to irrevocable undertakings received by Gran
Tierra is 388,683,329 i3 Energy Shares and i3 Energy CFDs,
representing in aggregate approximately 32.32 per cent. of i3
Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in
treasury).
Transaction Structure and
Timetable
It is intended that the Acquisition will be
implemented by way of a court sanctioned scheme of arrangement
under Part 26 of the Companies Act, further details of which are
contained in the full text of this Announcement and full details of
which will be set out in the Scheme Document to be published by i3
Energy in due course. However, Gran Tierra reserves the right, with
the consent of the Panel, to implement the Acquisition by way of a
Takeover Offer.
The Acquisition will be subject to the
Conditions and certain further terms set out in Appendix 1 to this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document, including the approval of the Scheme by
the i3 Energy Shareholders, the sanction of the Scheme by the
Court, the satisfaction of the NSTA Condition, the Minority
Shareholder Protection Condition and the Competition Act Condition,
and the approval of the TSX.
The Scheme Document will include full details of
the Scheme, together with notices of the Court Meeting and the i3
Energy General Meeting and the expected timetable of principal
events, and will specify the action to be taken by i3 Energy
Shareholders. It is expected that the Scheme Document, together
with the Forms of Proxy and Forms of Election (and/or where
required, Letters of Transmittal) in relation to the Mix and Match
Facility, will be published as soon as practicable and in any event
within 28 days of the date of this Announcement (or such later date
as may be agreed by Gran Tierra and i3 Energy with the consent of
the Panel).
The Scheme is expected to become effective in Q4
2024, subject to the satisfaction or, where permitted, waiver of
the Conditions and certain further terms set out in Appendix 1 to
this Announcement.
Comments on the Acquisition
Commenting on the Acquisition, Gary
Guidry, President and Chief Executive Officer of Gran
Tierra said:
"We are thrilled to announce this acquisition,
which marks a significant milestone in diversifying our portfolio
while strengthening our asset base. By integrating these
high-quality, operated assets, including low-decline production,
large resources in place and a substantial land base, we are not
only enhancing our asset base but also aligning with our long-term
strategic vision. We are excited to welcome the talented Canadian
team to our company, as their expertise and dedication will be
invaluable in driving our continued success. This acquisition is a
testament to our commitment to sustainable and profitable growth
and delivering consistent value to our shareholders."
Commenting on the Acquisition, Majid
Shafiq, Chief Executive Officer of i3 Energy, said:
“We believe that the Acquisition presents an
exceptional opportunity for i3 Energy's Shareholders. The
Acquisition represents the culmination of a thorough process to
realise the maximum value available for shareholders and offers
significant upside potential; it expedites the realisation of fair
value, with a cash premium and incremental upside through continued
ownership in the Combined Group, without necessitating additional
capital investment, time, or operational risk. This business
combination will significantly enhance scale, thereby improving
capacity to drive growth, production, and cash flows for the
benefit of all shareholders and local stakeholders.”
This summary should be read in
conjunction with, and is subject to, the full text of this
Announcement and the Appendices.
The Acquisition will be subject to the
Conditions and further terms set out in Appendix 1 to this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document. Appendix 2 to this Announcement
contains the sources and bases of certain information used in this
summary and this Announcement. Appendix 3 to this Announcement
contains details of the irrevocable undertakings received in
relation to the Acquisition that are referred to in this
Announcement. Appendix 4 to this Announcement contains details of
the Gran Tierra Profit Forecast. Appendix 5 to this Announcement
contains definitions of certain terms used in this summary and this
Announcement.
Presentation
A presentation in connection with the
Acquisition is available on the Gran Tierra website at
https://www.grantierra.com/investor-relations/recommended-acquisition/.
A presentation in connection with the
Acquisition is also available on the i3 Energy website at
https://i3.energy/grantierra-offer-terms/.
Enquiries:
Ashurst LLP is acting as UK legal adviser,
Stikeman Elliott LLP is acting as Canadian legal adviser and
Gibson, Dunn & Crutcher LLP is acting as US legal adviser to
Gran Tierra in connection with the Acquisition. Burness Paull LLP
is acting as UK legal adviser and Norton Rose Fulbright Canada LLP
is acting as Canadian legal adviser to i3 Energy in connection with
the Acquisition.
|
Gran TierraGary GuidryRyan Ellson |
+1 (403) 265 3221 |
|
|
|
|
Stifel (Joint Financial Adviser)Callum Stewart
Simon Mensley |
+44 (0) 20 7710 7600 |
|
|
|
|
Eight Capital (Joint Financial
Adviser)Tony P. LoriaMatthew Halasz |
+1 (587) 893 6835 |
|
|
|
|
i3 EnergyMajid Shafiq |
c/o Camarco |
|
|
|
|
Zeus Capital Limited(Rule 3 Financial
Adviser, Nomad and Joint Broker) James JoyceDarshan
Patel Isaac Hooper |
+44 (0) 203 829 5000 |
|
|
|
|
Tudor, Pickering, Holt & Co. Securities – Canada,
ULC (Financial Adviser)Brendan Lines |
+1 403 705 7830 |
|
|
|
|
National Bank Financial Inc. (Financial
Adviser)Tarek Brahim Arun Chandrasekaran |
+1 403 410 7749 |
|
|
|
|
CamarcoAndrew TurnerViolet WilsonSam Morris |
+44 (0) 203 757 4980 |
|
|
|
Further Information
This Announcement is for information purposes
only and is not intended to and does not constitute or form part of
an offer, offer to acquire, invitation or the solicitation of an
offer, offer to acquire or invitation to purchase, or otherwise
acquire, offer to acquire, subscribe for, sell or otherwise dispose
of any securities or the solicitation of any vote or approval in
any jurisdiction pursuant to the Acquisition or otherwise nor shall
there be any sale, issuance or transfer of securities of Gran
Tierra or i3 Energy pursuant to the Acquisition in any jurisdiction
in contravention of applicable laws. The Acquisition will be
implemented solely pursuant to the terms of the Scheme Document
(or, in the event that the Acquisition is to be implemented by
means of an Takeover Offer, the Offer Document), which, together
with the Forms of Proxy and the Forms of Election (and/or where
required, Letters of Transmittal) in relation to the Mix and Match
Facility, will contain the full terms and conditions of the
Acquisition, including details of how to vote in respect of the
Acquisition. Any decision in respect of, or other response to, the
Acquisition should be made on the basis of the information
contained in the Scheme Document or the Forms of Proxy or the Forms
of Election (and/or where required, Letters of Transmittal) in
relation to the Mix and Match Facility. In particular, this
Announcement is not an offer of securities for sale in the United
States or in any other jurisdiction. No offer of securities shall
be made in the United States absent registration under the US
Securities Act, or pursuant to an exemption from, or in a
transaction not subject to, such registration requirements. Any
securities issued as part of the Acquisition are anticipated to be
issued in reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the US Securities Act.
Additionally, if the Acquisition is implemented by way of a scheme
of arrangement or a Takeover Offer, any New Gran Tierra Shares to
be issued in connection with the Acquisition are expected to be
issued in reliance upon the prospectus exemption provided by 2.11
or Section 2.16, as applicable, of National Instrument 45-106 –
Prospectus Exemptions of the Canadian Securities Administrators and
in compliance with the provincial securities laws of Canada.
The Acquisition will be made solely by means of
the scheme document to be published by i3 Energy in due course, or
(if applicable) pursuant to an offer document to be published by
Gran Tierra, which (as applicable) would contain the full terms and
conditions of the Acquisition. Any decision in respect of, or other
response to, the Acquisition, should be made only on the basis of
the information contained in such document(s). If, in the future,
Gran Tierra ultimately seeks to implement the Acquisition by way of
a Takeover Offer, or otherwise in a manner that is not exempt from
the registration requirements of the US Securities Act, that offer
will be made in compliance with applicable US laws and regulations.
and, to the extent such Takeover Offer extends into the provinces
of Canada, such Takeover Offer will be made in compliance with the
provincial securities laws of Canada, including, without
limitation, to the extent applicable, the rules applicable to
take-over bids under National Instrument 62-104 – Take-Over Bids
and Issuer Bids of the Canadian Securities Administrators.
The statements contained in this Announcement
are made as at the date of this Announcement, unless some other
time is specified in relation to them, and publication of this
Announcement shall not give rise to any implication that there has
been no change in the facts set forth in this Announcement since
such date.
This Announcement has been prepared for the
purpose of complying with English law and the Takeover Code and the
information disclosed may not be the same as that which would have
been disclosed if this Announcement had been prepared in accordance
with the laws of jurisdictions outside England and Wales, including
(without limitation) the United States and Canada. The Acquisition
will be subject to the applicable requirements or acceptance, as
applicable, of the Takeover Code, Canadian Securities Laws, the
Panel, the London Stock Exchange, the TSX, the NYSE American, the
FCA and the AIM Rules.
This Announcement contains inside information in
relation to each of i3 Energy and Gran Tierra for the purposes of
Article 7 of the Market Abuse Regulation. The person responsible
for making this Announcement on behalf of i3 Energy is Majid Shafiq
and the person responsible for making this Announcement on behalf
of Gran Tierra is Gary Guidry.
This Announcement does not constitute a
prospectus or circular or prospectus or circular equivalent
document, nor does this Announcement, or the information contained
herein, constitute a solicitation of proxies within the meaning of
applicable Canadian Securities Laws. Shareholders are not being
asked at this time to execute a proxy in favour of the Acquisition
or the matters described herein.
Information Relating to i3 Energy
Shareholders
Please be aware that addresses, electronic
addresses and certain other information provided by i3 Energy
Shareholders, persons with information rights and other relevant
persons for the receipt of communications from i3 Energy may be
provided to Gran Tierra during the Offer Period as required under
Section 4 of Appendix 4 of the Takeover Code or Canadian Securities
Laws, as applicable.
Overseas Jurisdictions
The release, publication or distribution of this
Announcement in or into jurisdictions other than the United Kingdom
may be restricted by law and therefore any persons who are subject
to the laws of any jurisdiction other than the United Kingdom
should inform themselves about, and observe any applicable legal or
regulatory requirements. In particular, the ability of persons who
are not resident in the United Kingdom to vote their i3 Energy
Shares with respect to the Scheme at the Court Meeting, or to
execute and deliver forms of proxy appointing another to vote at
the Court Meeting on their behalf, may be affected by the laws of
the relevant jurisdictions in which they are located. Any failure
to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law the companies and
persons involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
Unless otherwise determined by Gran Tierra or
required by the Takeover Code, and permitted by applicable law and
regulation, the availability of New Gran Tierra Shares to be issued
pursuant to the Acquisition to i3 Energy Shareholders will not be
made available, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in
that jurisdiction and no person may vote in favour of the
Acquisition by any such use, means, instrumentality or form within
a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of that jurisdiction.
Accordingly, copies of this Announcement and any formal
documentation relating to the Acquisition are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction
or any other jurisdiction where to do so would constitute a
violation of the laws of that jurisdiction, and persons receiving
such documents (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send such documents in
or into or from any Restricted Jurisdiction. Doing so may render
invalid any related purported vote in respect of the Acquisition.
If the Acquisition is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the
Takeover Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including,
but not limited to, facsimile, e-mail or other electronic
transmission or telephone) of interstate or foreign commerce of, or
of any facility of a national, state or other securities exchange
of any Restricted Jurisdiction and the Takeover Offer may not be
capable of acceptance by any such use, means, instrumentality or
facilities or from within any Restricted Jurisdiction.
The availability of New Gran Tierra Shares
pursuant to the Acquisition to i3 Energy Shareholders who are not
resident in the United Kingdom or the ability of those persons to
hold such shares may be affected by the laws or regulatory
requirements of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom should
inform themselves of, and observe, any applicable legal or
regulatory requirements. i3 Energy Shareholders who are in doubt
about such matters should consult an appropriate independent
professional adviser in the relevant jurisdiction without
delay.
Further details in relation to i3 Energy
Shareholders in overseas jurisdictions will be contained in the
Scheme Document.
Notice to US Shareholders
The Acquisition relates to the shares of an
English company with a listing on the London Stock Exchange and the
TSX and is proposed to be implemented pursuant to a scheme of
arrangement provided for under the law of England and Wales. A
transaction effected by means of a scheme of arrangement is not
subject to proxy solicitation or the tender offer rules under the
US Exchange Act. Accordingly, the Acquisition is subject to the
procedural and disclosure requirements, rules and practices
applicable in the United Kingdom to schemes of arrangement which
differ from the requirements of US proxy solicitation or tender
offer rules. Financial information included in this Announcement
and the Scheme Document in relation to Gran Tierra has been or will
be prepared in accordance with US GAAP and in relation to i3 Energy
has been or will be prepared in accordance with International
Financial Reporting Standards ("IFRS").
If, in the future, Gran Tierra elects, with the
consent of the Panel, to implement the Acquisition by means of a
Takeover Offer and determines to extend such Takeover Offer into
the United States, such Takeover Offer will be made in compliance
with all applicable laws and regulations, including, without
limitation, to the extent applicable, Section 14(e) of the US
Exchange Act and Regulation 14E thereunder, and subject, in the
case of participation by i3 Energy Shareholders resident in the
United States, to the availability of an exemption (if any) from
the registration requirements of the US Securities Act and of the
securities laws of any state or other jurisdiction of the United
States. Such Takeover Offer would be made by Gran Tierra and no one
else. In addition to any such Takeover Offer, Gran Tierra, certain
affiliated companies and the nominees or brokers (acting as agents)
may make certain purchases of, or arrangements to purchase, shares
in i3 Energy outside such Takeover Offer during the period in which
such Takeover Offer would remain open for acceptance. If such
purchases or arrangements to purchase were to be made, they would
be made outside the United States and would comply with applicable
law, including the US Exchange Act. Any information about such
purchases will be disclosed as required in the United Kingdom,
United States and Canada and will be reported to a Regulatory
Information Service of the FCA and will be available on the London
Stock Exchange website: www.londonstockexchange.com/, and, if
required, on the SEC website at http://www.sec.gov..
The New Gran Tierra Shares have not been and
will not be registered under the US Securities Act or under the
securities laws of any state or other jurisdiction of the United
States. Accordingly, the New Gran Tierra Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into or from the United States absent
registration under the US Securities Act or an exemption therefrom
and in compliance with the securities laws of any state or other
jurisdiction of the United States. The New Gran Tierra Shares are
expected to be issued in reliance upon the exemption from the
registration requirements of the US Securities Act provided by
section 3(a)(10) thereof.
None of the securities referred to in this
Announcement have been approved or disapproved by the SEC, any
state securities commission in the United States or any other US
regulatory authority, nor have such authorities passed upon or
determined the fairness or merits of such securities or the
Acquisition or upon the adequacy or accuracy of the information
contained in this Announcement. Any representation to the contrary
is a criminal offence in the United States.
It may be difficult for US holders of i3 Energy
Shares to enforce their rights and claims arising out of the US
federal securities laws, since i3 Energy is organised in a country
other than the United States, and some or all of its officers and
directors may be residents of, and some or all of its assets may be
located in, jurisdictions other than the United States. US holders
of i3 Energy Shares may have difficulty effecting service of
process within the United States upon those persons or recovering
against judgments of US courts, including judgments based upon the
civil liability provisions of the US federal securities laws. US
holders of i3 Energy Shares may not be able to sue a non-US company
or its officers or directors in a non-US court for violations of US
securities laws. Further, it may be difficult to compel a non-US
company and its affiliates to subject themselves to a US court's
judgment.
The receipt of New Gran Tierra Shares pursuant
to the Acquisition by a US i3 Energy Shareholder may be a taxable
transaction for US federal income tax purposes, and may also be a
taxable transaction under applicable state and local tax laws, as
well as foreign and other tax laws. Each i3 Energy Shareholder is
urged to consult its independent professional adviser immediately
regarding the tax consequences of the Acquisition.
Notice to Canadian i3 Energy
Shareholders
The Acquisition relates to the securities of an
English company with a listing on the London Stock Exchange and the
TSX and is proposed to be implemented pursuant to a scheme of
arrangement provided for under the laws of England and Wales. A
transaction effected by means of a scheme of arrangement may differ
from the procedures and requirements that would be applicable to a
similar transaction under applicable Canadian corporate laws or
Canadian Securities Laws, including the rules applicable to
take-over bids under National Instrument 62-104 – Take-Over Bids
and Issuer Bids of the Canadian Securities Administrators
(“Canadian Take-Over Bid Rules”). While Gran
Tierra and i3 Energy will complete the Acquisition in accordance
with applicable Canadian Securities Laws, the Acquisition is
subject to the procedural and disclosure requirements, rules and
practices applicable to schemes of arrangement involving a target
company incorporated in England and listed on the London Stock
Exchange and the TSX, which may differ in certain areas from the
requirements applicable to similar transactions under applicable
Canadian corporate laws or Canadian Securities Laws.
The Acquisition is not a “take-over bid” as
defined under Canadian Take-Over Bid Rules. However, if, in the
future, Gran Tierra elects, with the consent of the Panel, to
implement the Acquisition by means of a Takeover Offer and
determines to extend such Takeover Offer into the provinces of
Canada, such Takeover Offer will be made in compliance with all
Canadian Securities Laws, including, without limitation, to the
extent applicable, the Canadian Take-Over Bid Rules. In addition to
any such Takeover Offer, Gran Tierra, certain affiliated companies
and the nominees or brokers (acting as agents) may make certain
purchases of, or arrangements to purchase, shares in i3 Energy
outside such Takeover Offer during the period in which such
Takeover Offer would remain open for acceptance. If such purchases
or arrangements to purchase were to be made, they would be made
outside of Canada and would comply with Canadian Securities Laws.
Any information about such purchases will be disclosed as required
in the United Kingdom, will be reported to a Regulatory Information
Service of the UK Financial Conduct Authority and will be available
on the London Stock Exchange website:
www.londonstockexchange.com.
Any New Gran Tierra Shares to be issued in
connection with the Acquisition have not been and will not be
qualified for distribution under Canadian Securities Laws.
Accordingly, the New Gran Tierra Shares may not be offered, sold,
resold, delivered, distributed or otherwise transferred, directly
or indirectly, in or into or from Canada absent a qualification for
distribution or an exemption from the prospectus requirements and
in compliance with Canadian Securities Laws. If the Acquisition is
implemented by way of a scheme of arrangement or a Takeover Offer,
any New Gran Tierra Shares to be issued in connection with the
Acquisition are expected to be issued in reliance upon the
prospectus exemption provided by Section 2.11 or Section 2.16, as
applicable, of National Instrument 45-106 – Prospectus Exemptions
of the Canadian Securities Administrators and in compliance with
Canadian Securities Laws.
The receipt of consideration pursuant to the
Acquisition by a Canadian i3 Energy Shareholder as consideration
for the transfer of its i3 Energy Shares may be a taxable
transaction for Canadian federal income tax purposes and under
applicable Canadian provincial income tax laws, as well as foreign
and other tax laws. Each i3 Energy Shareholder is urged to consult
their independent professional adviser immediately regarding the
tax consequences of the Acquisition applicable to them.
None of the securities referred to in this
Announcement have been approved or disapproved by any Canadian
securities regulatory authority nor has any Canadian regulatory
authority passed upon or determined the fairness or merits of such
securities or the Acquisition or upon the adequacy or accuracy of
the information contained in this Announcement. Any representation
to the contrary is an offence.
i3 Energy is located in a country other than
Canada, and some or all of its officers and directors may be
residents of a country other than Canada. It may be difficult for
Canadian i3 Energy Shareholders to enforce judgments obtained in
Canada against any person that is incorporated, continued or
otherwise organised under the laws of a foreign jurisdiction or
resides outside of Canada, even if the party has appointed an agent
for service of process.
Important Notices Relating to Financial
Advisers
Stifel Nicolaus Europe Limited
("Stifel"), which is authorised and regulated by
the FCA in the UK, is acting as financial adviser exclusively for
Gran Tierra and no one else in connection with the matters referred
to in this Announcement and will not be responsible to anyone other
than Gran Tierra for providing the protections afforded to its
clients or for providing advice in relation to matters referred to
in this Announcement. Neither Stifel, nor any of its affiliates,
owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of Stifel
in connection with this Announcement, any statement contained
herein or otherwise.
Eight Capital ("Eight
Capital"), which is authorised and regulated by the
Canadian Investment Regulatory Organization in Canada, is acting
exclusively for Gran Tierra and for no one else in connection with
the subject matter of this Announcement and will not be responsible
to anyone other than Gran Tierra for providing the protections
afforded to its clients or for providing advice in connection with
the subject matter of this Announcement.
Zeus Capital Limited ("Zeus"),
which is authorised and regulated by the FCA in the United Kingdom,
is acting exclusively for i3 Energy as financial adviser, nominated
adviser and joint broker and no one else in connection with the
matters referred to in this Announcement and will not be
responsible to anyone other than i3 Energy for providing the
protections afforded to clients of Zeus, or for providing advice in
relation to matters referred to in this Announcement. Neither Zeus
nor any of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Zeus in connection with the matters referred to in
this Announcement, any statement contained herein or otherwise.
Tudor, Pickering, Holt & Co. Securities –
Canada, ULC ("TPH&Co."), regulated by the
Canadian Investment Regulatory Organization and a member of the
Canadian Investor Protection Fund, is acting exclusively for i3
Energy by way of its engagement with i3 Energy Canada., a
wholly-owned subsidiary of i3 Energy, in connection with the
matters set out in this Announcement and for no one else, and will
not be responsible to anyone other than i3 Energy. for providing
the protections afforded to its clients nor for providing advice in
relation to the matters set out in this Announcement. Neither
TPH&Co. nor any of its subsidiaries, branches or affiliates and
their respective directors, officers, employees or agents owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of TPH&Co. in
connection with this Announcement, any statement contained herein
or otherwise.
National Bank Financial Inc.
("NBF"), regulated by the Canadian Investment
Regulatory Organization and a member of the Canadian Investor
Protection Fund, is acting exclusively for i3 Energy by way of its
engagement with i3 Energy Canada, a wholly-owned subsidiary of i3
Energy, in connection with the matters set out in this
Announcement. Neither NBF, nor any of its subsidiaries, branches or
affiliates and their respective directors, officers, employees or
agents owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of NBF in connection with this Announcement, any statement
contained herein or otherwise.
Cautionary Note Regarding Forward
Looking Statements
This Announcement (including information
incorporated by reference into this Announcement), oral statements
regarding the Acquisition and other information published by Gran
Tierra and i3 Energy contain certain forward looking statements
with respect to the financial condition, strategies, objectives,
results of operations and businesses of Gran Tierra and i3 Energy
and their respective groups and certain plans and objectives with
respect to the Combined Group. These forward looking statements can
be identified by the fact that they do not relate only to
historical or current facts. Forward looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections of the management of
Gran Tierra and i3 Energy about future events, and are therefore
subject to risks and uncertainties which could cause actual results
to differ materially from the future results expressed or implied
by the forward looking statements. The forward looking statements
contained in this Announcement include, without limitation,
statements relating to the expected effects of the Acquisition on
Gran Tierra and i3 Energy, the expected timing method of
completion, and scope of the Acquisition, the expected actions of
Gran Tierra upon completion of the Acquisition, Gran Tierra's
ability to recognise the anticipated benefits from the Acquisition,
expectations regarding the business and operations of the Combined
Group, and other statements other than historical facts. Forward
looking statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "strategy", "focus",
"envision", "goal", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar
meaning. These statements are based on assumptions and assessments
made by Gran Tierra, and/or i3 Energy in light of their experience
and their perception of historical trends, current conditions,
future developments and other factors they believe appropriate. By
their nature, forward looking statements involve risk and
uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors
described in the context of such forward looking statements in this
Announcement could cause actual results and developments to differ
materially from those expressed in or implied by such forward
looking statements. Although it is believed that the expectations
reflected in such forward looking statements are reasonable, no
assurance can be given that such expectations will prove to have
been correct and readers are therefore cautioned not to place undue
reliance on these forward looking statements. Actual results may
vary from the forward looking statements.
There are several factors which could cause
actual results to differ materially from those expressed or implied
in forward looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward looking statements are changes in the global, political,
economic, business, competitive, market and regulatory forces,
future exchange and interest rates, changes in tax rates and future
business acquisitions or dispositions.
Each forward looking statement speaks only as at
the date of this Announcement. Neither Gran Tierra nor i3 Energy,
nor their respective groups assumes any obligation to update or
correct the information contained in this Announcement (whether as
a result of new information, future events or otherwise), except as
required by applicable law or by the rules of any competent
regulatory authority.
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
The estimates of Gran Tierra's and i3 Energy's
respective future production and 2024 EBITDA and in the case of i3
Energy, 2024 net operating income, set forth in this Announcement
may be considered to be future-oriented financial information or a
financial outlook for the purposes of applicable Canadian
Securities Laws. Financial outlook and future-oriented financial
information contained in this Announcement about prospective
financial performance and operational performance are provided to
give the reader a better understanding of the potential future
performance of Gran Tierra, i3 Energy and the Combined Group in
certain areas and are based on assumptions about future events,
including economic conditions and proposed courses of action, based
on Gran Tierra's and i3 Energy's respective management’s assessment
of the relevant information currently available, and to become
available in the future. In particular, this Announcement contains
Gran Tierra and i3 Energy projected financial and operational
information for 2024. These projections contain forward-looking
statements and are based on a number of material assumptions and
factors set out above and in Appendix 4 to this Announcement.
Actual results may differ significantly from the projections
presented herein. These projections may also be considered to
contain future-oriented financial information or a financial
outlook. The actual results of Gran Tierra’s and i3 Energy’s
respective operations for any period will likely vary from the
amounts set forth in these projections, and such variations may be
material. See above for a discussion of the risks that could cause
actual results to vary. The future-oriented financial information
and financial outlooks contained in this Announcement have been
approved by the respective management of Gran Tierra and i3 Energy,
as applicable, as of the date of this Announcement. Readers are
cautioned that any such financial outlook and future-oriented
financial information contained herein should not be used for
purposes other than those for which it is disclosed herein. Gran
Tierra, i3 Energy and their respective management believe that the
prospective financial and operational information has been prepared
on a reasonable basis, reflecting Gran Tierra and i3 Energy
respective management’s best estimates and judgments, and
represent, to the best of Gran Tierra’s and i3 Energy's respective
management’s knowledge and opinion, Gran Tierra’s and i3 Energy's
expected respective course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. See Gran Tierra’s press
release dated 23 January 2024 and most recent reports on Form 10-K
and Form 10-Q for additional information regarding the 2024
financial and production outlook of Gran Tierra, and i3 Energy’s
press release dated 13 August 2024 regarding the financial and
production outlook of i3 Energy.
Non-IFRS, Non-GAAP and Other Specified
Financial Measures
This Announcement contains references to Gran
Tierra’s EBITDA, adjusted EBITDA, net debt, net debt to adjusted
EBITDA ratio, i3 Energy’s EBITDA, net operating income, free cash
flow, net cash surplus and net debt, which are specified financial
measures that do not have any standardized meaning as prescribed by
US GAAP in the case of Gran Tierra or UK adopted IFRS in the case
of i3 Energy and, therefore, may not be comparable with the
calculation of similar measures presented by other applicable
issuers. You are cautioned that these measures should not be
construed as alternatives to net income or loss, or other measures
of financial performance as determined in accordance with US GAAP
in the case of Gran Tierra and UK adopted IFRS in the case of i3
Energy. Gran Tierra’s and i3 Energy’s methods of calculating these
measures may differ from other companies and, accordingly, they may
not be comparable to similar measures used by other companies. Each
non-GAAP and non-IFRS financial measure is presented along with the
corresponding GAAP or IFRS measure so as to not imply that more
emphasis should be placed on the non-GAAP or non-IFRS measure. For
an explanation of the composition of i3 Energy’s EBITDA, adjusted
EBITDA, net operating income, free cash flow, net cash surplus and
net debt, see "Non-IFRS Financial Measures" in i3 Energy’s
Management Discussion and Analysis dated August 13, 2024, and for
an explanation of Gran Tierra’s EBITDA, adjusted EBITDA, net debt
and adjusted EBITDA to net debt ratio, see “Non-GAAP Measures” in
Gran Tierra’s quarterly and annual reports, which are available on
i3 Energy’s SEDAR+ issuer profile at www.sedarplus.ca and Gran
Tierra’s SEC EDGAR issuer profile at www.sec.gov, or and on their
respective websites at https://i3.energy/ and
https://www.grantierra.com/. These measures should not be
considered in isolation or as a substitute for measures prepared in
accordance with IFRS or US GAAP, as applicable. The non-IFRS and
non-US GAAP measures used in this Announcement are summarized as
follows:
EBITDA and Adjusted EBITDA (Gran Tierra):
EBITDA, as presented, is defined as net income
(or loss) adjusted for depletion, depreciation and accretion
(“DD&A”) expenses, interest expense and income
tax expense or recovery.
Adjusted EBITDA, as presented, is defined as
EBITDA adjusted for non-cash lease expense, lease payments, foreign
exchange gain or loss, stock-based compensation expense or
recovery, other gain or loss and financial instrument loss.
Gran Tierra’s management uses these supplemental
measures to analyse performance and income generated by its
principal business activities prior to the consideration of how
non-cash items affect that income and believes that these financial
measures are useful supplemental information for investors to
analyse its performance and its financial results. A reconciliation
from net (loss) income to EBITDA and adjusted EBITDA are as
follows:
|
|
Three Months Ended |
|
(Thousands of U.S. Dollars) |
June 30,2024 |
March 31,2024 |
December 31,2023 |
September 30,2023 |
|
Net income (loss) |
36,371 |
-78 |
7,711 |
6,527 |
|
Adjustments to reconcile net income to EBITDA and Adjusted
EBITDA |
|
|
|
|
|
DD&A expenses |
55,490 |
56,150 |
52,635 |
55,019 |
|
Interest expense |
18,398 |
18,424 |
17,789 |
13,503 |
|
Income tax (recovery) expense |
-9,072 |
17,395 |
5,499 |
40,333 |
|
EBITDA (non-GAAP) |
101,187 |
91,891 |
83,634 |
115,382 |
|
Non-cash lease expense |
1,381 |
1,413 |
1,479 |
1,235 |
|
Lease payments |
-1,311 |
-1,058 |
-1,100 |
-676 |
|
Foreign exchange (gain) loss |
-4,413 |
-815 |
3,696 |
1,717 |
|
Stock-based compensation expense |
6,160 |
3,361 |
1,974 |
1,931 |
|
Other (gain) loss |
- |
- |
3,266 |
-354 |
|
Unrealized derivative instruments gain |
- |
- |
- |
- |
|
Other financial instruments loss |
- |
- |
15 |
- |
|
Adjusted EBITDA (non-GAAP) |
103,004 |
94,792 |
92,964 |
119,235 |
Net Debt (Gran Tierra):
Gran Tierra’s net debt, as presented, is defined
as Gran Tierra’s senior notes and borrowings under Gran Tierra’s
credit facility, excluding deferred financing fees, less cash and
cash equivalents.
Gran Tierra’s management uses this supplemental
measure to evaluate the financial sustainability of Gran Tierra’s
business and leverage. The most directly comparable US GAAP measure
is total debt. A reconciliation from total debt to net debt is as
follows:
|
In thousands of US$ |
As at 30 June 2024 |
|
Senior
notes(i) |
US$ |
637,000 |
|
Credit
facility |
|
— |
|
Total debt |
US$ |
637,000 |
|
Cash and cash
equivalents |
|
115,000 |
|
Net debt |
US$ |
521,000 |
(i) Calculated using the sum of US$24.8 million
aggregate principal amount of Gran Tierra’s 6.25% Senior Notes due
2025, US$24.2 million aggregate principal amount of Gran Tierra’s
7.75% Senior Notes due 2027, and US$587.6 million aggregate
principal amount of Gran Tierra’s 9.50% Senior Notes due 2029,
excluding deferred financing fees.
EBITDA and Adjusted EBITDA (i3 Energy):
EBITDA is defined as earnings before
depreciation and depletion, financial costs, and tax. Adjusted
EBITDA is defined as EBITDA before gain on bargain purchase and
asset dispositions and acquisition costs. i3 Energy management
believes that EBITDA provides useful information into the operating
performance of i3 Energy, is commonly used within the oil and gas
sector, and assists its management and investors by increasing
comparability from period to period. Adjusted EBITDA removes the
gain or loss on bargain purchase and asset dispositions and the
related acquisition costs which management does not consider to be
representative of the underlying operations of i3 Energy.
A reconciliation of profit as reported under
IFRS to EBITDA and Adjusted EBITDA is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Profit for the period |
14,463 |
|
728 |
8,369 |
|
10,944 |
|
Depreciation and depletion |
8,027 |
|
8,702 |
16,660 |
|
19,410 |
|
Finance costs |
950 |
|
2,312 |
3,115 |
|
4,682 |
|
Tax |
4,840 |
|
1,104 |
7,036 |
|
3,525 |
|
EBITDA |
28,280 |
|
12,846 |
35,180 |
|
38,561 |
|
Gain on asset dispositions |
(15,779) |
|
– |
(15,779) |
|
– |
|
Adjusted EBITDA |
12,501 |
|
12,846 |
19,104 |
|
38,561 |
|
Adjusted EBITDA presented in
USD(i) |
15,770 |
|
16,088 |
24,163 |
|
47,546 |
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Net Operating Income (i3 Energy):
Net operating income is defined as gross profit
before depreciation and depletion, gains or losses on risk
management contracts, and other operating income, which equals
revenue from the sale of oil and gas and processing income, less
production costs. i3 Energy management believes that net operating
income is a useful supplementary measure as it provides investors
with information on operating margins before non-cash depreciation
and depletion charges and gains or losses on risk management
contracts. These metrics are also presented on a per BOE basis.
A reconciliation of gross profit as reported
under IFRS to net operating income is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Gross profit |
7,796 |
|
5,775 |
|
8,698 |
|
22,985 |
|
|
Depreciation and depletion |
8,027 |
|
8,702 |
|
16,660 |
|
19,410 |
|
|
(Gain) / loss on risk management contracts |
(1,624) |
|
(387) |
|
1,459 |
|
(3,343) |
|
|
Other operating income |
(1,786) |
|
– |
|
(1,816) |
|
(107) |
|
|
Net operating income |
12,413 |
|
14,090 |
|
25,001 |
|
38,945 |
|
|
Net operating income presented in
USD(i) |
5,659 |
|
17,646 |
|
31,621 |
|
48,019 |
|
|
Total Sales Production (BOE) |
1,662,661 |
|
1,686,139 |
|
3,428,516 |
|
3,735,840 |
|
|
Net operating income per BOE (£/BOE) |
7.47 |
|
8.36 |
|
7.29 |
|
10.42 |
|
|
Net operating income per BOE presented in
USD(i) |
9.42 |
|
10.47 |
|
9.22 |
|
12.85 |
|
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Free Cash Flow (i3 Energy):
Free cash flow is defined as cash from operating
activities plus proceeds on disposal of PP&E and E&E, less
cash capital expenditures on PP&E and E&E. i3 Energy
management believes that free cash flow provides useful information
to management and investors about i3 Energy’s ability to pay
dividends. This definition was expanded in Q2 2024 to include
proceeds on disposal of PP&E and E&E as i3 Energy completed
material dispositions in the period.
A reconciliation of cash from operating
activities to free cash flow is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Net cash from operating activities |
6,053 |
|
3,186 |
|
19,569 |
|
24,294 |
|
|
Disposal of property, plant & equipment |
17,956 |
|
– |
|
17,956 |
|
– |
|
|
Disposal of E&E assets |
1,234 |
|
– |
|
1,234 |
|
– |
|
|
Expenditures on property, plant & equipment |
(2,567) |
|
(3,274) |
|
(3,985) |
|
(15,225) |
|
|
Expenditures on exploration and evaluation assets |
(62) |
|
(173) |
|
(361) |
|
(1,200) |
|
|
Free cash flow |
22,614 |
|
369 |
|
34,413 |
|
7,869 |
|
|
FCF presented in USD(i) |
28,528 |
|
462 |
|
43,526 |
|
9,702 |
|
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Net Cash Surplus and Debt (i3 Energy):
Net cash surplus or net debt is defined as
borrowings and leases and trade and other payables, less cash and
cash equivalents and trade and other receivables. This definition
was expanded in 2023 and 2024 to include other non-current
liabilities and other non-current assets which are new account
balances that arose during the respective years. When net debt is
negative it is referred to as a net cash surplus. i3 Energy
management believes that net cash surplus or net debt is a
meaningful measure to monitor the liquidity position of i3
Energy.
A reconciliation of the various line items per
the statement of financial position to net cash surplus or net debt
is provided below.
|
|
30 Jun 2024 £’000 |
31 Dec 2023 £’000 |
|
Borrowings and leases |
209 |
|
34,569 |
|
|
Trade and other payables |
23,479 |
|
27,640 |
|
|
Other non-current liabilities |
431 |
|
84 |
|
|
Income taxes (receivable) / payable |
(27) |
|
(205) |
|
|
Cash and cash equivalents |
(8,802) |
|
(23,507) |
|
|
Trade and other receivables |
(19,658) |
|
(20,534) |
|
|
Other non-current assets |
(1,136) |
|
– |
|
|
Net (cash surplus) / debt |
(5,504) |
|
18,047 |
|
|
Net (cash surplus) / debt presented in
USD(ii) |
(6,958) |
|
23,005 |
|
(ii) Amounts converted at the period-end GBP:USD
exchange rates of 1.2642 and 1.2747 for the 2024 and 2023 periods,
respectively.
Disclosure of Oil and Gas
Information
All reserves and production volumes are on an
average working interest before royalties (“WI”)
basis unless otherwise indicated. Production is expressed in
barrels of oil per day (“BOPD”) in respect of Gran
Tierra and in barrels of oil equivalent per day
(“BOEPD”) in respect of i3 Energy while reserves
are expressed in million barrels of oil equivalent
(“MMBOE”), unless otherwise indicated.
Gran Tierra’s 2023 year-end reserves, future net
revenue and ancillary information were evaluated by Gran Tierra’s
independent qualified reserves evaluator McDaniel in a report with
an effective date of 31 December 2023 (the “Gran Tierra
McDaniel Reserves Report”). In conjunction with the
Acquisition, McDaniel has prepared a fair market valuation report
dated 15 August 2024 in respect of certain of Gran Tierra's
reserves, future net revenue and net present values (the
“Gran Tierra Valuation Report”) with an effective
date of 31 December 2023 for the purposes of Rule 29 of the
Takeover Code in which the referenced reserves, future net revenue
and net present values disclosed therein matches the corresponding
reserves future net revenue and net present values provided for in
the Gran Tierra McDaniel Reserves Report. All reserves values,
future net revenue and ancillary information contained in this
Announcement, with respect to the assets of Gran Tierra, have been
prepared by McDaniel and calculated in compliance with Canadian
National Instrument 51-101 – Standards of Disclosure for Oil and
Gas Activities (“NI 51-101”) and the Canadian Oil
and Gas Evaluation Handbook (“COGEH”) and derived
from the Gran Tierra Valuation Report and the Gran Tierra McDaniel
Reserves Report.
Certain of i3 Energy’s ancillary information
presented in this Announcement were evaluated by i3 Energy’s
independent qualified reserves evaluator GLJ in a report with an
effective date of 31 December 2023 (the “i3 Energy GLJ
Reserves Report”). In conjunction with the Acquisition,
GLJ has prepared a fair market valuation report dated 16 August
2024 in respect of i3 Energy's reserves, future net revenue and net
present values (the “i3 Energy Valuation Report”)
with an effective date of 31 July 2024 for the purposes of Rule 29
of the Takeover Code. All reserves values, future net revenue and
ancillary information contained in this Announcement, with respect
to the assets of i3 Energy, have been prepared by GLJ and
calculated in compliance with NI 51-101 and COGEH, and derived from
the i3 Energy Valuation Report or the i3 Energy GLJ Reserves Report
as applicable. The results of i3 Energy's GLJ Reserves Report were
disclosed on i3 Energy’s press release dated 25 March 2024, a copy
of which is available on i3 Energy's website at
https://i3.energy/.
Barrel of oil equivalents
(“BOE”) have been converted on the basis of six
thousand cubic feet (“Mcf”) natural gas to 1
barrel (“bbl”) of oil. BOE’s may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf:
1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. In addition, given that the value
ratio based on the current price of oil as compared with natural
gas is significantly different from the energy equivalent of six to
one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be
misleading as an indication of value.
The following reserves categories are discussed
in this Announcement: Proved (“1P”), 1P plus
Probable (“2P”) and 2P plus Possible
(“3P”), Proved Developed Producing, Proved
Developed Non-Producing and Proved Undeveloped.
Proved reserves are those reserves that can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves. Probable reserves are those
additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated proved plus probable reserves. Possible reserves are
those additional reserves that are less certain to be recovered
than Probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
Proved developed reserves are those proved
reserves that are expected to be recovered from existing wells and
installed facilities or, if facilities have not been installed,
that would involve a low expenditure (e.g., when compared to cost
of drilling a well) to put reserves on production. Developed
category may be subdivided into producing and non-producing.
Undeveloped reserves are those reserves expected to be recovered
from known accumulations where a significant expenditure (e.g.,
when compared to the cost of drilling a well) is required to render
them capable of production. They must fully meet the requirements
of the reserves category (proved, probable, possible) to which they
are assigned.
Estimates of net present value and future net
revenue contained herein do not necessarily represent fair market
value. Estimates of reserves and future net revenue for individual
properties may not reflect the same level of confidence as
estimates of reserves and future net revenue for all properties,
due to the effect of aggregation. There is no assurance that the
forecast price and cost assumptions applied by McDaniel or GLJ in
evaluating Gran Tierra’s or i3 Energy’s reserves, respectively,
will be attained and variances could be material. See the Gran
Tierra Valuation Report for a summary of the price forecasts
employed by McDaniel therein. See the i3 Energy Valuation Report
for a summary of the price forecasts employed by GLJ therein. There
are numerous uncertainties inherent in estimating quantities of
crude oil and natural gas reserves. The reserves information set
forth in the Gran Tierra McDaniel Reserves Report, the i3 Energy
GLJ Reserves Report, the Gran Tierra Valuation Report and the i3
Energy Valuation Report are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may be greater than or less than the estimates provided
therein.
All reserves assigned in the Gran Tierra
McDaniel Reserves Report and the Gran Tierra Valuation Report are
located in Colombia and Ecuador and presented on a consolidated
basis by foreign geographic area. References to a formation where
evidence of hydrocarbons has been encountered is not necessarily an
indicator that hydrocarbons will be recoverable in commercial
quantities or in any estimated volume. Gran Tierra’s reported
production is a mix of light crude oil and medium and heavy crude
oil for which there is not a precise breakdown since Gran Tierra’s
oil sales volumes typically represent blends of more than one type
of crude oil. Well test results should be considered as preliminary
and not necessarily indicative of long-term performance or of
ultimate recovery. Well log interpretations indicating oil and gas
accumulations are not necessarily indicative of future production
or ultimate recovery. If it is indicated that a pressure transient
analysis or well-test interpretation has not been carried out, any
data disclosed in that respect should be considered preliminary
until such analysis has been completed. References to thickness of
“oil pay” or of a formation where evidence of hydrocarbons has been
encountered is not necessarily an indicator that hydrocarbons will
be recoverable in commercial quantities or in any estimated
volume.
All evaluations of future net revenue contained
in the Gran Tierra McDaniel Reserves Report, the i3 Energy GLJ
Reserves Report, the Gran Tierra Valuation Report and the i3 Energy
Valuation Report are after the deduction of royalties, operating
costs, development costs, production costs and abandonment and
reclamation costs but before consideration of indirect costs such
as administrative, overhead and other miscellaneous expenses. It
should not be assumed that the estimates of future net revenues
presented in this Announcement represent the fair market value of
the reserves. There are numerous uncertainties inherent in
estimating quantities of crude oil reserves and the future cash
flows attributed to such reserves. The reserve and associated cash
flow information set forth in the Gran Tierra McDaniel Reserves
Report, the i3 Energy GLJ Reserves Report, the Gran Tierra
Valuation Report and the i3 Energy Valuation Report are estimates
only and there is no guarantee that the estimated reserves will be
recovered. Actual reserves may be greater than or less than the
estimates provided therein.
Booked drilling locations of i3 Energy disclosed
herein are derived from the i3 Energy GLJ Reserves Report and
account for drilling locations that have associated 2P
reserves.
This Announcement contains reference to reserves
replacement of Gran Tierra which is an oil and gas metric that does
not have a standardised meaning or standard method of calculation
and therefore such measure may not be comparable to similar
measures used by other companies and should not be used to make
comparisons. That metric has been included herein to provide
readers with an additional measure to evaluate Gran Tierra's
performance; however, that measure is not a reliable indicator of
the future performance of Gran Tierra and future performance may
not compare to the performance in previous periods. Reserves
replacement is calculated as reserves in the referenced category
divided by estimated referenced production. Gran Tierra management
uses this measure to determine the relative change of its reserves
base over a period of time.
References in this Announcement to IP30, IP90
and other short-term production rates of Gran Tierra are useful in
confirming the presence of hydrocarbons, however such rates are not
determinative of the rates at which such wells will commence
production and decline thereafter and are not indicative of
long-term performance or of ultimate recovery. While encouraging,
readers are cautioned not to place reliance on such rates in
calculating the aggregate production of Gran Tierra. Gran Tierra
cautions that such results should be considered to be
preliminary.
No Profit Forecasts or
Estimates
The Gran Tierra Profit Forecast and the i3
Energy Profit Forecast are profit forecasts for the purposes of
Rule 28 of the Takeover Code. As required by Rule 28.1 of the
Takeover Code, the assumptions on which the Gran Tierra Profit
Forecast is stated are set out in Appendix 4 to this Announcement
and the assumptions on which the i3 Energy Profit Forecast is
stated are set out in paragraph 6 of this Announcement.
Other than the Gran Tierra Profit Forecast and
the i3 Energy Profit Forecast, no statement in this Announcement is
intended as a profit forecast or estimate for any period and no
statement in this Announcement should be interpreted to mean that
earnings or earnings per share or dividend per share for Gran
Tierra or i3 Energy, as appropriate, for the current or future
financial years would necessarily match or exceed the historical
published earnings or earnings per share or dividend per share for
Gran Tierra or i3 Energy as appropriate.
Dealing and Opening Position Disclosure
Requirements
Under Rule 8.3(a) of the Takeover Code, any
person who is interested in one per cent. or more of any class of
relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is
likely to be, solely in cash) must make an Opening Position
Disclosure following the commencement of the Offer Period and, if
later, following the Announcement in which any securities exchange
offeror is first identified.
An Opening Position Disclosure must contain
details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An
Opening Position Disclosure by a person to whom Rule 8.3(a) applies
must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10th
Business Day following the Announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any
person who is, or becomes, interested in one per cent. or more of
any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or
of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s), save to the extent that these
details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 p.m. (London time) on the Business Day following
the date of the relevant dealing. If two or more persons act
together pursuant to an agreement or understanding, whether formal
or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror,
they will be deemed to be a single person for the purpose of Rule
8.3.
Opening Position Disclosures must also be made
by the offeree company and by any offeror and Dealing Disclosures
must also be made by the offeree company, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and
8.4). Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
Offer Period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 20
7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Rounding
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover
Code, i3 Energy confirms that as at the date of this Announcement,
it has in issue and admitted to trading on the London Stock
Exchange and the TSX 1,202,447,663 ordinary shares of 0.01 pence
each (excluding ordinary shares held in treasury). The
International Securities Identification Number (ISIN) of the
ordinary shares is GB00BDHXPJ60.
In accordance with Rule 2.9 of the Takeover
Code, Gran Tierra confirms that as at the date of this
Announcement, it has in issue and admitted to trading on the NYSE
American, the London Stock Exchange and the TSX 30,665,305 ordinary
shares of US$0.001 each. The International Securities
Identification Number (ISIN) of the ordinary shares is
US38500T2006.
Publication on website and availability
of hard copies
A copy of this Announcement is and will be
available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, for inspection on Gran
Tierra's website
https://www.grantierra.com/investor-relations/recommended-acquisition/
and on i3 Energy 's website
https://i3.energy/grantierra-offer-terms/ by no later than 12 noon
(London time) on the Business Day following this Announcement. For
the avoidance of doubt, the contents of the websites referred to in
this Announcement are not incorporated into and do not form part of
this Announcement.
In accordance with Rule 30.3 of the Takeover
Code, i3 Energy Shareholders and persons with information rights
may request a hard copy of this Announcement by contacting i3
Energy's registrars, Link Group or by calling Link Group on +44
(0)371 664 0321. Calls are charged at the standard geographical
rate and will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Lines are
open between 9.00 a.m. to 5.30 p.m. (London time), Monday to Friday
(except public holidays in England and Wales). Please note that
Link Group cannot provide any financial, legal or tax advice. Calls
may be recorded and monitored for security and training purposes.
For persons who receive a copy of this Announcement in electronic
form or via a website notification, a hard copy of this
Announcement will not be sent unless so requested. Such persons may
also request that all future documents, announcements and
information to be sent to them in relation to the Acquisition
should be in hard copy form. For the avoidance of doubt, the
contents of the aforementioned websites, and any websites
accessible from hyperlinks on those websites, are not incorporated
into and do not form part of this Announcement.
If you are in any doubt about the contents of
this Announcement or the action you should take, you are
recommended to seek your own independent financial advice
immediately from your stockbroker, bank manager, solicitor,
accountant or independent financial adviser duly authorised under
the Financial Services and Markets Act 2000 (as amended) if you are
resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser.
Qualified Person's
Statement
In accordance with the AIM Note for Mining and
Oil and Gas Companies, i3 Energy discloses that Majid Shafiq is the
qualified person who has reviewed the technical information
contained in this Announcement. He has a Master's Degree in
Petroleum Engineering from Heriot-Watt University and is a member
of the Society of Petroleum Engineers. Majid Shafiq consents to the
inclusion of the information in the form and context in which it
appears.
NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY IN, INTO
OR FROM ANY RESTRICTED JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF
SUCH JURISDICTION.
THE FOLLOWING ANNOUNCEMENT IS AN
ADVERTISEMENT AND NOT A PROSPECTUS OR CIRCULAR OR PROSPECTUS OR
CIRCULAR EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY
INVESTMENT DECISION IN RELATION TO THE NEW GRAN TIERRA SHARES
EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT WHICH
IS PROPOSED TO BE PUBLISHED IN DUE COURSE.
NEITHER THIS ANNOUNCEMENT, NOR THE
INFORMATION CONTAINED HEREIN, CONSTITUTE A SOLICITATION OF PROXIES
WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LAWS.
SHAREHOLDERS ARE NOT BEING ASKED AT THIS TIME TO EXECUTE A PROXY IN
FAVOUR OF THE ACQUISITION OR THE MATTERS DESCRIBED
HEREIN.
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION.
FOR IMMEDIATE RELEASE.
19 August 2024
Recommended and Final* Cash and Share
Acquisition
of
i3 Energy plc ("i3 Energy")
by
Gran Tierra Energy, Inc. ("Gran
Tierra")
to be implemented by way of a scheme of
arrangement under Part 26 of the Companies Act 2006
1. Summary
The Boards of Gran Tierra and i3 Energy are
pleased to announce that they have reached agreement on the terms
of a recommended and final* cash and share offer by Gran Tierra for
i3 Energy pursuant to which Gran Tierra will acquire the entire
issued and to be issued share capital of i3 Energy (the
"Acquisition"), intended to be effected by means
of a court sanctioned scheme of arrangement between i3 Energy and
the i3 Energy Shareholders under Part 26 of the Companies Act (the
"Scheme").
Under the terms of the Acquisition, each i3
Energy Shareholder will be entitled to receive:
- one New
Gran Tierra Share per every 207 i3 Energy Shares held;
and
- 10.43
pence cash per i3 Energy Share,
(together, the
"Consideration")
In addition, each i3 Energy Shareholder will be
entitled to receive:
- a cash
dividend of 0.2565 pence per i3 Energy Share in lieu of the
ordinary dividend in respect of the three month period ending 30
September 2024 (the "Acquisition Dividend")
Following completion of the Acquisition, i3
Energy Shareholders will own up to 16.5 per cent. of Gran
Tierra.
Based on Gran Tierra's closing price of US$8.66
per Gran Tierra Share on the NYSE American on 16 August 2024 (being
the last Business Day before the Offer Period began), the
Acquisition implies a value of 13.92 pence per i3 Energy Share and
approximately £174.1 (US$225.4) for the entire issued and to be
issued share capital of i3 Energy which represents:
(e) a premium
of 49.0 per cent. to the Closing Price of 9.34 pence per i3 Energy
Share on 16 August 2024;
(f) a premium
of 49.7 per cent. to the volume weighted average price of 9.30
pence per i3 Energy Share for the 30-day period ended 16 August
2024;
(g) a premium
of 43.6 per cent. to the volume weighted average price of 9.70
pence per i3 Energy Share for the 60-day period ended 16 August
2024; and
(h) a premium
of 37.5 per cent. to the volume weighted average price of 10.12
pence per i3 Energy Share for the 180-day period ended 16 August
2024.
A Mix and Match Facility will also be made
available to i3 Energy Shareholders in order to enable them to
elect, subject to off-setting elections, to vary the proportions in
which they receive cash and New Gran Tierra Shares to be issued.
The maximum aggregate amount of cash to be paid and New Gran Tierra
Shares to be issued under the terms of the Acquisition will not be
varied or increased as a result of elections under the Mix and
Match Facility, in accordance with Gran Tierra’s no increase
statement made in accordance with Rule 32.2 of the Takeover Code.
Gran Tierra reserves the right to scale back elections made for the
New Gran Tierra Shares pursuant to the Mix and Match Facility if
the issuance of such New Gran Tierra Shares would result in any i3
Energy Shareholder holding 10% or more of Gran Tierra's issued
share capital (on a non-diluted basis) following completion of the
Acquisition.
If any dividend, distribution or other return of
value in respect of the i3 Energy Shares other than the Acquisition
Dividend is declared, paid, made or becomes payable on or after the
date of this Announcement and prior to the Effective Date, Gran
Tierra will reduce the cash consideration payable for each i3
Energy Share under the terms of the Acquisition by the amount per
i3 Energy Share of such dividend, distribution or other return of
value. Any exercise by Gran Tierra of its rights referred to in
this paragraph shall be the subject of an announcement. In such
circumstances, i3 Energy Shareholders would be entitled to receive
and retain any such dividend, distribution or other return of
value, which has been declared, made or paid or which becomes
payable.
It is intended that, immediately following
completion of the Acquisition, Gran Tierra will transfer the entire
issued share capital of i3 Energy to its wholly owned, indirect
subsidiary, Gran Tierra EIH. Gran Tierra EIH is the holding entity
for Gran Tierra's Colombian assets.
Following completion of the Acquisition, it is
expected that the i3 Energy Shares will be cancelled from trading
on the AIM market of the London Stock Exchange and will be delisted
from the TSX and that Gran Tierra will, subject to Canadian
Securities Laws, apply to have i3 Energy cease to be a reporting
issuer in all jurisdictions of Canada in which it is a reporting
issuer.
No Increase Statement
Gran Tierra considers the financial terms of the
Acquisition comprising 10.43 pence per i3 Energy Share in cash, one
new Gran Tierra Share per every 207 i3 Energy Share held, and the
payment of the 0.2565 pence per i3 Energy Share Acquisition
Dividend to be full and fair and therefore that the financial terms
of the Acquisition will not be increased in accordance with Rule
32.2 of the Takeover Code. Under Rule 35.1 of the Takeover Code, if
the Acquisition lapses, except with the consent of the Panel, Gran
Tierra will not be able to make an offer for i3 Energy for at least
12 months.
Gran Tierra reserves the right to revise the
financial terms of the Acquisition in the event: (i) a third party,
other than Gran Tierra announces a firm intention to make an offer
for i3 Energy on more favourable terms than Gran Tierra’s
Acquisition; or (ii) the Panel otherwise provides its consent.
2. Background to and
reasons for the Acquisition
Over the last five years, Gran Tierra has looked
to diversify into specific oil and gas basins where it is confident
it can create shareholder value focused on operated, high-quality
assets with large resources in place and access to infrastructure.
The Western Canadian Sedimentary Basin (“WCSB”)
being one of the basins on Gran Tierra’s priority list. The
majority of the Gran Tierra team has worked in the WCSB and, with
its headquarters located in Calgary, is well positioned to do so
again.
Gran Tierra believes that the Acquisition offers
significant benefits to both companies and their respective
shareholders, including the following:
- A
business with increased scale and relevance: The
Acquisition will create an independent energy company of scale in
the Americas with significant production, reserves, cash flows and
development optionality. This increased scale is expected to
facilitate access to capital, allow for optimised capital
allocation, enhance shareholder returns and increase relevance to
investors:
- i3 Energy has
guided to 2024 working interest production of 18,000 to 19,000
BOEPD from its Canadian assets with exit rate guidance of 20,250 –
21,250 BOEPD and Gran Tierra has announced 2024 guidance production
of 32,000 to 35,000 BOPD (100 per cent. oil).
- i3 Energy has
1P working interest reserves of 88 MMBOE as at 31 July 2024 and
Gran Tierra had 1P working interest reserves of 90 MMBOE as at 31
December 2023.
- i3 Energy has
2P working interest reserves of 175 MMBOE as at 31 July 2024 and
Gran Tierra had 2P working interest reserves of 147 MMBOE as at 31
December 2023.
- i3 Energy has
an independently valued 2P net present value discounted at 10 per
cent. ("NPV10") (after tax) of C$994 million
(approximately US$725 million) as at 31 July 2024 and Gran Tierra
has an independently valued 2P NPV10 (after tax) of US$1.9 billion
as at 31 December 2023. On a 1P (after tax) basis, i3 Energy’s
NPV10 is C$469 million (approximately US$342 million) and Gran
Tierra’s NPV10 is US$1.3 billion.
- i3 Energy has
announced full year 2024 EBITDA guidance of US$50 – 55 million
after considering hedges and Gran Tierra has announced full year
2024 EBITDA guidance of US$335 – US$395 million in its low case (at
US$70/bbl Brent oil pricing), US$400 – US$460 million in its base
case (at US$80/bbl Brent oil pricing), and US$480 – US$540 million
in its high case (at US$90/bbl Brent oil pricing).
- i3 Energy has
over 250 net booked drilling locations (over 374 gross booked
drilling locations) associated with 2P reserves which, coupled with
Gran Tierra’s substantial booked reserves, recent exploration
discoveries and significant prospective acreage across Colombia and
Ecuador, provides development and exploration upside potential to
shareholders.
-
Increased diversity across geographies and product
streams: The Acquisition will create a more diverse
international energy company operating across the Americas in
regions with substantial oil and gas production, well-established
regulatory regimes, stable contracts, access to markets and
attractive fiscal terms. The Combined Group will offer a more
diversified proposition to both i3 Energy Shareholders and Gran
Tierra shareholders. Gran Tierra's and i3 Energy's Q2 2024
production imply an approximate geographic split of 62 per cent.
Colombia, 36 per cent. Canada, and 3 per cent. Ecuador for the
Combined Group, with a commodity mix of 81 per cent. liquids and 19
per cent. natural gas. The addition of new geographies and
commodities, along with the exposure to an investment grade
country, is expected to benefit the Combined Group in terms of
increased development optionality, risk diversification and credit
profile. The Combined Group would have approximately 1.4 million
net acres in Colombia, 138 thousand net acres in Ecuador and 584
thousand net acres in Canada including 298 thousand net acres in
Central Alberta, 102 thousand net acres in Wapiti/Elmworth, 50
thousand net acres in Simonette, and 69 thousand net acres in North
Alberta (Clearwater)
-
Optimised capital allocation and investment: The
Combined Group will have exposure to high return projects across
Canada, Colombia and Ecuador, enabling capital allocation and
investment across the portfolio to be optimised, using Gran
Tierra’s balance sheet strength to accelerate production and cash
flow growth from i3 Energy’s 250 net booked drilling locations
associated with 2P reserves and additional unbooked Canadian
drilling locations and Gran Tierra’s high-impact exploration and
low decline oil assets currently under waterflood. Gran Tierra
further believes that the strength of the Combined Group will
provide an excellent platform for future consolidation, both in
Canada and internationally, with significant management expertise,
free cash flow, a strong balance sheet and borrowing base
potential.
- Balance
sheet strength: Gran Tierra has a strong balance sheet and
ample liquidity to fund growth projects and shareholder returns. As
of 30 June 2024, Gran Tierra had twelve month trailing net debt to
adjusted EBITDA of 1.3x and a cash balance of US$115 million.
Approximately 70 per cent. of Gran Tierra's debt is due in 2028 and
2029. The addition of i3 Energy’s production and cash flows would
enhance Gran Tierra’s balance sheet and enable accelerated
investment and shareholder returns. i3 Energy’s assets would add
production, cash flows, reserves and a diversified drilling
inventory in an investment grade country, Gran Tierra expects this
enhanced scale and diversity to provide enhancements to the credit
profile of the business and, ultimately, lower its cost of capital.
As at 30 June 2024 i3 Energy had zero debt and a C$75 million
undrawn credit facility.
-
Increased trading liquidity and investor access:
Gran Tierra maintains a primary listing on the NYSE American, where
it trades significant volume, with additional listings on the
London Stock Exchange and the TSX. With i3 Energy shareholders
expected to own up to 16.5 per cent. of Gran Tierra on completion
of the Acquisition, the Acquisition is expected to provide enhanced
trading liquidity for the Combined Group's shareholders across
exchanges and provide continuity of trading venues for i3 Energy’s
Shareholders. Additionally, with increased scale, Gran Tierra
expects to be increasingly relevant to a larger pool of
international equity and credit investors, with the potential for
this to have further benefits in terms of trading liquidity and
valuation multiple expansion.
- Cash
return for i3 Energy shareholders with upside potential:
Gran Tierra’s offer provides i3 Energy Shareholders with a
significant premium, in cash, to the current value of their
holdings with material upside potential through equity ownership of
the Combined Group. Gran Tierra intends to use the Combined Group's
scale and enhanced financial capacity to accelerate development of
i3 Energy’s Canadian assets as well as Gran Tierra's existing
Colombian and Ecuadorian assets and expects this to provide
meaningful long-term returns to shareholders of the Combined Group.
Since 1 January 2023 Gran Tierra has purchased approximately 11 per
cent. of its Gran Tierra Shares outstanding from free cash
flow.
3. Recommendation
The i3 Energy Directors, who have been so
advised by Zeus Capital as to the financial terms of the
Acquisition, consider the terms of the Acquisition to be fair and
reasonable. In providing its advice to the i3 Energy Directors,
Zeus Capital has taken into account the commercial assessments of
the i3 Energy Directors. In addition, the i3 Energy Directors
consider the terms of the Acquisition to be in the best interests
of the i3 Energy Shareholders as a whole. Zeus Capital is providing
independent financial advice to the i3 Energy Directors for the
purposes of Rule 3 of the Takeover Code.
Accordingly, the i3 Energy Directors intend to
recommend unanimously that the i3 Energy Shareholders vote in
favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the i3 Energy General Meeting as those i3 Energy
Directors who hold i3 Energy Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of an aggregate of
32,139,532 i3 Energy Shares representing, in aggregate,
approximately 2.6728 per cent. of the ordinary share capital of i3
Energy in issue on the Last Practicable Date (excluding any i3
Energy Shares in treasury).
Further details of the irrevocable undertakings
are set out in Appendix 3 to this Announcement.
4. Background to and reasons
for the recommendation of the i3 Energy Directors
Since entering Canada in 2020, i3 Energy has
executed a series of strategic acquisitions. This targeted
acquisition strategy focused on establishing four high quality core
operating areas (namely Central Alberta, Simonette, Wapiti
Clearwater), each area consisting of strong, low-decline,
production profiles and an extensive inventory of economic
development drilling opportunities.
In Q1 2024, i3 Energy was approached by multiple
counterparties, including but not limited to Gran Tierra,
expressing unsolicited and non-binding interest in a potential
corporate combination or transaction. Beginning in Q2 2024, i3
Energy and its advisors conducted a targeted competitive outreach
process (the “Process”), while strictly adhering
to the rules of the Takeover Code, to evaluate potential strategic
alternatives for i3 Energy. The Process was successful, with i3
Energy receiving a number of proposals. In exchange for being
selected as preferred bidder, Gran Tierra was given the opportunity
to improve its offer, which it did on 27 July 2024. As such, Gran
Tierra was selected as preferred bidder with the offer reflecting a
premium in cash to the prevailing share price and with additional
upside potential from ongoing exposure to the Combined Group. In
addition, i3 Energy Directors welcomed Gran Tierra’s intention to
retain i3 Energy’s Canadian employee base and its ability to
provide i3 Energy Shareholders with ongoing and enhanced trading
liquidity through its multi-exchange listings on the NYSE American,
the TSX and the London Stock Exchange.
Following further diligence and negotiations,
Gran Tierra submitted a further increased non-binding proposal on
13 August 2024. Gran Tierra made a final increased proposal on 15
August 2024, reflecting the terms set out in this Announcement,
which received unanimous support from the i3 Energy Directors.
The i3 Energy Directors note Gran Tierra’s
familiarity with i3 Energy’s assets and operations and acknowledge
the compelling strategic rationale of the Acquisition and the
potential benefits for i3 Energy in the next phase of its
growth.
In considering the Acquisition and the
recommendation, the i3 Energy Directors have taken into account a
range of factors including the following:
- the Acquisition
represents a significant premium of approximately 49 per cent. to
the Closing Price of an i3 Energy Share of 9.34 pence on the Last
Practicable Date, recognising the strength of i3 Energy and its
prospects, but takes account of the significant requirement for
capital to realise those prospects;
- the Acquisition
provides an opportunity for i3 Energy Shareholders to crystallise a
premium in cash, with additional value through ongoing equity
ownership in the Combined Group which provides further upside
potential in addition to the initial Acquisition premium;
- the Acquisition
accelerates, without further capital investment, time or
operational risk, the delivery of fair value to i3 Energy
Shareholders, removing the inherent uncertainty of the delivery of
future value which exists as a standalone entity;
- the Acquisition
value compares favourably to comparable company valuations and
transactions across a range of metrics;
- Gran Tierra,
with a listing on the TSX, its headquarters in Calgary and with
substantial previous operational experience in Canada, will be a
strong custodian of i3 Energy’s assets going forward and is well
positioned to obtain the necessary regulatory consents for the
Acquisition;
- the Combined
Group provides higher trading liquidity for shareholders with
London, New York and Toronto stock exchange listings;
- the Acquisition
will provide i3 Energy Shareholders, through their interest in the
Combined Group, with exposure to significant production, cash flow
and capital market access which is expected to provide the required
financial strength to support the development of i3 Energy’s asset
base as well as Gran Tierra’s existing assets in Colombia and
Ecuador; and
- the i3 Energy
Directors welcome Gran Tierra’s confirmation that it is supportive
of i3 Energy’s existing efforts to reduce carbon emissions and is
committed to such measures in the future.
The i3 Energy Directors have also given careful
consideration to Gran Tierra’s intentions regarding the strategy,
management, employees and locations of business of i3 Energy (as
set out in paragraph 11 below).
5. Information relating to i3
Energy
i3 Energy, an independent oil and gas company,
with a diverse, full-cycle portfolio of assets in the WCSB and UK
North Sea (“UKNS”) was initially admitted to
trading on AIM on 25 July 2017 before listing on the TSX in Q3
2020, upon the completion of the re-admission to trading on AIM
following its initial Canadian acquisitions.
i3 Energy’s registered office is in Eastleigh,
United Kingdom, and has an office located in Calgary in Canada,
where the majority of its employees are based and where its
operational plans are formulated and, in conjunction with i3
Energy's UK based management, executed.
i3 Energy’s Canadian acreage spans four key
regions in some of the WCSB’s most economic play types, including
Central Alberta, Simonette, Wapiti and Clearwater. The assets are
76 per cent. operated with production from approximately 850 net
long-life, low-risk and low-decline wells, spanning approximately
600,000 net acres. These four core areas combined delivered 18,271
BOEPD of production in Q2 2024, comprising of 57.5 million standard
cubic feet of natural gas per day ("mmcf/d"),
4,616 BOPD of natural gas liquids ("NGLs"), 3,983
BOPD of oil and condensate and 87 BOEPD of royalty interest
production.
i3 Energy has a total of 375 gross (254.4 net)
booked drilling locations associated with 2P reserves and
additional unbooked drilling locations across its acreage.
As of 31 July 2024, i3 Energy had 2P reserves of
approximately 175 MMBOE, and an independently assessed 2P NPV10
(after tax) of C$994 million (approximately US$725 million).
On 25 April 2024, i3 Energy announced its 2024
expected guidance, with full year working interest production was
expected to be between 18,000 and 19,000 BOEPD. On 13 August 2024,
i3 Energy announced updated guidance for 2024 full year EBITDA
before hedging gains and losses between US$50 million and US$55
million and full year annual net operating income of between US$63
million and US$67 million. At the end of Q2 2024, i3 Energy had
hedging in place to cover 34 per cent. and 28 per cent. of
projected Q3 2024 and Q4 2024 production respectively, providing
protection for approximately US$46.5 million of 2024 net operating
income.
On 13 August 2024, i3 Energy announced its
operating and financial results for the three and six months ended
30 June 2024. For the six months ended 30 June 2024, i3 Energy used
non-IFRS measures when assessing and discussing i3 Energy's
financial performance and financial position, as described further
in Non-IFRS, Non-GAAP and Other Specified Financial Measures below.
i3 Energy recorded an adjusted EBITDA of US$24.2 million, Net
Operating Income (“NOI”) of US$31.6 million and
Free Cash Flow of US$31.4 million for the six months ended 30 June
2024. i3 Energy exited the second quarter 2024 with a net cash
surplus of US$7 million, positioning i3 Energy with a strong
balance sheet, financial flexibility with a fully undrawn C$75
million credit facility, and solid cash flow base. i3 Energy has
paid multiple dividends to its shareholders since 2021, returning
£43.4 million or approximately US$55.3 million in dividends to date
(excluding the Acquisition Dividend). At the end of Q2 2024, i3
Energy had hedging in place to cover 34 per cent. and 28 per cent.
of projected Q3 2024 and Q4 2024 production respectively, providing
protection for approximately US$46.5 million of 2024 net operating
income. i3 Energy also announced a revised statement regarding the
unaudited NOI of US$63 – US$67 million and EBITDA after considering
hedges of US$50 – US$55 million to be generated by i3 Energy for
the financial year ending 2024.
During the first half of 2024, i3 Energy focused
on repositioning i3 Energy's balance sheet to unlock future growth
potential. During Q2 2024, i3 Energy closed four asset transactions
for combined net proceeds of US$26.29 million. The four
transactions included the partial sale of its royalty assets, the
partial sale of its Hangingstone assets, the disposition of certain
Bluesky mineral rights and the disposition of 3.75 net sections of
land in the greater Gilby area of Central Alberta. Proceeds from
these transactions assisted in the elimination of all outstanding
net debt.
In addition to its assets in the WCSB, i3 Energy
owns and operates block 13/23c in the UK North Sea which
encapsulates the Serenity oil discovery and the Minos High area. i3
Energy’s North Sea strategy has been focused on the development of
existing discoveries that are located proximal to existing
infrastructure in order to minimise development capital and
maximise economic recovery. Like other companies with UK North Sea
assets, the frequent and adverse changes to the UK’s oil and gas
fiscal regime have caused significant uncertainty in relation to
the development of i3 Energy’s UK assets.
6. i3 Energy Profit
Forecast
On 13 August 2024, i3 Energy announced its Q2
2024 Operational and Financial Results update (the "August
Announcement"), which included the following guidance in
relation to EBITDA and net operating income for the year ending 31
December 2024:
|
2024 Budget |
|
|
|
Net operating income (US$ million) |
63 - 67 |
|
EBITDA after considering hedges (US$ million) |
50 - 55 |
|
|
|
Application of Rule 28 to i3 Energy
Profit Forecast
The net operating income of US$63 – US$67
million and EBITDA (after considering hedges) of US$50 – US$55
million included in the August Announcement sets expectations for
the minimum net operating income and EBITDA after considering
hedges of i3 Energy for the period ending 31 December 2024 and for
purposes of Rule 28.1(c) of the Takeover Code constitutes a profit
forecast (the "i3 Energy Profit Forecast").
Directors' confirmation
The i3 Energy Directors confirm that, as at the
date of this announcement, the i3 Energy Profit Forecast remains
valid and that it has been compiled on the basis of the assumptions
stated below and that the basis of accounting used is consistent
with i3 Energy’s accounting policies which are in accordance with
UK adopted IFRS, and their interpretations issued by the
International Accounting Standards Board (“IASB”),
and with IFRS and their interpretations issued by the IASB
guidelines used by i3 Energy to measure business performance and
that i3 Energy applied in preparing its financial statements for
the year ended 31 December 2023.
Basis of preparation and principal
assumptions
The i3 Energy Profit Forecast and each of the
net operating income and EBITDA after considering hedges ranges set
out above are based upon internal i3 Energy forecasts. In
confirming the i3 Energy Profit Forecast and the net operating
income and EBITDA after considering hedges ranges, the i3 Energy
Directors have made the following assumptions, none of which are
within their control:
- price
assumptions of US$ 78.00/barrel ("bbl") for West
Texas Intermediate;
- price
assumptions of CAD 1.60/Gigajoules ("GJ") for AECO
natural gas; and
- foreign
exchange assumptions for full year 2024 of approximately 0.732 US$
to C$.
7. Information relating to Gran
Tierra
Gran Tierra, together with its subsidiaries, is
an independent international energy company focused on oil and
natural gas exploration and production. The Gran Tierra Shares are
admitted to trading on the NYSE American, the TSX and the London
Stock Exchange under the ticker symbol GTE with a market
capitalisation of US$266 million as at the Last Practicable
Date.
Gran Tierra is a full cycle company focused on
exploration, development, and production. Gran Tierra allocates
approximately 60-70 per cent. of its capital program to
development, with the balance to exploration and appraisal, and
targets returning up to 50 per cent. of free cash flow to
shareholders via share buybacks with the remainder to debt
reduction. Gran Tierra is currently developing its portfolio of 100
per cent. operated oil assets spanning 25 blocks and 1.4 million
net acres across Colombia and Ecuador and has a stated ambition to
pursue additional growth opportunities.
Gran Tierra has guided to 2024 working interest
production from existing assets of 32,000-35,000 BOPD, with
reported second quarter 2024 total average working interest
production of 32,776 BOPD. As at 31 December 2023, Gran Tierra had
certified 1P, 2P and 3P reserves of 90 MMBOE, 147 MMBOE and 207
MMBOE, respectively, with Gran Tierra having achieved reserve
replacement ratios in the year of 154 per cent. (1P), 242 per cent.
(2P) and 303 per cent. (3P), respectively. Gran Tierra has had five
consecutive years of 1P reserve growth.
Gran Tierra’s exploration acreage in Ecuador has
seen five consecutive oil successful discoveries, all of which are
currently on production.
|
Well |
Zone |
Onstream Date |
Initial Rate |
IP30 (BOPD)1. |
IP90 (BOPD)2 |
IP30 BS&W3 |
API |
|
Charapa-B5 |
Hollin |
11/9/2022 |
- |
1,092 |
910 |
2% |
|
28 |
|
Bocachico-J1 |
Basal Tena |
5/30/2023 |
- |
1,296 |
1,146 |
<1% |
20 |
|
Arawana-J1 |
Basal Tena |
5/17/2024 |
- |
1,182 |
- |
<1% |
20 |
|
Bocachico Norte-J1 |
T-Sand |
8/1/2024 |
1,353 |
- |
- |
- |
|
35 |
|
Charapa-B6 |
Hollin |
8/7/2024 |
2,118 |
- |
- |
- |
|
28 |
1. Average initial 30-day production per well.2.
Average initial 90-day production per well. 3. Percentage of basic
sediment and water in the initial 30-day production.
Gran Tierra recorded adjusted EBITDA of US$103
million in the second quarter 2024, reflecting a trailing net debt
to adjusted EBITDA of 1.3x and expects this to be less than 1.0x by
the end of 2024, prior to effects of the Acquisition. As at 30 June
2024, Gran Tierra had a cash balance of US$115 million and,
following the successful refinancing of its senior notes in October
2023, had total debt of US$637 million, resulting in net debt of
$521 million.
Gran Tierra is headquartered in Calgary and has
a highly qualified and experienced management team and board of
directors with a depth of experience in conventional asset
development, both internationally as well as in the WCSB. Gran
Tierra is committed to best-in-class ESG standards:
- Since 2019,
Gran Tierra has decreased its Scope 1 and 2 carbon emissions by 26
per cent. and decreased flaring by 76 per cent.
- Gran Tierra
recycles 92 per cent. of its operationally injected water, with an
objective of sourcing 100 per cent. of its water from closed-cycle
production.
- Gran Tierra has
planted 1.66 million trees and has conserved, preserved, or
reforested over 4,500 hectares of land, more than 31 times Gran
Tierra’s operational footprint.
- Gran Tierra is
committed to providing significant training and local employment
opportunities, prioritizing local goods and services, voluntarily
investing in local social and environmental projects and promoting
human rights projects in the communities neighbouring our
operations.
- Gran Tierra has
been accepted by the Voluntary Principles Initiative as an official
member of the Voluntary Principles for Security and Human Rights
world-wide initiative.
- Gran Tierra has
consistently been the top sector performer in Colombia in terms of
its Lost Time Injury Frequency Rate and Total Recordable Injury
Frequency, verified through an internal study conducted with the
Colombian HSE National Committee.
8. Rule 29 Valuation
Reports
Gran Tierra
Your attention is drawn to the Gran Tierra
Valuation Report prepared in accordance with Rule 29 of the
Takeover Code, a copy of which is available on Gran Tierra's
website (https://www.grantierra.com/).
On 23 January 2024, Gran Tierra announced its
year end reserves for the year ended 31 December 2023 as evaluated
by McDaniel, which included, among other things, statements
relating to Gran Tierra's reserves, future net revenue and net
present values. In connection with the Acquisition, Gran Tierra is
required by Rule 29 of the Takeover Code to publish an updated
independent asset valuation as at 31 December 2023 (the
“Gran Tierra Valuation”). Gran
Tierra has commissioned McDaniel to provide the Gran Tierra
Valuation. McDaniel is independent of both Gran Tierra and i3
Energy.
The output of the Gran Tierra Valuation Report
in respect of Gran Tierra net present values is reproduced
below:
|
Total Company |
Discount Rate |
|
|
(US$ million) |
0% |
|
5% |
|
10% |
|
15% |
|
20% |
|
|
Before Tax |
|
|
|
|
|
|
Proved Developed Producing |
1,362 |
|
1,228 |
|
1,117 |
|
1,025 |
|
948 |
|
|
Proved Developed Non-Producing |
135 |
|
115 |
|
99 |
|
87 |
|
77 |
|
|
Proved Undeveloped |
1,209 |
|
932 |
|
730 |
|
579 |
|
465 |
|
|
Total Proved |
2,706 |
|
2,275 |
|
1,946 |
|
1,691 |
|
1,490 |
|
|
Total Probable |
2,062 |
|
1,493 |
|
1,117 |
|
861 |
|
680 |
|
|
Total Proved plus Probable |
4,768 |
|
3,768 |
|
3,063 |
|
2,552 |
|
2,170 |
|
|
Total Possible |
2,513 |
|
1,698 |
|
1,207 |
|
895 |
|
688 |
|
|
Total Proved plus Probable plus Possible |
7,281 |
|
5,466 |
|
4,270 |
|
3,447 |
|
2,858 |
|
|
|
|
|
|
|
|
|
After Tax |
|
|
|
|
|
|
Proved Developed Producing |
1,025 |
|
930 |
|
848 |
|
779 |
|
721 |
|
|
Proved Developed Non-Producing |
73 |
|
63 |
|
54 |
|
48 |
|
42 |
|
|
Proved Undeveloped |
691 |
|
514 |
|
384 |
|
288 |
|
216 |
|
|
Total Proved |
1,789 |
|
1,507 |
|
1,286 |
|
1,115 |
|
979 |
|
|
Total Probable |
1,142 |
|
816 |
|
601 |
|
455 |
|
353 |
|
|
Total Proved plus Probable |
2,931 |
|
2,323 |
|
1,887 |
|
1,570 |
|
1,332 |
|
|
Total Possible |
1,413 |
|
945 |
|
664 |
|
486 |
|
370 |
|
|
Total Proved plus Probable plus Possible |
4,344 |
|
3,268 |
|
2,551 |
|
2,056 |
|
1,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the purposes of Rule 29.5 of the Takeover
Code, the Gran Tierra Directors confirm that McDaniel has confirmed
to them that an updated valuation of Gran Tierra's asset portfolio
as at the date of this Announcement would not be materially
different from the valuation given by McDaniel on 15 August 2024
with an effective date of 31 December 2023 and contained in
McDaniel's valuation report available on Gran Tierra's website at
https://www.grantierra.com/).
Rule 29.6 of the Takeover Code requires that
this Announcement contain an estimate by the Gran Tierra Directors
of the amount of any potential tax liability which would arise if
the assets were to be sold at the amount of the valuation contained
in the Gran Tierra Valuation Report and a comment as to the
likelihood of any such liability crystallising. The Gran Tierra
Directors, having taken appropriate taxation advice, believe that
realistic transaction structures exist for such a sale such that it
is likely that no tax would be payable.
i3 Energy
Your attention is drawn to the i3 Energy
Valuation Report prepared in accordance with Rule 29 of the
Takeover Code, a copy of which is available on i3 Energy’s website
at https://i3.energy/grantierra-offer-terms/.
On 25 March 2024, i3 Energy announced its year
end reserves for the year ended 31 December 2023 as evaluated by
GLJ, which included, among other things, statements relating to i3
Energy's reserves, future net revenue and net present values. In
connection with the Acquisition, i3 Energy is required by Rule 29
of the Takeover Code to publish an updated independent asset
valuation as of 31 July 2024 (the “i3 Energy
Valuation”). i3 Energy has commissioned GLJ to provide the
i3 Energy Valuation. GLJ is independent of both i3 Energy and Gran
Tierra.
The output of the i3 Energy Valuation Report in
respect of i3 Energy net present values is reproduced below:
|
Total Company |
Discount Rate |
|
|
(C$ million) |
0% |
|
5% |
|
10% |
|
15% |
|
20% |
|
|
Before Tax |
|
|
|
|
|
|
Proved Developed Producing |
260 |
|
394 |
|
353 |
|
307 |
|
270 |
|
|
Proved Developed Non-Producing |
19 |
|
15 |
|
13 |
|
11 |
|
9 |
|
|
Proved Undeveloped |
573 |
|
379 |
|
256 |
|
175 |
|
119 |
|
|
Total Proved |
852 |
|
788 |
|
622 |
|
492 |
|
398 |
|
|
Total Probable |
1,714 |
|
1,069 |
|
723 |
|
518 |
|
386 |
|
|
Total Proved plus Probable |
2,565 |
|
1,857 |
|
1,345 |
|
1,010 |
|
784 |
|
|
|
|
|
|
|
|
|
After Tax |
|
|
|
|
|
|
Proved Developed Producing |
160 |
|
316 |
|
289 |
|
253 |
|
224 |
|
|
Proved Developed Non-Producing |
15 |
|
12 |
|
10 |
|
8 |
|
7 |
|
|
Proved Undeveloped |
430 |
|
271 |
|
170 |
|
104 |
|
59 |
|
|
Total Proved |
604 |
|
598 |
|
469 |
|
366 |
|
290 |
|
|
Total Probable |
1,317 |
|
800 |
|
525 |
|
363 |
|
260 |
|
|
Total Proved plus Probable |
1,921 |
|
1,399 |
|
994 |
|
729 |
|
550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the purposes of Rule 29.5 of the Takeover
Code, the i3 Energy Directors confirm that GLJ has confirmed to
them that an updated valuation of i3 Energy's asset valuation as at
the date of this Announcement would not be materially different
from the valuation given by GLJ on 12 August 2024 with an effective
date of 31 July 2024 and contained in GLJ Ltd.'s valuation report
available on i3 Energy’s website at
https://i3.energy/grantierra-offer-terms/.
For the purposes of Rule 29.6 of the Takeover
Code, in the event that the assets within i3 Energy were to be sold
at the valuation contained in the i3 Energy Valuation Report, the
proceeds on such disposal may be subject to taxation in Canada. The
i3 Energy Directors estimate that the potential tax liability that
would arise would be approximately £21 million. It is not expected
that the aforementioned tax liability will crystallise in
connection with the Acquisition.
9. Financing
The consideration payable under the Acquisition
will be funded by existing cash resources and debt to be provided
under the Facility Agreement.
On 19 August 2024 Gran Tierra, as borrower, and
Trafigura PTE Ltd, as lender, entered into the Facility Agreement,
pursuant to which Trafigura will provide a term loan facility for
an amount of the US$ equivalent of £80 million (the “Loan
Facility”) made available on a customary “certain funds”
basis consistent with the Takeover Code to fund the cash
consideration payable to i3 Energy’s Shareholders in connection
with the Acquisition and associated costs. The Loan Facility has a
term of 12 months from the date of first drawdown and bears
interest at a 3-month SOFR reference rate plus a margin of 300
basis points per annum for the first three months after the first
drawdown and 600 basis points per annum thereafter.
Subject to satisfying standard conditions
precedent to initial utilization, the Loan Facility is available
for drawdown from the date of the Facility Agreement to the last
day of the Certain Funds Period (as defined in the Facility
Agreement). The Loan Facility will automatically be cancelled in
full if it has not been drawn within the Certain Funds Period.
The Facility Agreement provides that if Gran
Tierra has not, within 9 months of first Utilisation under the Loan
Facility, entered into documentation to either raise debt for the
Acquisition or repay the loans under the Loan Facility (the
"Loans"), then Gran Tierra and Trafigura shall
enter into new finance documentation based on a previously agreed
financing arrangement in August 2022 and use the proceeds of such
financing to repay the Loans in full.
In accordance with Rule 2.7(d) of the Takeover
Code, Stifel, as financial adviser to Gran Tierra is satisfied that
sufficient financial resources are available to Gran Tierra to
satisfy in full the cash consideration payable to i3 Energy
Shareholders under the Acquisition.
10. Mix and Match
Facility
i3 Energy Shareholders may elect, subject to
availability, to vary the proportions in which they receive cash
and New Gran Tierra Shares in respect of their holdings in i3
Energy Shares. However, the total number of New Gran Tierra Shares
to be issued and the maximum aggregate amount of cash to be paid
under the terms of the Acquisition will not be varied or increased
as a result of elections under the Mix and Match Facility in
accordance with Gran Tierra’s no increase statement made in
accordance with Rule 32.2 of the Takeover Code. Accordingly,
satisfaction of elections made by i3 Energy Shareholders under the
Mix and Match Facility will depend on the extent to which other i3
Energy Shareholders make offsetting elections.
To the extent that elections cannot be satisfied
in full, they will be scaled down on a pro rata basis. As a result,
i3 Energy Shareholders who make an election under the Mix and Match
Facility will not necessarily know the exact number of New Gran
Tierra Shares or the amount of cash they will receive until
settlement of the consideration due to them under the terms of the
Acquisition. The Mix and Match Facility is conditional upon the
Acquisition becoming Effective.
Elections under the Mix and Match Facility will
not affect the entitlements of those i3 Energy Shareholders who do
not make such elections.
Gran Tierra reserves the right to scale back
elections made for the New Gran Tierra Shares pursuant to the Mix
and Match Facility if the issuance of such New Gran Tierra Shares
would result in any i3 Energy Shareholder holding 10% or more of
Gran Tierra's issued share capital (on a non-diluted basis)
following completion of the Acquisition.
Further details in relation to the Mix and Match
Facility will be contained in the Scheme Document.
11. Strategic Plans for i3
Energy, i3 Energy Directors, management, employees and
locations
Gran Tierra intends to use the combined
company’s scale and enhanced financial capacity to accelerate
development of i3 Energy’s Canadian assets as well as Gran Tierra's
existing Colombian and Ecuadorian assets. Following completion of
the Acquisition, Gran Tierra intends to conduct a review of i3
Energy's UK assets. This will not result in any reduction in
headcount beyond that which is stated below. Gran Tierra does not
intend to relocate any of i3 Energy's fixed assets, save for
relocating i3 Energy's London headquarters and headquarter
functions to Gran Tierra's headquarters in Calgary.
Gran Tierra holds the skills, knowledge and
expertise of i3 Energy’s management and employees in high regard
and believes the Acquisition will provide exciting opportunities to
i3 Energy's Canada based employees. Gran Tierra does not intend to
make any material changes to the balance of skills and functions of
employees and management of i3 Energy in Canada. Gran Tierra
confirms that, following completion of the Acquisition, the
existing contractual and statutory employment rights of i3 Energy's
employees will be fully safeguarded in accordance with applicable
law. Gran Tierra intends that the current employment arrangements
of all employees and management based in Canada will be terminated
on completion of the Acquisition and any severance obligations owed
to them paid in accordance with the terms of those arrangements.
Gran Tierra intends to then rehire the Canadian employees and
management on terms and compensation arrangements consistent with
Gran Tierra's employment terms and existing programs. Becoming part
of a larger organisation, there may be opportunities for i3 Energy
employees to be immediately integrated into the Gran Tierra
operations outside of Canada. Gran Tierra does not expect that
there will be any material reduction in i3 Energy’s Canada based
employee headcount following the rehiring offers being made to all
employees and management.
Concurrent with completion of the Acquisition,
Gran Tierra intends to reduce the i3 Energy UK headcount in its
entirety as part of the relocation of i3 Energy's London
headquarters and headquarter functions to Gran Tierra's
headquarters in Calgary. This will affect all relevant employees of
whom there are four, including the chief executive officer. This
reduction in headcount will be undertaken in consultation with the
affected employees and in accordance with applicable law.
It is also envisaged that the remaining i3
Energy Directors will resign on completion of the Acquisition.
Gran Tierra confirms that it does not intend to
seek or implement, as a result of the Acquisition, any material
changes regarding the continued employment of the employees and
management of the Gran Tierra Group, including any material change
in the conditions of employment or in the balance of the skills and
functions of the employees and management.
Subject to the Scheme becoming Effective, i3
Energy will make an application to the London Stock Exchange for
the cancellation of the admission to trading of the i3 Energy
shares on the AIM market of the London Stock Exchange , and to the
TSX for the delisting of the i3 Energy Shares from the TSX, to take
effect on or shortly after the Effective Date. It is expected that
Gran Tierra will, subject to applicable Canadian securities laws,
subsequently apply to have i3 Energy cease to be a reporting issuer
in all jurisdictions in Canada in which it is a reporting
issuer.
i3 Energy does not have any research and
development functions and Gran Tierra does not intend to create
such functions. i3 Energy does not operate any defined benefit
pension schemes and Gran Tierra does not intend to create any such
schemes.
No statements in this paragraph 11 constitute
"post-offer undertakings" for the purposes of Rule 19.5 of the
Code.
12. Deferred
Shares
In addition to its ordinary share capital, i3
Energy has 5,000 Deferred Shares in issue. The Deferred Shares were
issued by i3 Energy in 2017 shortly before i3 Energy’s AIM IPO. The
Deferred Shares were subscribed by two of i3 Energy’s then founder
directors for an aggregate subscription price of £50,000 in order
to enable i3 Energy to meet the minimum share capital requirements
ahead of such AIM IPO.
The i3 Energy articles of association provide
for the holders of the Deferred Shares to be paid an aggregate
amount of £50,000 in the event of a transaction such as the
Acquisition, but with such £50,000 being funded out of the sale
proceeds that would be due to the i3 Energy Shareholders. It is not
possible to facilitate this arrangement with the terms of the
Scheme, so it was agreed that the parties concerned enter into the
Deferred Shares Share Purchase Agreements.
Gran Tierra has entered into conditional share
purchase agreements with Neill Carson (a non-executive director of
i3 Energy) and Graham Heath (the former CFO of i3 Energy) pursuant
to which Gran Tierra has agreed to purchase the Deferred Shares for
an aggregate consideration of £50,000 conditional only upon the
Scheme having become Effective. In addition, each of Neill Carson
and Graham Heath has given an irrevocable undertaking to vote in
favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the i3 Energy General Meeting in respect of their i3
Energy Shares and, to the extent required, in respect of their
Deferred Shares.
13. i3 Energy Share
Plans
Participants in the i3 Energy Share Plans will
be contacted regarding the effect of the Acquisition on their
rights under the i3 Energy Share Plans and appropriate proposals
will be made to such participants in due course.
14. Offer related
Arrangements
Confidentiality Agreement
Gran Tierra and i3 Energy have entered into a
mutual non-disclosure agreement dated 28 February 2024 pursuant to
which each of Gran Tierra and i3 Energy has undertaken, among other
things, to keep certain information relating to the Acquisition and
the other party confidential and not to disclose it to third
parties (other than to permitted parties) unless required by law or
regulation.
Cooperation Agreement
Gran Tierra and i3 Energy entered into a
Co-operation Agreement dated 19 August 2024, pursuant to which Gran
Tierra and i3 Energy have agreed: (i) to co-operate, use reasonable
endeavours and provide each other with reasonable information,
assistance and access in relation to the filings, submissions and
notifications to be made in relation to regulatory clearances and
authorisations that are required in connection with the
Acquisition; (ii) to co-operate, use reasonable endeavours and
provide each other with reasonable information, assistance and
access in relation to the notifications to, and obtention of
consents from, certain regulatory authorities; and (iii) to certain
provisions if the Scheme should switch to a Takeover Offer. Gran
Tierra has also agreed to provide i3 Energy with certain
information for the purposes of the Scheme Document and to
otherwise assist with the preparation of the Scheme Document.
The Co-operation Agreement records the intention
of Gran Tierra and i3 Energy to implement the Acquisition by way of
the Scheme, subject to Gran Tierra's right to switch to a Takeover
Offer in certain circumstances.
The Co-operation Agreement may be terminated
with immediate effect in the following circumstances, among
others:
(i) if Gran Tierra
and i3 Energy so agree in writing;
(ii) the i3 Energy
Board (i) withdraws or adversely modifies the i3 Energy Board
recommendation, (ii) recommends a competing proposal, or (iii)
makes a statement in relation its intention to do so; or
(iii) upon notice
by Gran Tierra to i3 Energy if: (i) a competing proposal is
announced which the i3 Energy Board has recommended or has noted
its intention to recommend; or (ii) i3 Energy announces that it or
any member of the Wider i3 Energy Group has entered into one or
more legally binding agreements to effect a competing proposal.
The Co-operation Agreement also contains
provisions that will apply in respect of the i3 Energy Share
Plans.
15. Irrevocable
undertakings
The i3 Energy Directors, who have been so
advised by Zeus Capital as to the financial terms of the
Acquisition, consider the terms of the Acquisition to be fair and
reasonable. In providing its advice to the i3 Energy Directors,
Zeus Capital has taken into account the commercial assessments of
the i3 Energy Directors. In addition, the i3 Energy Directors
consider the terms of the Acquisition to be in the best interests
of the i3 Energy Shareholders as a whole. Zeus Capital is providing
independent financial advice to the i3 Energy Directors for the
purposes of Rule 3 of the Takeover Code.
Accordingly, the i3 Energy Directors intend to
recommend unanimously that the i3 Energy Shareholders vote in
favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the i3 Energy General Meeting as those i3 Energy
Directors who hold i3 Energy Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of in aggregate
32,139,532 i3 Energy Shares representing approximately 2.7 per
cent. of the existing issued ordinary share capital of i3 Energy on
the Last Practicable Date (excluding any i3 Energy Shares held in
treasury).
Gran Tierra has also received irrevocable
undertakings to vote (or, in relation to the i3 Energy CFDs, to use
best endeavours to procure votes) in favour of the Scheme at the
Court Meeting and the resolutions to be proposed at the i3 Energy
General Meeting from the Polus Funds and Graham Heath in respect of
a total of 238,537,465 i3 Energy Shares and 118,006,332 i3 Energy
CFDs, which represent, in aggregate, approximately 19.84 per cent.
and 9.81 per cent. respectively, of i3 Energy's existing issued
ordinary share capital on the Last Practicable Date (excluding any
i3 Energy Shares held in treasury). Therefore, the total number of
i3 Energy Shares and i3 Energy CFDs that are subject to irrevocable
undertakings received by Gran Tierra from the Polus Funds and
Graham Heath is 356,543,797 i3 Energy Shares and i3 Energy CFDs,
representing in aggregate approximately 29.65 per cent. of i3
Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in
treasury).
Therefore, Gran Tierra has received irrevocable
undertakings to vote (or, in relation to the i3 Energy CFDs, to use
best endeavours to procure votes) in favour of the Scheme at the
Court Meeting and the resolutions to be proposed at the i3 Energy
General Meeting from holders of 270,676,997 i3 Energy Shares
and 118,006,332 i3 Energy CFDs, which represent, in aggregate,
approximately 22.51 per cent. and 9.81 per cent. respectively,
of i3 Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in treasury).
The total number of i3 Energy Shares and i3 Energy CFDs that are
subject to irrevocable undertakings received by Gran Tierra
is 388,683,329 i3 Energy Shares and i3 Energy CFDs,
representing in aggregate approximately 32.32 per cent. of i3
Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in
treasury).
Further details of the irrevocable undertakings
are set out in Appendix 3 to this Announcement.
16. Scheme of
Arrangement
It is intended that the Acquisition will be
implemented by way of a court sanctioned scheme of arrangement
under Part 26 of the Companies Act, further details of which are
contained in the full text of this Announcement and full details of
which will be set out in the Scheme Document to be published by i3
Energy in due course. However, Gran Tierra reserves the right, with
the consent of the Panel, to implement the Acquisition by way of a
Takeover Offer. The procedure involves, among other things, an
application by i3 Energy to the Court to sanction the Scheme, in
consideration for which Scheme Shareholders who are on the register
of members at the Scheme Record Time will receive the
Consideration. The purpose of the Scheme is to provide for Gran
Tierra to become the holder of the entire issued ordinary share
capital of i3 Energy.
The Acquisition will be subject to the
Conditions and certain further terms set out in Appendix 1 to this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document, including the approval of the Scheme by
the Scheme Shareholders, the sanction of the Scheme by the Court,
the satisfaction of the NSTA Condition, the Minority Shareholder
Protection Condition and the Competition Act Condition, and the
approval of the TSX.
To become effective, the Scheme requires the
approval of Scheme Shareholders by the passing of a resolution at
the Court Meeting. The resolution must be approved by a majority in
number of the Scheme Shareholders present and voting (and entitled
to vote), either in person or by proxy, representing not less than
75 per cent. in value of the Scheme Shares voted by such Scheme
Shareholders. In addition, a special resolution relating to the
Acquisition must be passed at the i3 Energy General Meeting, which
requires the approval of i3 Energy Shareholders representing at
least 75 per cent. of the votes cast at the i3 Energy General
Meeting (either in person or by proxy).
The Scheme must also be approved by a simple
majority of the votes cast on the relevant resolution at the i3
Energy Meetings, in each case by i3 Energy Shareholders after
excluding the votes cast by Neill Carson as a result of his role as
a director of i3 Energy and his entry into the Deferred Shares
Share Purchase Agreement with Gran Tierra, together with any other
person (if any) whose vote may not be included under Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions of the Canadian Securities Administrators.
The i3 Energy General Meeting will be held
immediately after the Court Meeting.
The i3 Energy Meetings are to be held no later
than the 22nd day after the expected date of the i3 Energy Meetings
to be set out in the Scheme Document in due course (or such later
date, if any, as Gran Tierra may determine with the agreement of i3
Energy or with the consent of the Panel and approval of the Court,
if such approval is required).
Following the i3 Energy Meetings, the Scheme
must be sanctioned by the Court no later than the 22nd day after
the expected date of the Scheme Court Hearing to be set out in the
Scheme Document in due course (or such later date, if any, as Gran
Tierra may determine with the agreement of i3 Energy or with the
consent of the Panel and approval of the Court, if such approval is
required ). The Scheme will only become effective once a copy of
the Court Order is delivered to the Registrar of Companies.
The Scheme is expected to become effective in Q4
2024, subject to the satisfaction or, where permitted, waiver of
the Conditions and certain further terms set out in Appendix 1 to
this Announcement.
Upon the Scheme becoming Effective, it will be
binding on all i3 Energy Shareholders, irrespective of whether or
not they attended or voted at the i3 Energy Meetings and share
certificates in respect of i3 Energy Shares will cease to be valid
and entitlements to i3 Energy Shares held within the CREST system
will be cancelled.
The Scheme Document will include full details of
the Scheme, together with notices of the Court Meeting and the i3
Energy General Meeting and the expected timetable of principal
events, and will specify the action to be taken by Scheme
Shareholders. It is expected that the Scheme Document, together
with the Forms of Proxy and Forms of Election (and/or where
required, Letters of Transmittal) in relation to the Mix and Match
Facility, will be published as soon as practicable and in any event
within 28 days of the date of this Announcement (or such later date
as may be agreed by Gran Tierra and i3 Energy with the consent of
the Panel).
The Scheme will be governed by English law and
will be subject to the jurisdiction of the Courts of England and
Wales. The Scheme will be subject to the applicable requirements or
acceptance, as applicable, of the Takeover Code, Canadian
Securities Laws, the Panel, the London Stock Exchange, the TSX, the
NYSE American, the FCA and the AIM Rules.
17. Admission of New Gran
Tierra Shares
It is a Condition that the New Gran Tierra
Shares be admitted to the Official List and to trading on the
London Stock Exchange's Main Market for listed securities
respectively. It is expected that such Admission will become
effective and that dealings for normal settlement in the New Gran
Tierra Shares will commence at 8.00 a.m. (London time) on the first
Business Day following the Effective Date.
It is a Condition that the TSX Approval shall
have been obtained. In addition, it is a condition to the
Acquisition that the New Gran Tierra Shares be approved for listing
on the NYSE American, subject to official notice of issuance. There
can be no assurance that the New Gran Tierra Shares will be listed
on the TSX, the NYSE American or the London Stock Exchange.
The New Gran Tierra Shares will be issued in
non-certificated book-entry form and, upon issuance, will be
validly issued, credited as fully paid, and non-assessable. They
will rank pari passu in all respects with the existing Gran Tierra
Shares, including the rights to receive all dividends and other
distributions (if any) declared, made or paid by Gran Tierra by
reference to a record date falling after the Effective Date.
Fractions of New Gran Tierra Shares will not be
allotted or issued pursuant to the Acquisition and entitlements of
Scheme Shareholders will be rounded down to the nearest whole
number of New Gran Tierra Shares. All fractional entitlements to
New Gran Tierra Shares will be aggregated and sold in the market as
soon as practicable after the Effective Date. The net proceeds of
such sale (after deduction of all expenses and commissions incurred
in connection with the sale) will be distributed by Gran Tierra in
due proportions to Scheme Shareholders who would otherwise have
been entitled to such fractions provided that individual
entitlements to amounts of less than £5.00 will not be paid to
Scheme Shareholders but will be retained for the benefit of Gran
Tierra.
18. Delisting
Prior to the Scheme becoming Effective, an
application will be made by i3 Energy for the cancellation of
trading of the i3 Energy Shares on the AIM market of the London
Stock Exchange and the delisting of the i3 Energy Shares from the
TSX, to take effect on or shortly after the Effective Date. On the
AIM market of the London Stock Exchange, the last day of dealings
in i3 Energy Shares is expected to be the Business Day immediately
prior to the Effective Date and no transfers shall be registered
after 6:00 p.m. (London time) on that date.
On the Effective Date, i3 Energy will become a
wholly-owned subsidiary of Gran Tierra and share certificates in
respect of the i3 Energy Shares will cease to be valid and should
be destroyed and entitlements to i3 Energy Shares held within the
CREST system shall be cancelled.
In addition, entitlements held within the CREST
system to the i3 Energy Shares will be cancelled.
Following the Effective Date, it is expected
that Gran Tierra will, subject to Canadian Securities Laws, apply
to have i3 Energy cease to be a reporting issuer in all Canadian
jurisdictions in which it is a reporting issuer.
19. Disclosure of
Interests
(a) As at the
close of business on the Last Practicable Date, save for the
irrevocable undertakings referred to in paragraph 15 above,
neither Gran Tierra, nor any of the Gran Tierra Directors, nor, so
far as Gran Tierra is aware, any person acting in concert (within
the meaning of the Takeover Code) with Gran Tierra has:
(i) any interest in or right to
subscribe for any relevant securities of i3 Energy;
(ii) any short positions in respect of
relevant i3 Energy Shares (whether conditional or absolute and
whether in the money or otherwise), including any short position
under a derivative, any agreement to sell or any delivery
obligation or right to require another person to purchase or take
delivery;
(iii) borrowed or lent any relevant i3
Energy Shares (including, for these purposes, any financial
collateral arrangements of the kind referred to in Note 3 on Rule
4.6 of the Takeover Code), save for any borrowed shares which had
been either on-lent or sold; or
(iv) any dealing arrangement of the
kind referred to in Note 11(a) on the definition of acting in
concert in the Takeover Code in relation to i3 Energy Shares or in
relation to securities convertible or exchangeable into i3 Energy
Shares.
20. Consents
Each of Stifel, Eight Capital, Zeus Capital, TPH
and National Bank has given and not withdrawn their consent to the
publication of this Announcement with the inclusion herein of the
references to their names in the form and context in which they
appear.
GLJ has given and not withdrawn its consent to
the publication of its valuation report in this Announcement (by
incorporation by reference) with the inclusion herein to the
references to its name and, where applicable, report in the form
and context in which it is included (by reference).
McDaniel has given and not withdrawn its consent
to the publication of its valuation report in this Announcement (by
incorporation by reference) with the inclusion herein to the
references to its name and, where applicable, report in the form
and context in which it is included (by reference).
21. Documents available for
inspection
Copies of the following documents will, by no
later than 12 noon (London time) on 20 August 2024, be published on
Gran Tierra's website at
https://www.grantierra.com/investor-relations/recommended-acquisition/
and on i3 Energy's website at
https://i3.energy/grantierra-offer-terms/:
- this Announcement;
- irrevocable undertakings listed in Appendix 3 to this
Announcement;
- the Confidentiality Agreement;
- the consent letters referred to in paragraph 20 above;
- the Valuation Reports;
- the Co-operation Agreement;
- the Facility Agreement; and
- the Deferred Shares Share Purchase Agreements.
22. General
The bases and sources for certain financial
information contained in this Announcement are set out in Appendix
2 to this Announcement. A summary of the irrevocable undertakings
given in relation to the Acquisition is set out in Appendix 3 to
this Announcement. Gran Tierra's Profit Forecast is set out in
Appendix 4 to this Announcement. Certain terms used in this
Announcement are defined in Appendix 5 to this Announcement.
The Acquisition is not a “take-over bid” as
defined under Canadian Take-Over Bid Rules. However, Gran Tierra
reserves the right, with the consent of the Panel, to implement the
Acquisition by way of a Takeover Offer for the entire issued and to
be issued share capital of i3 Energy not already held by Gran
Tierra as an alternative to the Scheme. In such an event a Takeover
Offer will be implemented on the same terms (subject to appropriate
amendments), so far as applicable, as those which would apply to
the Scheme and subject to the amendments referred to in Part C of
Appendix 1 to this Announcement.
For the purposes of Rule 29.5 of the Takeover
Code, the i3 Energy Directors confirm that GLJ has confirmed to
them that an updated valuation of i3 Energy's asset valuation as at
the date of this Announcement would not be materially different
from the valuation given by GLJ as at 31 July 2024 and contained in
GLJ's valuation report available on i3 Energy’s website at
https://i3.energy/grantierra-offer-terms/.
For the purposes of Rule 29.5 of the Takeover
Code, the Gran Tierra Directors confirm that McDaniel has confirmed
to them that an updated valuation of Gran Tierra's asset portfolio
as at the date of this Announcement would not be materially
different from the valuation given by McDaniel as at 15 August 2024
and contained in the valuation report(s) available on Gran Tierra's
website at
https://www.grantierra.com/investor-relations/recommended-acquisition/.
Further Information
This Announcement is for information purposes
only and is not intended to and does not constitute or form part of
an offer, offer to acquire, invitation or the solicitation of an
offer, offer to acquire or invitation to purchase, or otherwise
acquire, offer to acquire, subscribe for, sell or otherwise dispose
of any securities or the solicitation of any vote or approval in
any jurisdiction pursuant to the Acquisition or otherwise nor shall
there be any sale, issuance or transfer of securities of Gran
Tierra or i3 Energy pursuant to the Acquisition in any jurisdiction
in contravention of applicable laws. The Acquisition will be
implemented solely pursuant to the terms of the Scheme Document
(or, in the event that the Acquisition is to be implemented by
means of an Takeover Offer, the Offer Document), which, together
with the Forms of Proxy and the Forms of Election (and/or where
required, Letters of Transmittal) in relation to the Mix and Match
Facility, will contain the full terms and conditions of the
Acquisition, including details of how to vote in respect of the
Acquisition. Any decision in respect of, or other response to, the
Acquisition should be made on the basis of the information
contained in the Scheme Document or the Forms of Proxy or the Forms
of Election (and/or where required, Letters of Transmittal) in
relation to the Mix and Match Facility. In particular, this
Announcement is not an offer of securities for sale in the United
States or in any other jurisdiction. No offer of securities shall
be made in the United States absent registration under the US
Securities Act, or pursuant to an exemption from, or in a
transaction not subject to, such registration requirements. Any
securities issued as part of the Acquisition are anticipated to be
issued in reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the US Securities Act.
Additionally, if the Acquisition is implemented by way of a scheme
of arrangement or a Takeover Offer, any New Gran Tierra Shares to
be issued in connection with the Acquisition are expected to be
issued in reliance upon the prospectus exemption provided by 2.11
or Section 2.16, as applicable, of National Instrument 45-106 –
Prospectus Exemptions of the Canadian Securities Administrators and
in compliance with the provincial securities laws of Canada.
The Acquisition will be made solely by means of
the scheme document to be published by i3 Energy in due course, or
(if applicable) pursuant to an offer document to be published by
Gran Tierra, which (as applicable) would contain the full terms and
conditions of the Acquisition. Any decision in respect of, or other
response to, the Acquisition, should be made only on the basis of
the information contained in such document(s). If, in the future,
Gran Tierra ultimately seeks to implement the Acquisition by way of
a Takeover Offer, or otherwise in a manner that is not exempt from
the registration requirements of the US Securities Act, that offer
will be made in compliance with applicable US laws and regulations.
and, to the extent such Takeover Offer extends into the provinces
of Canada, such Takeover Offer will be made in compliance with the
provincial securities laws of Canada, including, without
limitation, to the extent applicable, the rules applicable to
take-over bids under National Instrument 62-104 – Take-Over Bids
and Issuer Bids of the Canadian Securities Administrators.
The statements contained in this Announcement
are made as at the date of this Announcement, unless some other
time is specified in relation to them, and publication of this
Announcement shall not give rise to any implication that there has
been no change in the facts set forth in this Announcement since
such date.
This Announcement has been prepared for the
purpose of complying with English law and the Takeover Code and the
information disclosed may not be the same as that which would have
been disclosed if this Announcement had been prepared in accordance
with the laws of jurisdictions outside England and Wales, including
(without limitation) the United States and Canada. The Acquisition
will be subject to the applicable requirements or acceptance, as
applicable, of the Takeover Code, Canadian Securities Laws, the
Panel, the London Stock Exchange, the TSX, the NYSE American, the
FCA and the AIM Rules.
This Announcement contains inside information in
relation to each of i3 Energy and Gran Tierra for the purposes of
Article 7 of the Market Abuse Regulation. The person responsible
for making this Announcement on behalf of i3 Energy is Majid Shafiq
and the person responsible for making this Announcement on behalf
of Gran Tierra is Gary Guidry.
This Announcement does not constitute a
prospectus or circular or prospectus or circular equivalent
document, nor does this Announcement, or the information contained
herein, constitute a solicitation of proxies within the meaning of
applicable Canadian Securities Laws. Shareholders are not being
asked at this time to execute a proxy in favour of the Acquisition
or the matters described herein.
Information Relating to i3 Energy
Shareholders
Please be aware that addresses, electronic
addresses and certain other information provided by i3 Energy
Shareholders, persons with information rights and other relevant
persons for the receipt of communications from i3 Energy may be
provided to Gran Tierra during the Offer Period as required under
Section 4 of Appendix 4 of the Takeover Code or Canadian Securities
Laws, as applicable.
Overseas Jurisdictions
The release, publication or distribution of this
Announcement in or into jurisdictions other than the United Kingdom
may be restricted by law and therefore any persons who are subject
to the laws of any jurisdiction other than the United Kingdom
should inform themselves about, and observe any applicable legal or
regulatory requirements. In particular, the ability of persons who
are not resident in the United Kingdom to vote their i3 Energy
Shares with respect to the Scheme at the Court Meeting, or to
execute and deliver forms of proxy appointing another to vote at
the Court Meeting on their behalf, may be affected by the laws of
the relevant jurisdictions in which they are located. Any failure
to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law the companies and
persons involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
Unless otherwise determined by Gran Tierra or
required by the Takeover Code, and permitted by applicable law and
regulation, the availability of New Gran Tierra Shares to be issued
pursuant to the Acquisition to i3 Energy Shareholders will not be
made available, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in
that jurisdiction and no person may vote in favour of the
Acquisition by any such use, means, instrumentality or form within
a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of that jurisdiction.
Accordingly, copies of this Announcement and any formal
documentation relating to the Acquisition are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction
or any other jurisdiction where to do so would constitute a
violation of the laws of that jurisdiction, and persons receiving
such documents (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send such documents in
or into or form any Restricted Jurisdiction. Doing so may render
invalid any related purported vote in respect of the Acquisition.
If the Acquisition is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the
Takeover Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including,
but not limited to, facsimile, e-mail or other electronic
transmission or telephone) of interstate or foreign commerce of, or
of any facility of a national, state or other securities exchange
of any Restricted Jurisdiction and the Takeover Offer may not be
capable of acceptance by any such use, means, instrumentality or
facilities or from within any Restricted Jurisdiction.
The availability of New Gran Tierra Shares
pursuant to the Acquisition to i3 Energy Shareholders who are not
resident in the United Kingdom or the ability of those persons to
hold such shares may be affected by the laws or regulatory
requirements of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom should
inform themselves of, and observe, any applicable legal or
regulatory requirements. i3 Energy Shareholders who are in doubt
about such matters should consult an appropriate independent
professional adviser in the relevant jurisdiction without
delay.
Further details in relation to i3 Energy
Shareholders in overseas jurisdictions will be contained in the
Scheme Document.
Notice to US Shareholders
The Acquisition relates to the shares of an
English company with a listing on the London Stock Exchange and the
TSX and is proposed to be implemented pursuant to a scheme of
arrangement provided for under the law of England and Wales. A
transaction effected by means of a scheme of arrangement is not
subject to proxy solicitation or the tender offer rules under the
US Exchange Act. Accordingly, the Acquisition is subject to the
procedural and disclosure requirements, rules and practices
applicable in the United Kingdom to schemes of arrangement which
differ from the requirements of US proxy solicitation or tender
offer rules. . Financial information included in this Announcement
and the Scheme Document in relation to Gran Tierra has been or will
be prepared in accordance with US GAAP and in relation to i3 Energy
has been or will be prepared in accordance with International
Financial Reporting Standards ("IFRS").
If, in the future, Gran Tierra elects, with the
consent of the Panel, to implement the Acquisition by means of a
Takeover Offer and determines to extend such Takeover Offer into
the United States, such Takeover Offer will be made in compliance
with all applicable laws and regulations, including, without
limitation, to the extent applicable, Section 14(e) of the US
Exchange Act and Regulation 14E thereunder, and subject, in the
case of participation by i3 Energy Shareholders resident in the
United States, to the availability of an exemption (if any) from
the registration requirements of the US Securities Act and of the
securities laws of any state or other jurisdiction of the United
States. Such Takeover Offer would be made by Gran Tierra and no one
else. In addition to any such Takeover Offer, Gran Tierra, certain
affiliated companies and the nominees or brokers (acting as agents)
may make certain purchases of, or arrangements to purchase, shares
in i3 Energy outside such Takeover Offer during the period in which
such Takeover Offer would remain open for acceptance. If such
purchases or arrangements to purchase were to be made, they would
be made outside the United States and would comply with applicable
law, including the US Exchange Act. Any information about such
purchases will be disclosed as required in the United Kingdom,
United States and Canada and will be reported to a Regulatory
Information Service of the FCA and will be available on the London
Stock Exchange website: www.londonstockexchange.com/, and, if
required, on the SEC website at http://www.sec.gov.
The New Gran Tierra Shares have not been and
will not be registered under the US Securities Act or under the
securities laws of any state or other jurisdiction of the United
States. Accordingly, the New Gran Tierra Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into or from the United States absent
registration under the US Securities Act or an exemption therefrom
and in compliance with the securities laws of any state or other
jurisdiction of the United States. The New Gran Tierra Shares are
expected to be issued in reliance upon the exemption from the
registration requirements of the US Securities Act provided by
section 3(a)(10) thereof.
None of the securities referred to in this
Announcement have been approved or disapproved by the SEC, any
state securities commission in the United States or any other US
regulatory authority, nor have such authorities passed upon or
determined the fairness or merits of such securities or the
Acquisition or upon the adequacy or accuracy of the information
contained in this Announcement. Any representation to the contrary
is a criminal offence in the United States.
It may be difficult for US holders of i3 Energy
Shares to enforce their rights and claims arising out of the US
federal securities laws, since i3 Energy is organised in a country
other than the United States, and some or all of its officers and
directors may be residents of, and some or all of its assets may be
located in, jurisdictions other than the United States. US holders
of i3 Energy Shares may have difficulty effecting service of
process within the United States upon those persons or recovering
against judgments of US courts, including judgments based upon the
civil liability provisions of the US federal securities laws. US
holders of i3 Energy Shares may not be able to sue a non-US company
or its officers or directors in a non-US court for violations of US
securities laws. Further, it may be difficult to compel a non-US
company and its affiliates to subject themselves to a US court's
judgment.
The receipt of New Gran Tierra Shares pursuant
to the Acquisition by a US i3 Energy Shareholder may be a taxable
transaction for US federal income tax purposes, and may also be a
taxable transaction under applicable state and local tax laws, as
well as foreign and other tax laws. Each i3 Energy Shareholder is
urged to consult its independent professional adviser immediately
regarding the tax consequences of the Acquisition.
Notice to Canadian i3 Energy
Shareholders
The Acquisition relates to the securities of an
English company with a listing on the London Stock Exchange and the
TSX and is proposed to be implemented pursuant to a scheme of
arrangement provided for under the laws of England and Wales. A
transaction effected by means of a scheme of arrangement may differ
from the procedures and requirements that would be applicable to a
similar transaction under applicable Canadian corporate laws or
Canadian Securities Laws, including the rules applicable to
take-over bids under National Instrument 62-104 – Take-Over Bids
and Issuer Bids of the Canadian Securities Administrators
(“Canadian Take-Over Bid Rules”). While Gran
Tierra and i3 Energy will complete the Acquisition in accordance
with applicable Canadian Securities Laws, the Acquisition is
subject to the procedural and disclosure requirements, rules and
practices applicable to schemes of arrangement involving a target
company incorporated in England and listed on the London Stock
Exchange and the TSX, which may differ in certain areas from the
requirements applicable to similar transactions under applicable
Canadian corporate laws or Canadian Securities Laws.
The Acquisition is not a “take-over bid” as
defined under Canadian Take-Over Bid Rules. However, if, in the
future, Gran Tierra elects, with the consent of the Panel, to
implement the Acquisition by means of a Takeover Offer and
determines to extend such Takeover Offer into the provinces of
Canada, such Takeover Offer will be made in compliance with all
Canadian Securities Laws, including, without limitation, to the
extent applicable, the Canadian Take-Over Bid Rules. In addition to
any such Takeover Offer, Gran Tierra, certain affiliated companies
and the nominees or brokers (acting as agents) may make certain
purchases of, or arrangements to purchase, shares in i3 Energy
outside such Takeover Offer during the period in which such
Takeover Offer would remain open for acceptance. If such purchases
or arrangements to purchase were to be made, they would be made
outside of Canada and would comply with Canadian Securities Laws.
Any information about such purchases will be disclosed as required
in the United Kingdom, will be reported to a Regulatory Information
Service of the UK Financial Conduct Authority and will be available
on the London Stock Exchange website
www.londonstockexchange.com.
Any New Gran Tierra Shares to be issued in
connection with the Acquisition have not been and will not be
qualified for distribution under Canadian Securities Laws.
Accordingly, the New Gran Tierra Shares may not be offered, sold,
resold, delivered, distributed or otherwise transferred, directly
or indirectly, in or into or from Canada absent a qualification for
distribution or an exemption from the prospectus requirements and
in compliance with Canadian Securities Laws. If the Acquisition is
implemented by way of a scheme of arrangement or a Takeover Offer,
any New Gran Tierra Shares to be issued in connection with the
Acquisition are expected to be issued in reliance upon the
prospectus exemption provided by Section 2.11 or Section 2.16, as
applicable, of National Instrument 45-106 – Prospectus Exemptions
of the Canadian Securities Administrators and in compliance with
Canadian Securities Laws.
The receipt of consideration pursuant to the
Acquisition by a Canadian i3 Energy Shareholder as consideration
for the transfer of its i3 Energy Shares may be a taxable
transaction for Canadian federal income tax purposes and under
applicable Canadian provincial income tax laws, as well as foreign
and other tax laws. Each i3 Energy Shareholder is urged to consult
their independent professional adviser immediately regarding the
tax consequences of the Acquisition applicable to them.
None of the securities referred to in this
Announcement have been approved or disapproved by any Canadian
securities regulatory authority nor has any Canadian regulatory
authority passed upon or determined the fairness or merits of such
securities or the Acquisition or upon the adequacy or accuracy of
the information contained in this Announcement. Any representation
to the contrary is an offence.
i3 Energy is located in a country other than
Canada, and some or all of its officers and directors may be
residents of a country other than Canada. It may be difficult for
Canadian i3 Energy Shareholders to enforce judgments obtained in
Canada against any person that is incorporated, continued or
otherwise organised under the laws of a foreign jurisdiction or
resides outside of Canada, even if the party has appointed an agent
for service of process.
Important Notices Relating to Financial
Advisers
Stifel Nicolaus Europe Limited
("Stifel"), which is authorised and regulated by
the FCA in the UK, is acting as financial adviser exclusively for
Gran Tierra and no one else in connection with the matters referred
to in this Announcement and will not be responsible to anyone other
than Gran Tierra for providing the protections afforded to its
clients or for providing advice in relation to matters referred to
in this Announcement. Neither Stifel, nor any of its affiliates,
owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of Stifel
in connection with this Announcement, any statement contained
herein or otherwise.
Eight Capital ("Eight
Capital"), which is authorised and regulated by the
Canadian Investment Regulatory Organization in Canada, is acting
exclusively for Gran Tierra and for no one else in connection with
the subject matter of this Announcement and will not be responsible
to anyone other than Gran Tierra for providing the protections
afforded to its clients or for providing advice in connection with
the subject matter of this Announcement.
Zeus Capital Limited ("Zeus"),
which is authorised and regulated by the FCA in the United Kingdom,
is acting exclusively for i3 Energy as financial adviser, nominated
adviser and joint broker and no one else in connection with the
matters referred to in this Announcement and will not be
responsible to anyone other than i3 Energy for providing the
protections afforded to clients of Zeus, or for providing advice in
relation to matters referred to in this Announcement. Neither Zeus
nor any of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Zeus in connection with the matters referred to in
this Announcement, any statement contained herein or otherwise.
Tudor, Pickering, Holt & Co. Securities –
Canada, ULC ("TPH&Co."), regulated by the
Canadian Investment Regulatory Organization and a member of the
Canadian Investor Protection Fund, is acting exclusively for i3
Energy by way of its engagement with i3 Energy Canada, a
wholly-owned subsidiary of i3 Energy, in connection with the
matters set out in this Announcement and for no one else, and will
not be responsible to anyone other than i3 Energy for providing the
protections afforded to its clients nor for providing advice in
relation to the matters set out in this Announcement. Neither
TPH&Co. nor any of its subsidiaries, branches or affiliates and
their respective directors, officers, employees or agents owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of TPH&Co. in
connection with this Announcement, any statement contained herein
or otherwise.
National Bank Financial Inc.
("NBF"), regulated by the Canadian Investment
Regulatory Organization and a member of the Canadian Investor
Protection Fund, is acting exclusively for i3 Energy by way of its
engagement with i3 Energy Canada, a wholly-owned subsidiary of i3
Energy, in connection with the matters set out in this
Announcement. Neither NBF, nor any of its subsidiaries, branches or
affiliates and their respective directors, officers, employees or
agents owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of NBF in connection with this Announcement, any statement
contained herein or otherwise.
Cautionary Note Regarding Forward
Looking Statements
This Announcement (including information
incorporated by reference into this Announcement), oral statements
regarding the Acquisition and other information published by Gran
Tierra and i3 Energy contain certain forward looking statements
with respect to the financial condition, strategies, objectives,
results of operations and businesses of Gran Tierra and i3 Energy
and their respective groups and certain plans and objectives with
respect to the Combined Group. These forward looking statements can
be identified by the fact that they do not relate only to
historical or current facts. Forward looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections of the management of
Gran Tierra and i3 Energy about future events, and are therefore
subject to risks and uncertainties which could cause actual results
to differ materially from the future results expressed or implied
by the forward looking statements. The forward looking statements
contained in this Announcement include, without limitation,
statements relating to the expected effects of the Acquisition on
Gran Tierra and i3 Energy, the expected timing method of
completion, and scope of the Acquisition, the expected actions of
Gran Tierra upon completion of the Acquisition, Gran Tierra's
ability to recognise the anticipated benefits from the Acquisition,
expectations regarding the business and operations of the Combined
Group, and other statements other than historical facts. Forward
looking statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "strategy", "focus",
"envision", "goal", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar
meaning. These statements are based on assumptions and assessments
made by Gran Tierra, and/or i3 Energy in light of their experience
and their perception of historical trends, current conditions,
future developments and other factors they believe appropriate. By
their nature, forward looking statements involve risk and
uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors
described in the context of such forward looking statements in this
Announcement could cause actual results and developments to differ
materially from those expressed in or implied by such forward
looking statements. Although it is believed that the expectations
reflected in such forward looking statements are reasonable, no
assurance can be given that such expectations will prove to have
been correct and readers are therefore cautioned not to place undue
reliance on these forward looking statements. Actual results may
vary from the forward looking statements.
There are several factors which could cause
actual results to differ materially from those expressed or implied
in forward looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward looking statements are changes in the global, political,
economic, business, competitive, market and regulatory forces,
future exchange and interest rates, changes in tax rates and future
business acquisitions or dispositions.
Each forward looking statement speaks only as at
the date of this Announcement. Neither Gran Tierra nor i3 Energy,
nor their respective groups assume any obligation to update or
correct the information contained in this Announcement (whether as
a result of new information, future events or otherwise), except as
required by applicable law or by the rules of any competent
regulatory authority.
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
The estimates of Gran Tierra's and i3 Energy's
respective future production and 2024 EBITDA and in the case of i3
Energy, 2024 net operating income, set forth in this Announcement
may be considered to be future-oriented financial information or a
financial outlook for the purposes of applicable Canadian
Securities Laws. Financial outlook and future-oriented financial
information contained in this Announcement about prospective
financial performance and operational performance are provided to
give the reader a better understanding of the potential future
performance of Gran Tierra, i3 Energy and the Combined Group in
certain areas and are based on assumptions about future events,
including economic conditions and proposed courses of action, based
on Gran Tierra's and i3 Energy's respective management’s assessment
of the relevant information currently available, and to become
available in the future. In particular, this Announcement contains
Gran Tierra and i3 Energy projected financial and operational
information for 2024. These projections contain forward-looking
statements and are based on a number of material assumptions and
factors set out above and in Appendix 4 to this Announcement.
Actual results may differ significantly from the projections
presented herein. These projections may also be considered to
contain future-oriented financial information or a financial
outlook. The actual results of Gran Tierra’s and i3 Energy’s
respective operations for any period will likely vary from the
amounts set forth in these projections, and such variations may be
material. See above for a discussion of the risks that could cause
actual results to vary. The future-oriented financial information
and financial outlooks contained in this Announcement have been
approved by the respective management of Gran Tierra and i3 Energy,
as applicable, as of the date of this Announcement. Readers are
cautioned that any such financial outlook and future-oriented
financial information contained herein should not be used for
purposes other than those for which it is disclosed herein. Gran
Tierra, i3 Energy and their respective management believe that the
prospective financial and operational information has been prepared
on a reasonable basis, reflecting Gran Tierra and i3 Energy
respective management’s best estimates and judgments, and
represent, to the best of Gran Tierra’s and i3 Energy's respective
management’s knowledge and opinion, Gran Tierra’s and i3 Energy's
expected respective course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. See Gran Tierra’s press
release dated 23 January 2024 and most recent reports on Form 10-K
and Form 10-Q for additional information regarding the 2024
financial and production outlook of Gran Tierra, and i3 Energy’s
press release dated 13 August 2024 regarding the financial and
production outlook of i3 Energy.
Non-IFRS, Non-GAAP and Other Specified
Financial Measures
This Announcement contains references to Gran
Tierra’s EBITDA, adjusted EBITDA, net debt, net debt to adjusted
EBITDA ratio, i3 Energy’s EBITDA, net operating income, free cash
flow, net cash surplus and net debt, which are specified financial
measures that do not have any standardized meaning as prescribed by
US GAAP in the case of Gran Tierra or UK adopted IFRS in the case
of i3 Energy and, therefore, may not be comparable with the
calculation of similar measures presented by other applicable
issuers. You are cautioned that these measures should not be
construed as alternatives to net income or loss, or other measures
of financial performance as determined in accordance with US GAAP
in the case of Gran Tierra and UK adopted IFRS in the case of i3
Energy. Gran Tierra’s and i3 Energy’s methods of calculating these
measures may differ from other companies and, accordingly, they may
not be comparable to similar measures used by other companies. Each
non-GAAP and non-IFRS financial measure is presented along with the
corresponding GAAP or IFRS measure so as to not imply that more
emphasis should be placed on the non-GAAP or non-IFRS measure. For
an explanation of the composition of i3 Energy’s EBITDA, adjusted
EBITDA, net operating income, free cash flow, net cash surplus and
net debt, see "Non-IFRS Financial Measures" in i3 Energy’s
Management Discussion and Analysis dated August 13, 2024, and for
an explanation of Gran Tierra’s EBITDA, adjusted EBITDA, net debt
and adjusted EBITDA to net debt ratio, see “Non-GAAP Measures” in
Gran Tierra’s quarterly and annual reports, which are available on
i3 Energy’s SEDAR+ issuer profile at www.sedarplus.ca and Gran
Tierra’s SEC EDGAR issuer profile at www.sec.gov, or and on their
respective websites at https://i3.energy/ and
https://www.grantierra.com/. These measures should not be
considered in isolation or as a substitute for measures prepared in
accordance with IFRS or US GAAP, as applicable. The non-IFRS and
non-US GAAP measures used in this Announcement are summarized as
follows:
EBITDA and Adjusted EBITDA (Gran Tierra):
EBITDA, as presented, is defined as net income
(or loss) adjusted for depletion, depreciation and accretion
(“DD&A”) expenses, interest expense and income
tax expense or recovery.
Adjusted EBITDA, as presented, is defined as
EBITDA adjusted for non-cash lease expense, lease payments, foreign
exchange gain or loss, stock-based compensation expense or
recovery, other gain or loss and financial instrument loss.
Gran Tierra’s management uses these supplemental
measures to analyse performance and income generated by its
principal business activities prior to the consideration of how
non-cash items affect that income and believes that these financial
measures are useful supplemental information for investors to
analyse its performance and its financial results. A reconciliation
from net (loss) income to EBITDA and adjusted EBITDA are as
follows:
|
|
Three Months Ended |
|
(Thousands of U.S. Dollars) |
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
September 30, 2023 |
|
Net income (loss) |
36,371 |
-78 |
7,711 |
6,527 |
|
Adjustments to reconcile net income to EBITDA and Adjusted
EBITDA |
|
|
|
|
|
DD&A expenses |
55,490 |
56,150 |
52,635 |
55,019 |
|
Interest expense |
18,398 |
18,424 |
17,789 |
13,503 |
|
Income tax (recovery) expense |
-9,072 |
17,395 |
5,499 |
40,333 |
|
EBITDA (non-GAAP) |
101,187 |
91,891 |
83,634 |
115,382 |
|
Non-cash lease expense |
1,381 |
1,413 |
1,479 |
1,235 |
|
Lease payments |
-1,311 |
-1,058 |
-1,100 |
-676 |
|
Foreign exchange (gain) loss |
-4,413 |
-815 |
3,696 |
1,717 |
|
Stock-based compensation expense |
6,160 |
3,361 |
1,974 |
1,931 |
|
Other (gain) loss |
- |
- |
3,266 |
-354 |
|
Unrealized derivative instruments gain |
- |
- |
- |
- |
|
Other financial instruments loss |
- |
- |
15 |
- |
|
Adjusted EBITDA (non-GAAP) |
103,004 |
94,792 |
92,964 |
119,235 |
Net Debt (Gran Tierra):
Gran Tierra’s net debt, as presented, is defined
as Gran Tierra’s senior notes and borrowings under Gran Tierra’s
credit facility, excluding deferred financing fees, less cash and
cash equivalents.
Gran Tierra’s management uses this supplemental
measure to evaluate the financial sustainability of Gran Tierra’s
business and leverage. The most directly comparable US GAAP measure
is total debt. A reconciliation from total debt to net debt is as
follows:
|
In thousands of US$ |
As at 30 June 2024 |
|
Senior
notes(i) |
US$ 637,000 |
|
Credit
facility |
— |
|
Total
debt |
US$ 637,000 |
|
Cash and cash
equivalents |
115,000 |
|
Net
debt |
US$ 521,000 |
(i) Calculated using the sum of US$24.8 million
aggregate principal amount of Gran Tierra’s 6.25% Senior Notes due
2025, US$24.2 million aggregate principal amount of Gran Tierra’s
7.75% Senior Notes due 2027, and US$587.6 million aggregate
principal amount of Gran Tierra’s 9.50% Senior Notes due 2029,
excluding deferred financing fees.
EBITDA and Adjusted EBITDA (i3 Energy):
EBITDA is defined as earnings before
depreciation and depletion, financial costs, and tax. Adjusted
EBITDA is defined as EBITDA before gain on bargain purchase and
asset dispositions and acquisition costs. i3 Energy management
believes that EBITDA provides useful information into the operating
performance of i3 Energy, is commonly used within the oil and gas
sector, and assists its management and investors by increasing
comparability from period to period. Adjusted EBITDA removes the
gain or loss on bargain purchase and asset dispositions and the
related acquisition costs which management does not consider to be
representative of the underlying operations of i3 Energy.
A reconciliation of profit as reported under
IFRS to EBITDA and Adjusted EBITDA is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Profit for the period |
14,463 |
|
728 |
8,369 |
|
10,944 |
|
Depreciation and depletion |
8,027 |
|
8,702 |
16,660 |
|
19,410 |
|
Finance costs |
950 |
|
2,312 |
3,115 |
|
4,682 |
|
Tax |
4,840 |
|
1,104 |
7,036 |
|
3,525 |
|
EBITDA |
28,280 |
|
12,846 |
35,180 |
|
38,561 |
|
Gain on asset dispositions |
(15,779 |
) |
– |
(15,779 |
) |
– |
|
Adjusted EBITDA |
12,501 |
|
12,846 |
19,104 |
|
38,561 |
|
Adjusted EBITDA presented in
USD(i) |
15,770 |
|
16,088 |
24,163 |
|
47,546 |
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Net Operating Income (i3 Energy):
Net operating income is defined as gross profit
before depreciation and depletion, gains or losses on risk
management contracts, and other operating income, which equals
revenue from the sale of oil and gas and processing income, less
production costs. i3 Energy management believes that net operating
income is a useful supplementary measure as it provides investors
with information on operating margins before non-cash depreciation
and depletion charges and gains or losses on risk management
contracts. These metrics are also presented on a per BOE basis.
A reconciliation of gross profit as reported
under IFRS to net operating income is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Gross profit |
7,796 |
|
5,775 |
|
8,698 |
|
22,985 |
|
|
Depreciation and depletion |
8,027 |
|
8,702 |
|
16,660 |
|
19,410 |
|
|
(Gain) / loss on risk management contracts |
(1,624 |
) |
(387 |
) |
1,459 |
|
(3,343 |
) |
|
Other operating income |
(1,786 |
) |
– |
|
(1,816 |
) |
(107 |
) |
|
Net operating income |
12,413 |
|
14,090 |
|
25,001 |
|
38,945 |
|
|
Net operating income presented in
USD(i) |
5,659 |
|
17,646 |
|
31,621 |
|
48,019 |
|
|
Total Sales Production (BOE) |
1,662,661 |
|
1,686,139 |
|
3,428,516 |
|
3,735,840 |
|
|
Net operating income per BOE (£/BOE) |
7.47 |
|
8.36 |
|
7.29 |
|
10.42 |
|
|
Net operating income per BOE presented in
USD(i) |
9.42 |
|
10.47 |
|
9.22 |
|
12.85 |
|
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Free Cash Flow (i3 Energy):
Free cash flow is defined as cash from operating
activities plus proceeds on disposal of PP&E and E&E, less
cash capital expenditures on PP&E and E&E. i3 Energy
management believes that free cash flow provides useful information
to management and investors about i3 Energy’s ability to pay
dividends. This definition was expanded in Q2 2024 to include
proceeds on disposal of PP&E and E&E as i3 Energy completed
material dispositions in the period.
A reconciliation of cash from operating
activities to free cash flow is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Net cash from operating activities |
6,053 |
|
3,186 |
|
19,569 |
|
24,294 |
|
|
Disposal of property, plant & equipment |
17,956 |
|
– |
|
17,956 |
|
– |
|
|
Disposal of E&E assets |
1,234 |
|
– |
|
1,234 |
|
– |
|
|
Expenditures on property, plant & equipment |
(2,567 |
) |
(3,274 |
) |
(3,985 |
) |
(15,225 |
) |
|
Expenditures on exploration and evaluation assets |
(62 |
) |
(173 |
) |
(361 |
) |
(1,200 |
) |
|
Free cash flow |
22,614 |
|
369 |
|
34,413 |
|
7,869 |
|
|
FCF presented in USD(i) |
28,528 |
|
462 |
|
43,526 |
|
9,702 |
|
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Net Cash Surplus and Debt (i3 Energy):
Net cash surplus or net debt is defined as
borrowings and leases and trade and other payables, less cash and
cash equivalents and trade and other receivables. This definition
was expanded in 2023 and 2024 to include other non-current
liabilities and other non-current assets which are new account
balances that arose during the respective years. When net debt is
negative it is referred to as a net cash surplus. i3 Energy
management believes that net cash surplus or net debt is a
meaningful measure to monitor the liquidity position of i3
Energy.
A reconciliation of the various line items per
the statement of financial position to net cash surplus or net debt
is provided below.
|
|
30 Jun 2024 £’000 |
31 Dec 2023 £’000 |
|
Borrowings and leases |
209 |
|
34,569 |
|
|
Trade and other payables |
23,479 |
|
27,640 |
|
|
Other non-current liabilities |
431 |
|
84 |
|
|
Income taxes (receivable) / payable |
(27 |
) |
(205 |
) |
|
Cash and cash equivalents |
(8,802 |
) |
(23,507 |
) |
|
Trade and other receivables |
(19,658 |
) |
(20,534 |
) |
|
Other non-current assets |
(1,136 |
) |
– |
|
|
Net (cash surplus) / debt |
(5,504 |
) |
18,047 |
|
|
Net (cash surplus) / debt presented in
USD(ii) |
(6,958 |
) |
23,005 |
|
(ii) Amounts converted at the period-end GBP:USD
exchange rates of 1.2642 and 1.2747 for the 2024 and 2023 periods,
respectively.
Disclosure of Oil and Gas
Information
All reserves and production volumes are on an
average working interest before royalties (“WI”)
basis unless otherwise indicated. Production is expressed in
barrels of oil per day (“BOPD”) in respect of Gran
Tierra and in barrels of oil equivalent per day
(“BOEPD”) in respect of i3 Energy while reserves
are expressed in million barrels of oil equivalent
(“MMBOE”), unless otherwise indicated.
Gran Tierra’s 2023 year-end reserves, future net
revenue and ancillary information were evaluated by Gran Tierra’s
independent qualified reserves evaluator McDaniel in a report with
an effective date of 31 December 2023 (the “Gran Tierra
McDaniel Reserves Report”). In conjunction with the
Acquisition, McDaniel has prepared a fair market valuation report
dated 15 August 2024 in respect of certain of Gran Tierra's
reserves, future net revenue and net present values (the
“Gran Tierra Valuation Report”) with an effective
date of 31 December 2023 for the purposes of Rule 29 of the
Takeover Code in which the referenced reserves, future net revenue
and net present values disclosed therein matches the corresponding
reserves future net revenue and net present values provided for in
the Gran Tierra McDaniel Reserves Report. All reserves values,
future net revenue and ancillary information contained in this
Announcement, with respect to the assets of Gran Tierra, have been
prepared by McDaniel and calculated in compliance with Canadian
National Instrument 51-101 – Standards of Disclosure for Oil and
Gas Activities (“NI 51-101”) and the Canadian Oil
and Gas Evaluation Handbook (“COGEH”) and derived
from the Gran Tierra Valuation Report and the Gran Tierra McDaniel
Reserves Report.
Certain of i3 Energy’s ancillary information
presented in this Announcement were evaluated by i3 Energy’s
independent qualified reserves evaluator GLJ in a report with an
effective date of 31 December 2023 (the “i3 Energy GLJ
Reserves Report”). In conjunction with the Acquisition,
GLJ has prepared a fair market valuation report dated 16 August
2024 in respect of i3 Energy's reserves, future net revenue and net
present values (the “i3 Energy Valuation Report”)
with an effective date of 31 July 2024 for the purposes of Rule 29
of the Takeover Code. All reserves values, future net revenue and
ancillary information contained in this Announcement, with respect
to the assets of i3 Energy, have been prepared by GLJ and
calculated in compliance with NI 51-101 and COGEH, and derived from
the i3 Energy Valuation Report or the i3 Energy GLJ Reserves Report
as applicable. The results of i3 Energy's GLJ Reserves Report were
disclosed on i3 Energy’s press release dated 25 March 2024, a copy
of which is available on i3 Energy's website at
https://i3.energy/.
Barrel of oil equivalents
(“BOE”) have been converted on the basis of six
thousand cubic feet (“Mcf”) natural gas to 1
barrel (“bbl”) of oil. BOE’s may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf:
1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. In addition, given that the value
ratio based on the current price of oil as compared with natural
gas is significantly different from the energy equivalent of six to
one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be
misleading as an indication of value.
The following reserves categories are discussed
in this Announcement: Proved (“1P”), 1P plus
Probable (“2P”) and 2P plus Possible
(“3P”), Proved Developed Producing, Proved
Developed Non-Producing and Proved Undeveloped.
Proved reserves are those reserves that can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves. Probable reserves are those
additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated proved plus probable reserves. Possible reserves are
those additional reserves that are less certain to be recovered
than Probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
Proved developed reserves are those proved
reserves that are expected to be recovered from existing wells and
installed facilities or, if facilities have not been installed,
that would involve a low expenditure (e.g., when compared to cost
of drilling a well) to put reserves on production. Developed
category may be subdivided into producing and non-producing.
Undeveloped reserves are those reserves expected to be recovered
from known accumulations where a significant expenditure (e.g.,
when compared to the cost of drilling a well) is required to render
them capable of production. They must fully meet the requirements
of the reserves category (proved, probable, possible) to which they
are assigned.
Estimates of net present value and future net
revenue contained herein do not necessarily represent fair market
value. Estimates of reserves and future net revenue for individual
properties may not reflect the same level of confidence as
estimates of reserves and future net revenue for all properties,
due to the effect of aggregation. There is no assurance that the
forecast price and cost assumptions applied by McDaniel or GLJ in
evaluating Gran Tierra’s or i3 Energy’s reserves, respectively,
will be attained and variances could be material. See the Gran
Tierra Valuation Report for a summary of the price forecasts
employed by McDaniel therein. See the i3 Energy Valuation Report
for a summary of the price forecasts employed by GLJ therein. There
are numerous uncertainties inherent in estimating quantities of
crude oil and natural gas reserves. The reserves information set
forth in the Gran Tierra McDaniel Reserves Report, the i3 Energy
GLJ Reserves Report, the Gran Tierra Valuation Report and the i3
Energy Valuation Report are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may be greater than or less than the estimates provided
therein.
All reserves assigned in the Gran Tierra
McDaniel Reserves Report and the Gran Tierra Valuation Report are
located in Colombia and Ecuador and presented on a consolidated
basis by foreign geographic area. References to a formation where
evidence of hydrocarbons has been encountered is not necessarily an
indicator that hydrocarbons will be recoverable in commercial
quantities or in any estimated volume. Gran Tierra’s reported
production is a mix of light crude oil and medium and heavy crude
oil for which there is not a precise breakdown since Gran Tierra’s
oil sales volumes typically represent blends of more than one type
of crude oil. Well test results should be considered as preliminary
and not necessarily indicative of long-term performance or of
ultimate recovery. Well log interpretations indicating oil and gas
accumulations are not necessarily indicative of future production
or ultimate recovery. If it is indicated that a pressure transient
analysis or well-test interpretation has not been carried out, any
data disclosed in that respect should be considered preliminary
until such analysis has been completed. References to thickness of
“oil pay” or of a formation where evidence of hydrocarbons has been
encountered is not necessarily an indicator that hydrocarbons will
be recoverable in commercial quantities or in any estimated
volume.
All evaluations of future net revenue contained
in the Gran Tierra McDaniel Reserves Report, the i3 Energy GLJ
Reserves Report, the Gran Tierra Valuation Report and the i3 Energy
Valuation Report are after the deduction of royalties, operating
costs, development costs, production costs and abandonment and
reclamation costs but before consideration of indirect costs such
as administrative, overhead and other miscellaneous expenses. It
should not be assumed that the estimates of future net revenues
presented in this Announcement represent the fair market value of
the reserves. There are numerous uncertainties inherent in
estimating quantities of crude oil reserves and the future cash
flows attributed to such reserves. The reserve and associated cash
flow information set forth in the Gran Tierra McDaniel Reserves
Report, the i3 Energy GLJ Reserves Report, the Gran Tierra
Valuation Report and the i3 Energy Valuation Report are estimates
only and there is no guarantee that the estimated reserves will be
recovered. Actual reserves may be greater than or less than the
estimates provided therein.
Booked drilling locations of i3 Energy disclosed
herein are derived from the i3 Energy GLJ Reserves Report and
account for drilling locations that have associated 2P
reserves.
This Announcement contains reference to reserves
replacement of Gran Tierra which is an oil and gas metric that does
not have a standardised meaning or standard method of calculation
and therefore such measure may not be comparable to similar
measures used by other companies and should not be used to make
comparisons. That metric has been included herein to provide
readers with an additional measure to evaluate Gran Tierra's
performance; however, that measure is not a reliable indicator of
the future performance of Gran Tierra and future performance may
not compare to the performance in previous periods. Reserves
replacement is calculated as reserves in the referenced category
divided by estimated referenced production. Gran Tierra management
uses this measure to determine the relative change of its reserves
base over a period of time.
References in this Announcement to IP30, IP90
and other short-term production rates of Gran Tierra are useful in
confirming the presence of hydrocarbons, however such rates are not
determinative of the rates at which such wells will commence
production and decline thereafter and are not indicative of
long-term performance or of ultimate recovery. While encouraging,
readers are cautioned not to place reliance on such rates in
calculating the aggregate production of Gran Tierra. Gran Tierra
cautions that such results should be considered to be
preliminary.
No Profit Forecasts or
Estimates
The Gran Tierra Profit Forecast and the i3
Energy Profit Forecast are profit forecasts for the purposes of
Rule 28 of the Takeover Code. As required by Rule 28.1 of the
Takeover Code, the assumptions on which the Gran Tierra Profit
Forecast is stated are set out in Appendix 4 to this Announcement
and the assumptions on which the i3 Energy Profit Forecast is
stated are set out in paragraph 6 of this Announcement.
Other than the Gran Tierra Profit Forecast and
the i3 Energy Profit Forecast, no statement in this Announcement is
intended as a profit forecast or estimate for any period and no
statement in this Announcement should be interpreted to mean that
earnings or earnings per share or dividend per share for Gran
Tierra or i3 Energy, as appropriate, for the current or future
financial years would necessarily match or exceed the historical
published earnings or earnings per share or dividend per share for
Gran Tierra or i3 Energy as appropriate.
Dealing and Opening Position Disclosure
Requirements
Under Rule 8.3(a) of the Takeover Code, any
person who is interested in one per cent. or more of any class of
relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is
likely to be, solely in cash) must make an Opening Position
Disclosure following the commencement of the Offer Period and, if
later, following the Announcement in which any securities exchange
offeror is first identified.
An Opening Position Disclosure must contain
details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An
Opening Position Disclosure by a person to whom Rule 8.3(a) applies
must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10th
Business Day following the Announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any
person who is, or becomes, interested in one per cent. or more of
any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or
of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s), save to the extent that these
details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 p.m. (London time) on the Business Day following
the date of the relevant dealing. If two or more persons act
together pursuant to an agreement or understanding, whether formal
or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror,
they will be deemed to be a single person for the purpose of Rule
8.3.
Opening Position Disclosures must also be made
by the offeree company and by any offeror and Dealing Disclosures
must also be made by the offeree company, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and
8.4). Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
Offer Period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 20
7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Rounding
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover
Code, i3 Energy confirms that as at the date of this Announcement,
it has in issue and admitted to trading on the London Stock
Exchange and the TSX 1,202,447,663 ordinary shares of 0.01 pence
each (excluding ordinary shares held in treasury). The
International Securities Identification Number (ISIN) of the
ordinary shares is GB00BDHXPJ60.
In accordance with Rule 2.9 of the Takeover
Code, Gran Tierra confirms that as at the date of this
Announcement, it has in issue and admitted to trading on the NYSE
American, the London Stock Exchange and the TSX 30,665,305 ordinary
shares of US$0.001 each. The International Securities
Identification Number (ISIN) of the ordinary shares is
US38500T2006.
Publication on website and availability
of hard copies
A copy of this Announcement is and will be
available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, for inspection on Gran
Tierra's website
https://www.grantierra.com/investor-relations/recommended-acquisition/
and on i3 Energy 's website
https://i3.energy/grantierra-offer-terms/ by no later than 12 noon
(London time) on the Business Day following this Announcement. For
the avoidance of doubt, the contents of the websites referred to in
this Announcement are not incorporated into and do not form part of
this Announcement.
In accordance with Rule 30.3 of the Takeover
Code, i3 Energy Shareholders and persons with information rights
may request a hard copy of this Announcement by contacting i3
Energy's registrars, Link Group or by calling Link Group on +44
(0)371 664 0321. Calls are charged at the standard geographical
rate and will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Lines are
open between 9.00 a.m. to 5.30 p.m. (London time), Monday to Friday
(except public holidays in England and Wales). Please note that
Link Group cannot provide any financial, legal or tax advice. Calls
may be recorded and monitored for security and training purposes.
For persons who receive a copy of this Announcement in electronic
form or via a website notification, a hard copy of this
Announcement will not be sent unless so requested. Such persons may
also request that all future documents, announcements and
information to be sent to them in relation to the Acquisition
should be in hard copy form. For the avoidance of doubt, the
contents of the aforementioned websites, and any websites
accessible from hyperlinks on those websites, are not incorporated
into and do not form part of this Announcement.
If you are in any doubt about the contents of
this Announcement or the action you should take, you are
recommended to seek your own independent financial advice
immediately from your stockbroker, bank manager, solicitor,
accountant or independent financial adviser duly authorised under
the Financial Services and Markets Act 2000 (as amended) if you are
resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser.
Qualified Person's
Statement
In accordance with the AIM Note for Mining and
Oil and Gas Companies, i3 Energy discloses that Majid Shafiq is the
qualified person who has reviewed the technical information
contained in this Announcement. He has a Master's Degree in
Petroleum Engineering from Heriot-Watt University and is a member
of the Society of Petroleum Engineers. Majid Shafiq consents to the
inclusion of the information in the form and context in which it
appears.
NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY IN, INTO
OR FROM ANY RESTRICTED JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF
SUCH JURISDICTION.
THE FOLLOWING ANNOUNCEMENT IS AN
ADVERTISEMENT AND NOT A PROSPECTUS OR CIRCULAR OR PROSPECTUS OR
CIRCULAR EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY
INVESTMENT DECISION IN RELATION TO THE NEW GRAN TIERRA SHARES
EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT WHICH
IS PROPOSED TO BE PUBLISHED IN DUE COURSE.
NEITHER THIS ANNOUNCEMENT, NOR THE
INFORMATION CONTAINED HEREIN, CONSTITUTE A SOLICITATION OF PROXIES
WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LAWS.
SHAREHOLDERS ARE NOT BEING ASKED AT THIS TIME TO EXECUTE A PROXY IN
FAVOUR OF THE ACQUISITION OR THE MATTERS DESCRIBED
HEREIN.
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION.
FOR IMMEDIATE RELEASE.
19 August 2024
Recommended and Final* Cash and Share
Acquisition
of
i3 Energy plc ("i3 Energy")
by
Gran Tierra Energy, Inc. ("Gran
Tierra")
to be implemented by way of a scheme of
arrangement under Part 26 of the Companies Act 2006
1. Summary The Boards of
Gran Tierra and i3 Energy are pleased to announce that they have
reached agreement on the terms of a recommended and final* cash and
share offer by Gran Tierra for i3 Energy pursuant to which Gran
Tierra will acquire the entire issued and to be issued share
capital of i3 Energy (the "Acquisition"), intended
to be effected by means of a court sanctioned scheme of arrangement
between i3 Energy and the i3 Energy Shareholders under Part 26 of
the Companies Act (the "Scheme").
Under the terms of the Acquisition, each i3
Energy Shareholder will be entitled to receive:
- one New Gran Tierra Share per every 207 i3 Energy
Shares held; and
- 10.43 pence cash per i3 Energy Share,
(together, the
"Consideration")
In addition, each i3 Energy Shareholder will be
entitled to receive:
• a cash dividend of 0.2565 pence
per i3 Energy Share in lieu of the ordinary dividend in respect of
the three month period ending 30 September 2024 (the "Acquisition
Dividend")
Following completion of the Acquisition, i3
Energy Shareholders will own up to 16.5 per cent. of Gran
Tierra.
Based on Gran Tierra's closing price of US$8.66
per Gran Tierra Share on the NYSE American on 16 August 2024 (being
the last Business Day before the Offer Period began), the
Acquisition implies a value of 13.92 pence per i3 Energy Share and
approximately £174.1 (US$225.4) for the entire issued and to be
issued share capital of i3 Energy which represents:
- a premium of 49.0 per cent. to the Closing Price of 9.34 pence
per i3 Energy Share on 16 August 2024;
- a premium of 49.7 per cent. to the volume weighted average
price of 9.30 pence per i3 Energy Share for the 30-day period ended
16 August 2024;
- a premium of 43.6 per cent. to the volume weighted average
price of 9.70 pence per i3 Energy Share for the 60-day period ended
16 August 2024; and
- a premium of 37.5 per cent. to the volume weighted average
price of 10.12 pence per i3 Energy Share for the 180-day period
ended 16 August 2024.
A Mix and Match Facility will also be made
available to i3 Energy Shareholders in order to enable them to
elect, subject to off-setting elections, to vary the proportions in
which they receive cash and New Gran Tierra Shares to be issued.
The maximum aggregate amount of cash to be paid and New Gran Tierra
Shares to be issued under the terms of the Acquisition will not be
varied or increased as a result of elections under the Mix and
Match Facility, in accordance with Gran Tierra’s no increase
statement made in accordance with Rule 32.2 of the Takeover Code.
Gran Tierra reserves the right to scale back elections made for the
New Gran Tierra Shares pursuant to the Mix and Match Facility if
the issuance of such New Gran Tierra Shares would result in any i3
Energy Shareholder holding 10% or more of Gran Tierra's issued
share capital (on a non-diluted basis) following completion of the
Acquisition.
If any dividend, distribution or other return of
value in respect of the i3 Energy Shares other than the Acquisition
Dividend is declared, paid, made or becomes payable on or after the
date of this Announcement and prior to the Effective Date, Gran
Tierra will reduce the cash consideration payable for each i3
Energy Share under the terms of the Acquisition by the amount per
i3 Energy Share of such dividend, distribution or other return of
value. Any exercise by Gran Tierra of its rights referred to in
this paragraph shall be the subject of an announcement. In such
circumstances, i3 Energy Shareholders would be entitled to receive
and retain any such dividend, distribution or other return of
value, which has been declared, made or paid or which becomes
payable.
It is intended that, immediately following
completion of the Acquisition, Gran Tierra will transfer the entire
issued share capital of i3 Energy to its wholly owned, indirect
subsidiary, Gran Tierra EIH. Gran Tierra EIH is the holding entity
for Gran Tierra's Colombian assets.
Following completion of the Acquisition, it is
expected that the i3 Energy Shares will be cancelled from trading
on the AIM market of the London Stock Exchange and will be delisted
from the TSX and that Gran Tierra will, subject to Canadian
Securities Laws, apply to have i3 Energy cease to be a reporting
issuer in all jurisdictions of Canada in which it is a reporting
issuer.
No Increase Statement Gran Tierra
considers the financial terms of the Acquisition comprising 10.43
pence per i3 Energy Share in cash, one new Gran Tierra Share per
every 207 i3 Energy Share held, and the payment of the 0.2565 pence
per i3 Energy Share Acquisition Dividend to be full and fair and
therefore that the financial terms of the Acquisition will not be
increased in accordance with Rule 32.2 of the Takeover Code. Under
Rule 35.1 of the Takeover Code, if the Acquisition lapses, except
with the consent of the Panel, Gran Tierra will not be able to make
an offer for i3 Energy for at least 12 months.
Gran Tierra reserves the right to revise the
financial terms of the Acquisition in the event: (i) a third party,
other than Gran Tierra announces a firm intention to make an offer
for i3 Energy on more favourable terms than Gran Tierra’s
Acquisition; or (ii) the Panel otherwise provides its consent.
1. Background to and reasons for the
Acquisition Over the last five years, Gran Tierra has
looked to diversify into specific oil and gas basins where it is
confident it can create shareholder value focused on operated,
high-quality assets with large resources in place and access to
infrastructure. The Western Canadian Sedimentary Basin
(“WCSB”) being one of the basins on Gran Tierra’s
priority list. The majority of the Gran Tierra team has worked in
the WCSB and, with its headquarters located in Calgary, is well
positioned to do so again.
Gran Tierra believes that the Acquisition offers
significant benefits to both companies and their respective
shareholders, including the following:
- A business with increased scale and relevance:
The Acquisition will create an independent energy company of scale
in the Americas with significant production, reserves, cash flows
and development optionality. This increased scale is expected to
facilitate access to capital, allow for optimised capital
allocation, enhance shareholder returns and increase relevance to
investors:
- i3 Energy has guided to 2024 working interest production of
18,000 to 19,000 BOEPD from its Canadian assets with exit rate
guidance of 20,250 – 21,250 BOEPD and Gran Tierra has announced
2024 guidance production of 32,000 to 35,000 BOPD (100 per cent.
oil).
- i3 Energy has 1P working interest reserves of 88 MMBOE as at 31
July 2024 and Gran Tierra had 1P working interest reserves of 90
MMBOE as at 31 December 2023.
- i3 Energy has 2P working interest reserves of 175 MMBOE as at
31 July 2024 and Gran Tierra had 2P working interest reserves of
147 MMBOE as at 31 December 2023.
- i3 Energy has an independently valued 2P net present value
discounted at 10 per cent. ("NPV10") (after tax)
of C$994 million (approximately US$725 million) as at 31 July 2024
and Gran Tierra has an independently valued 2P NPV10 (after tax) of
US$1.9 billion as at 31 December 2023. On a 1P (after tax) basis,
i3 Energy’s NPV10 is C$469 million (approximately US$342 million)
and Gran Tierra’s NPV10 is US$1.3 billion.
- i3 Energy has announced full year 2024 EBITDA guidance of US$50
– 55 million after considering hedges and Gran Tierra has announced
full year 2024 EBITDA guidance of US$335 – US$395 million in its
low case (at US$70/bbl Brent oil pricing), US$400 – US$460 million
in its base case (at US$80/bbl Brent oil pricing), and US$480 –
US$540 million in its high case (at US$90/bbl Brent oil
pricing).
- i3 Energy has over 250 net booked drilling locations (over 374
gross booked drilling locations) associated with 2P reserves which,
coupled with Gran Tierra’s substantial booked reserves, recent
exploration discoveries and significant prospective acreage across
Colombia and Ecuador, provides development and exploration upside
potential to shareholders.
- Increased diversity across geographies and product
streams: The Acquisition will create a more diverse
international energy company operating across the Americas in
regions with substantial oil and gas production, well-established
regulatory regimes, stable contracts, access to markets and
attractive fiscal terms. The Combined Group will offer a more
diversified proposition to both i3 Energy Shareholders and Gran
Tierra shareholders. Gran Tierra's and i3 Energy's Q2 2024
production imply an approximate geographic split of 62 per cent.
Colombia, 36 per cent. Canada, and 3 per cent. Ecuador for the
Combined Group, with a commodity mix of 81 per cent. liquids and 19
per cent. natural gas. The addition of new geographies and
commodities, along with the exposure to an investment grade
country, is expected to benefit the Combined Group in terms of
increased development optionality, risk diversification and credit
profile. The Combined Group would have approximately 1.4 million
net acres in Colombia, 138 thousand net acres in Ecuador and 584
thousand net acres in Canada including 298 thousand net acres in
Central Alberta, 102 thousand net acres in Wapiti/Elmworth, 50
thousand net acres in Simonette, and 69 thousand net acres in North
Alberta (Clearwater)
- Optimised capital allocation and investment:
The Combined Group will have exposure to high return projects
across Canada, Colombia and Ecuador, enabling capital allocation
and investment across the portfolio to be optimised, using Gran
Tierra’s balance sheet strength to accelerate production and cash
flow growth from i3 Energy’s 250 net booked drilling locations
associated with 2P reserves and additional unbooked Canadian
drilling locations and Gran Tierra’s high-impact exploration and
low decline oil assets currently under waterflood. Gran Tierra
further believes that the strength of the Combined Group will
provide an excellent platform for future consolidation, both in
Canada and internationally, with significant management expertise,
free cash flow, a strong balance sheet and borrowing base
potential.
- Balance sheet strength: Gran Tierra has a
strong balance sheet and ample liquidity to fund growth projects
and shareholder returns. As of 30 June 2024, Gran Tierra had twelve
month trailing net debt to adjusted EBITDA of 1.3x and a cash
balance of US$115 million. Approximately 70 per cent. of Gran
Tierra's debt is due in 2028 and 2029. The addition of i3 Energy’s
production and cash flows would enhance Gran Tierra’s balance sheet
and enable accelerated investment and shareholder returns. i3
Energy’s assets would add production, cash flows, reserves and a
diversified drilling inventory in an investment grade country, Gran
Tierra expects this enhanced scale and diversity to provide
enhancements to the credit profile of the business and, ultimately,
lower its cost of capital. As at 30 June 2024 i3 Energy had zero
debt and a C$75 million undrawn credit facility.
- Increased trading liquidity and investor
access: Gran Tierra maintains a primary listing on the
NYSE American, where it trades significant volume, with additional
listings on the London Stock Exchange and the TSX. With i3 Energy
shareholders expected to own up to 16.5 per cent. of Gran Tierra on
completion of the Acquisition, the Acquisition is expected to
provide enhanced trading liquidity for the Combined Group's
shareholders across exchanges and provide continuity of trading
venues for i3 Energy’s Shareholders. Additionally, with increased
scale, Gran Tierra expects to be increasingly relevant to a larger
pool of international equity and credit investors, with the
potential for this to have further benefits in terms of trading
liquidity and valuation multiple expansion.
- Cash return for i3 Energy shareholders with upside
potential: Gran Tierra’s offer provides i3 Energy
Shareholders with a significant premium, in cash, to the current
value of their holdings with material upside potential through
equity ownership of the Combined Group. Gran Tierra intends to use
the Combined Group's scale and enhanced financial capacity to
accelerate development of i3 Energy’s Canadian assets as well as
Gran Tierra's existing Colombian and Ecuadorian assets and expects
this to provide meaningful long-term returns to shareholders of the
Combined Group. Since 1 January 2023 Gran Tierra has purchased
approximately 11 per cent. of its Gran Tierra Shares outstanding
from free cash flow.
- Recommendation
The i3 Energy Directors, who have been so
advised by Zeus Capital as to the financial terms of the
Acquisition, consider the terms of the Acquisition to be fair and
reasonable. In providing its advice to the i3 Energy Directors,
Zeus Capital has taken into account the commercial assessments of
the i3 Energy Directors. In addition, the i3 Energy Directors
consider the terms of the Acquisition to be in the best interests
of the i3 Energy Shareholders as a whole. Zeus Capital is providing
independent financial advice to the i3 Energy Directors for the
purposes of Rule 3 of the Takeover Code.
Accordingly, the i3 Energy Directors intend to
recommend unanimously that the i3 Energy Shareholders vote in
favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the i3 Energy General Meeting as those i3 Energy
Directors who hold i3 Energy Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of an aggregate of
32,139,532 i3 Energy Shares representing, in aggregate,
approximately 2.6728 per cent. of the ordinary share capital of i3
Energy in issue on the Last Practicable Date (excluding any i3
Energy Shares in treasury).
Further details of the irrevocable undertakings
are set out in Appendix 3 to this Announcement.
2. Background to and reasons for the
recommendation of the i3 Energy Directors Since entering
Canada in 2020, i3 Energy has executed a series of strategic
acquisitions. This targeted acquisition strategy focused on
establishing four high quality core operating areas (namely Central
Alberta, Simonette, Wapiti Clearwater), each area consisting of
strong, low-decline, production profiles and an extensive inventory
of economic development drilling opportunities.
In Q1 2024, i3 Energy was approached by multiple
counterparties, including but not limited to Gran Tierra,
expressing unsolicited and non-binding interest in a potential
corporate combination or transaction. Beginning in Q2 2024, i3
Energy and its advisors conducted a targeted competitive outreach
process (the “Process”), while strictly adhering
to the rules of the Takeover Code, to evaluate potential strategic
alternatives for i3 Energy. The Process was successful, with i3
Energy receiving a number of proposals. In exchange for being
selected as preferred bidder, Gran Tierra was given the opportunity
to improve its offer, which it did on 27 July 2024. As such, Gran
Tierra was selected as preferred bidder with the offer reflecting a
premium in cash to the prevailing share price and with additional
upside potential from ongoing exposure to the Combined Group. In
addition, i3 Energy Directors welcomed Gran Tierra’s intention to
retain i3 Energy’s Canadian employee base and its ability to
provide i3 Energy Shareholders with ongoing and enhanced trading
liquidity through its multi-exchange listings on the NYSE American,
the TSX and the London Stock Exchange.
Following further diligence and negotiations,
Gran Tierra submitted a further increased non-binding proposal on
13 August 2024. Gran Tierra made a final increased proposal on 15
August 2024, reflecting the terms set out in this Announcement,
which received unanimous support from the i3 Energy Directors.
The i3 Energy Directors note Gran Tierra’s
familiarity with i3 Energy’s assets and operations and acknowledge
the compelling strategic rationale of the Acquisition and the
potential benefits for i3 Energy in the next phase of its
growth.
In considering the Acquisition and the
recommendation, the i3 Energy Directors have taken into account a
range of factors including the following:
- the Acquisition represents a significant premium of
approximately 49 per cent. to the Closing Price of an i3 Energy
Share of 9.34 pence on the Last Practicable Date, recognising the
strength of i3 Energy and its prospects, but takes account of the
significant requirement for capital to realise those
prospects;
- the Acquisition provides an opportunity for i3 Energy
Shareholders to crystallise a premium in cash, with additional
value through ongoing equity ownership in the Combined Group which
provides further upside potential in addition to the initial
Acquisition premium;
- the Acquisition accelerates, without further capital
investment, time or operational risk, the delivery of fair value to
i3 Energy Shareholders, removing the inherent uncertainty of the
delivery of future value which exists as a standalone entity;
- the Acquisition value compares favourably to comparable company
valuations and transactions across a range of metrics;
- Gran Tierra, with a listing on the TSX, its headquarters in
Calgary and with substantial previous operational experience in
Canada, will be a strong custodian of i3 Energy’s assets going
forward and is well positioned to obtain the necessary regulatory
consents for the Acquisition;
- the Combined Group provides higher trading liquidity for
shareholders with London, New York and Toronto stock exchange
listings;
- the Acquisition will provide i3 Energy Shareholders, through
their interest in the Combined Group, with exposure to significant
production, cash flow and capital market access which is expected
to provide the required financial strength to support the
development of i3 Energy’s asset base as well as Gran Tierra’s
existing assets in Colombia and Ecuador; and
- the i3 Energy Directors welcome Gran Tierra’s confirmation that
it is supportive of i3 Energy’s existing efforts to reduce carbon
emissions and is committed to such measures in the future.
The i3 Energy Directors have also given careful
consideration to Gran Tierra’s intentions regarding the strategy,
management, employees and locations of business of i3 Energy (as
set out in paragraph 11 below).
3. Information relating to i3
Energy i3 Energy, an independent oil and gas company, with
a diverse, full-cycle portfolio of assets in the WCSB and UK North
Sea (“UKNS”) was initially admitted to trading on
AIM on 25 July 2017 before listing on the TSX in Q3 2020, upon the
completion of the re-admission to trading on AIM following its
initial Canadian acquisitions.
i3 Energy’s registered office is in Eastleigh,
United Kingdom, and has an office located in Calgary in Canada,
where the majority of its employees are based and where its
operational plans are formulated and, in conjunction with i3
Energy's UK based management, executed.
i3 Energy’s Canadian acreage spans four key
regions in some of the WCSB’s most economic play types, including
Central Alberta, Simonette, Wapiti and Clearwater. The assets are
76 per cent. operated with production from approximately 850 net
long-life, low-risk and low-decline wells, spanning approximately
600,000 net acres. These four core areas combined delivered 18,271
BOEPD of production in Q2 2024, comprising of 57.5 million standard
cubic feet of natural gas per day ("mmcf/d"),
4,616 BOPD of natural gas liquids ("NGLs"), 3,983
BOPD of oil and condensate and 87 BOEPD of royalty interest
production.
i3 Energy has a total of 375 gross (254.4 net)
booked drilling locations associated with 2P reserves and
additional unbooked drilling locations across its acreage.
As of 31 July 2024, i3 Energy had 2P reserves of
approximately 175 MMBOE, and an independently assessed 2P NPV10
(after tax) of C$994 million (approximately US$725 million).
On 25 April 2024, i3 Energy announced its 2024
expected guidance, with full year working interest production was
expected to be between 18,000 and 19,000 BOEPD. On 13 August 2024,
i3 Energy announced updated guidance for 2024 full year EBITDA
before hedging gains and losses between US$50 million and US$55
million and full year annual net operating income of between US$63
million and US$67 million. At the end of Q2 2024, i3 Energy had
hedging in place to cover 34 per cent. and 28 per cent. of
projected Q3 2024 and Q4 2024 production respectively, providing
protection for approximately US$46.5 million of 2024 net operating
income.
On 13 August 2024, i3 Energy announced its
operating and financial results for the three and six months ended
30 June 2024. For the six months ended 30 June 2024, i3 Energy used
non-IFRS measures when assessing and discussing i3 Energy's
financial performance and financial position, as described further
in Non-IFRS, Non-GAAP and Other Specified Financial Measures below.
i3 Energy recorded an adjusted EBITDA of US$24.2 million, Net
Operating Income (“NOI”) of US$31.6 million and
Free Cash Flow of US$31.4 million for the six months ended 30 June
2024. i3 Energy exited the second quarter 2024 with a net cash
surplus of US$7 million, positioning i3 Energy with a strong
balance sheet, financial flexibility with a fully undrawn C$75
million credit facility, and solid cash flow base. i3 Energy has
paid multiple dividends to its shareholders since 2021, returning
£43.4 million or approximately US$55.3 million in dividends to date
(excluding the Acquisition Dividend). At the end of Q2 2024, i3
Energy had hedging in place to cover 34 per cent. and 28 per cent.
of projected Q3 2024 and Q4 2024 production respectively, providing
protection for approximately US$46.5 million of 2024 net operating
income. i3 Energy also announced a revised statement regarding the
unaudited NOI of US$63 – US$67 million and EBITDA after considering
hedges of US$50 – US$55 million to be generated by i3 Energy for
the financial year ending 2024.
During the first half of 2024, i3 Energy focused
on repositioning i3 Energy's balance sheet to unlock future growth
potential. During Q2 2024, i3 Energy closed four asset transactions
for combined net proceeds of US$26.29 million. The four
transactions included the partial sale of its royalty assets, the
partial sale of its Hangingstone assets, the disposition of certain
Bluesky mineral rights and the disposition of 3.75 net sections of
land in the greater Gilby area of Central Alberta. Proceeds from
these transactions assisted in the elimination of all outstanding
net debt.
In addition to its assets in the WCSB, i3 Energy
owns and operates block 13/23c in the UK North Sea which
encapsulates the Serenity oil discovery and the Minos High area. i3
Energy’s North Sea strategy has been focused on the development of
existing discoveries that are located proximal to existing
infrastructure in order to minimise development capital and
maximise economic recovery. Like other companies with UK North Sea
assets, the frequent and adverse changes to the UK’s oil and gas
fiscal regime have caused significant uncertainty in relation to
the development of i3 Energy’s UK assets.
4. i3 Energy Profit Forecast
On 13 August 2024, i3 Energy announced its Q2 2024 Operational and
Financial Results update (the "August
Announcement"), which included the following guidance in
relation to EBITDA and net operating income for the year ending 31
December 2024:
| 2024 Budget |
|
| Net
operating income (US$ million) |
63 - 67 |
| EBITDA
after considering hedges (US$ million) |
50 - 55 |
Application of Rule 28 to i3 Energy
Profit Forecast
The net operating income of US$63 – US$67
million and EBITDA (after considering hedges) of US$50 – US$55
million included in the August Announcement sets expectations for
the minimum net operating income and EBITDA after considering
hedges of i3 Energy for the period ending 31 December 2024 and for
purposes of Rule 28.1(c) of the Takeover Code constitutes a profit
forecast (the "i3 Energy Profit Forecast").
Directors' confirmation
The i3 Energy Directors confirm that, as at the
date of this announcement, the i3 Energy Profit Forecast remains
valid and that it has been compiled on the basis of the assumptions
stated below and that the basis of accounting used is consistent
with i3 Energy’s accounting policies which are in accordance with
UK adopted IFRS, and their interpretations issued by the
International Accounting Standards Board (“IASB”),
and with IFRS and their interpretations issued by the IASB
guidelines used by i3 Energy to measure business performance and
that i3 Energy applied in preparing its financial statements for
the year ended 31 December 2023.
Basis of preparation and principal
assumptions
The i3 Energy Profit Forecast and each of the
net operating income and EBITDA after considering hedges ranges set
out above are based upon internal i3 Energy forecasts. In
confirming the i3 Energy Profit Forecast and the net operating
income and EBITDA after considering hedges ranges, the i3 Energy
Directors have made the following assumptions, none of which are
within their control:
- price assumptions of US$ 78.00/barrel ("bbl")
for West Texas Intermediate;
- price assumptions of CAD 1.60/Gigajoules
("GJ") for AECO natural gas; and
- foreign exchange assumptions for full year 2024 of
approximately 0.732 US$ to C$.
- Information relating to Gran Tierra
Gran Tierra, together with its subsidiaries, is
an independent international energy company focused on oil and
natural gas exploration and production. The Gran Tierra Shares are
admitted to trading on the NYSE American, the TSX and the London
Stock Exchange under the ticker symbol GTE with a market
capitalisation of US$266 million as at the Last Practicable
Date.
Gran Tierra is a full cycle company focused on
exploration, development, and production. Gran Tierra allocates
approximately 60-70 per cent. of its capital program to
development, with the balance to exploration and appraisal, and
targets returning up to 50 per cent. of free cash flow to
shareholders via share buybacks with the remainder to debt
reduction. Gran Tierra is currently developing its portfolio of 100
per cent. operated oil assets spanning 25 blocks and 1.4 million
net acres across Colombia and Ecuador and has a stated ambition to
pursue additional growth opportunities.
Gran Tierra has guided to 2024 working interest
production from existing assets of 32,000-35,000 BOPD, with
reported second quarter 2024 total average working interest
production of 32,776 BOPD. As at 31 December 2023, Gran Tierra had
certified 1P, 2P and 3P reserves of 90 MMBOE, 147 MMBOE and 207
MMBOE, respectively, with Gran Tierra having achieved reserve
replacement ratios in the year of 154 per cent. (1P), 242 per cent.
(2P) and 303 per cent. (3P), respectively. Gran Tierra has had five
consecutive years of 1P reserve growth.
Gran Tierra’s exploration acreage in Ecuador has
seen five consecutive oil successful discoveries, all of which are
currently on production.
|
Well |
Zone |
Onstream Date |
Initial Rate |
IP30 (BOPD) 1. |
IP90 (BOPD) 2 |
IP30 BS&W 3 |
API |
|
Charapa-B5 |
Hollin |
11/9/2022 |
- |
1,092 |
910 |
2 |
% |
28 |
|
Bocachico-J1 |
Basal Tena |
5/30/2023 |
- |
1,296 |
1,146 |
<1% |
20 |
|
Arawana-J1 |
Basal Tena |
5/17/2024 |
- |
1,182 |
- |
<1% |
20 |
|
Bocachico Norte-J1 |
T-Sand |
8/1/2024 |
1,353 |
- |
- |
- |
|
35 |
|
Charapa-B6 |
Hollin |
8/7/2024 |
2,118 |
- |
- |
- |
|
28 |
1. Average initial 30-day production per well.
2. Average initial 90-day production per well. 3. Percentage of
basic sediment and water in the initial 30-day production.
Gran Tierra recorded adjusted EBITDA of US$103
million in the second quarter 2024, reflecting a trailing net debt
to adjusted EBITDA of 1.3x and expects this to be less than 1.0x by
the end of 2024, prior to effects of the Acquisition. As at 30 June
2024, Gran Tierra had a cash balance of US$115 million and,
following the successful refinancing of its senior notes in October
2023, had total debt of US$637 million, resulting in net debt of
$521 million.
Gran Tierra is headquartered in Calgary and has
a highly qualified and experienced management team and board of
directors with a depth of experience in conventional asset
development, both internationally as well as in the WCSB. Gran
Tierra is committed to best-in-class ESG standards:
- Since 2019, Gran Tierra has decreased its Scope 1 and 2 carbon
emissions by 26 per cent. and decreased flaring by 76 per
cent.
- Gran Tierra recycles 92 per cent. of its operationally injected
water, with an objective of sourcing 100 per cent. of its water
from closed-cycle production.
- Gran Tierra has planted 1.66 million trees and has conserved,
preserved, or reforested over 4,500 hectares of land, more than 31
times Gran Tierra’s operational footprint.
- Gran Tierra is committed to providing significant training and
local employment opportunities, prioritizing local goods and
services, voluntarily investing in local social and environmental
projects and promoting human rights projects in the communities
neighbouring our operations.
- Gran Tierra has been accepted by the Voluntary Principles
Initiative as an official member of the Voluntary Principles for
Security and Human Rights world-wide initiative.
- Gran Tierra has consistently been the top sector performer in
Colombia in terms of its Lost Time Injury Frequency Rate and Total
Recordable Injury Frequency, verified through an internal study
conducted with the Colombian HSE National Committee.
- Rule 29 Valuation Reports
Gran Tierra
Your attention is drawn to the Gran Tierra
Valuation Report prepared in accordance with Rule 29 of the
Takeover Code, a copy of which is available on Gran Tierra's
website (https://www.grantierra.com/).
On 23 January 2024, Gran Tierra announced its
year end reserves for the year ended 31 December 2023 as evaluated
by McDaniel, which included, among other things, statements
relating to Gran Tierra's reserves, future net revenue and net
present values. In connection with the Acquisition, Gran Tierra is
required by Rule 29 of the Takeover Code to publish an updated
independent asset valuation as at 31 December 2023 (the
“Gran Tierra Valuation”). Gran
Tierra has commissioned McDaniel to provide the Gran Tierra
Valuation. McDaniel is independent of both Gran Tierra and i3
Energy.
The output of the Gran Tierra Valuation Report
in respect of Gran Tierra net present values is reproduced
below:
|
Total Company |
Discount Rate |
|
(US$ million) |
0% |
5% |
10% |
15% |
20% |
|
Before Tax |
|
|
|
|
|
| Proved
Developed Producing |
1,362 |
1,228 |
1,117 |
1,025 |
948 |
| Proved
Developed Non-Producing |
135 |
115 |
99 |
87 |
77 |
| Proved
Undeveloped |
1,209 |
932 |
730 |
579 |
465 |
|
Total Proved |
2,706 |
2,275 |
1,946 |
1,691 |
1,490 |
| Total
Probable |
2,062 |
1,493 |
1,117 |
861 |
680 |
|
Total Proved plus Probable |
4,768 |
3,768 |
3,063 |
2,552 |
2,170 |
| Total
Possible |
2,513 |
1,698 |
1,207 |
895 |
688 |
|
Total Proved plus Probable plus Possible |
7,281 |
5,466 |
4,270 |
3,447 |
2,858 |
|
|
|
|
|
|
|
|
After Tax |
|
|
|
|
|
| Proved
Developed Producing |
1,025 |
930 |
848 |
779 |
721 |
| Proved
Developed Non-Producing |
73 |
63 |
54 |
48 |
42 |
| Proved
Undeveloped |
691 |
514 |
384 |
288 |
216 |
|
Total Proved |
1,789 |
1,507 |
1,286 |
1,115 |
979 |
| Total
Probable |
1,142 |
816 |
601 |
455 |
353 |
|
Total Proved plus Probable |
2,931 |
2,323 |
1,887 |
1,570 |
1,332 |
| Total
Possible |
1,413 |
945 |
664 |
486 |
370 |
|
Total Proved plus Probable plus Possible |
4,344 |
3,268 |
2,551 |
2,056 |
1,702 |
For the purposes of Rule 29.5 of the Takeover
Code, the Gran Tierra Directors confirm that McDaniel has confirmed
to them that an updated valuation of Gran Tierra's asset portfolio
as at the date of this Announcement would not be materially
different from the valuation given by McDaniel on 15 August 2024
with an effective date of 31 December 2023 and contained in
McDaniel's valuation report available on Gran Tierra's website at
https://www.grantierra.com/).
Rule 29.6 of the Takeover Code requires that
this Announcement contain an estimate by the Gran Tierra Directors
of the amount of any potential tax liability which would arise if
the assets were to be sold at the amount of the valuation contained
in the Gran Tierra Valuation Report and a comment as to the
likelihood of any such liability crystallising. The Gran Tierra
Directors, having taken appropriate taxation advice, believe that
realistic transaction structures exist for such a sale such that it
is likely that no tax would be payable.
i3 Energy
Your attention is drawn to the i3 Energy
Valuation Report prepared in accordance with Rule 29 of the
Takeover Code, a copy of which is available on i3 Energy’s website
at https://i3.energy/grantierra-offer-terms/.
On 25 March 2024, i3 Energy announced its year
end reserves for the year ended 31 December 2023 as evaluated by
GLJ, which included, among other things, statements relating to i3
Energy's reserves, future net revenue and net present values. In
connection with the Acquisition, i3 Energy is required by Rule 29
of the Takeover Code to publish an updated independent asset
valuation as of 31 July 2024 (the “i3 Energy
Valuation”). i3 Energy has commissioned GLJ to provide the
i3 Energy Valuation. GLJ is independent of both i3 Energy and Gran
Tierra.
The output of the i3 Energy Valuation Report in
respect of i3 Energy net present values is reproduced below:
|
Total Company |
Discount Rate |
|
(C$ million) |
0% |
5% |
10% |
15% |
20% |
|
Before Tax |
|
|
|
|
|
| Proved
Developed Producing |
260 |
394 |
353 |
307 |
270 |
| Proved
Developed Non-Producing |
19 |
15 |
13 |
11 |
9 |
| Proved
Undeveloped |
573 |
379 |
256 |
175 |
119 |
|
Total Proved |
852 |
788 |
622 |
492 |
398 |
| Total
Probable |
1,714 |
1,069 |
723 |
518 |
386 |
|
Total Proved plus Probable |
2,565 |
1,857 |
1,345 |
1,010 |
784 |
|
|
|
|
|
|
|
|
After Tax |
|
|
|
|
|
| Proved
Developed Producing |
160 |
316 |
289 |
253 |
224 |
| Proved
Developed Non-Producing |
15 |
12 |
10 |
8 |
7 |
| Proved
Undeveloped |
430 |
271 |
170 |
104 |
59 |
|
Total Proved |
604 |
598 |
469 |
366 |
290 |
| Total
Probable |
1,317 |
800 |
525 |
363 |
260 |
|
Total Proved plus Probable |
1,921 |
1,399 |
994 |
729 |
550 |
For the purposes of Rule 29.5 of the Takeover
Code, the i3 Energy Directors confirm that GLJ has confirmed to
them that an updated valuation of i3 Energy's asset valuation as at
the date of this Announcement would not be materially different
from the valuation given by GLJ on 12 August 2024 with an effective
date of 31 July 2024 and contained in GLJ Ltd.'s valuation report
available on i3 Energy’s website at
https://i3.energy/grantierra-offer-terms/.
For the purposes of Rule 29.6 of the Takeover
Code, in the event that the assets within i3 Energy were to be sold
at the valuation contained in the i3 Energy Valuation Report, the
proceeds on such disposal may be subject to taxation in Canada. The
i3 Energy Directors estimate that the potential tax liability that
would arise would be approximately £21 million. It is not expected
that the aforementioned tax liability will crystallise in
connection with the Acquisition.
7. Financing The
consideration payable under the Acquisition will be funded by
existing cash resources and debt to be provided under the Facility
Agreement.
On 19 August 2024 Gran Tierra, as borrower, and
Trafigura PTE Ltd, as lender, entered into the Facility Agreement,
pursuant to which Trafigura will provide a term loan facility for
an amount of the US$ equivalent of £80 million (the “Loan
Facility”) made available on a customary “certain funds”
basis consistent with the Takeover Code to fund the cash
consideration payable to i3 Energy’s Shareholders in connection
with the Acquisition and associated costs. The Loan Facility has a
term of 12 months from the date of first drawdown and bears
interest at a 3-month SOFR reference rate plus a margin of 300
basis points per annum for the first three months after the first
drawdown and 600 basis points per annum thereafter.
Subject to satisfying standard conditions
precedent to initial utilization, the Loan Facility is available
for drawdown from the date of the Facility Agreement to the last
day of the Certain Funds Period (as defined in the Facility
Agreement). The Loan Facility will automatically be cancelled in
full if it has not been drawn within the Certain Funds Period.
The Facility Agreement provides that if Gran
Tierra has not, within 9 months of first Utilisation under the Loan
Facility, entered into documentation to either raise debt for the
Acquisition or repay the loans under the Loan Facility (the
"Loans"), then Gran Tierra and Trafigura shall
enter into new finance documentation based on a previously agreed
financing arrangement in August 2022 and use the proceeds of such
financing to repay the Loans in full.
In accordance with Rule 2.7(d) of the Takeover
Code, Stifel, as financial adviser to Gran Tierra is satisfied that
sufficient financial resources are available to Gran Tierra to
satisfy in full the cash consideration payable to i3 Energy
Shareholders under the Acquisition.
8. Mix and Match Facility i3
Energy Shareholders may elect, subject to availability, to vary the
proportions in which they receive cash and New Gran Tierra Shares
in respect of their holdings in i3 Energy Shares. However, the
total number of New Gran Tierra Shares to be issued and the maximum
aggregate amount of cash to be paid under the terms of the
Acquisition will not be varied or increased as a result of
elections under the Mix and Match Facility in accordance with Gran
Tierra’s no increase statement made in accordance with Rule 32.2 of
the Takeover Code. Accordingly, satisfaction of elections made by
i3 Energy Shareholders under the Mix and Match Facility will depend
on the extent to which other i3 Energy Shareholders make offsetting
elections.
To the extent that elections cannot be satisfied
in full, they will be scaled down on a pro rata basis. As a result,
i3 Energy Shareholders who make an election under the Mix and Match
Facility will not necessarily know the exact number of New Gran
Tierra Shares or the amount of cash they will receive until
settlement of the consideration due to them under the terms of the
Acquisition. The Mix and Match Facility is conditional upon the
Acquisition becoming Effective.
Elections under the Mix and Match Facility will
not affect the entitlements of those i3 Energy Shareholders who do
not make such elections.
Gran Tierra reserves the right to scale back
elections made for the New Gran Tierra Shares pursuant to the Mix
and Match Facility if the issuance of such New Gran Tierra Shares
would result in any i3 Energy Shareholder holding 10% or more of
Gran Tierra's issued share capital (on a non-diluted basis)
following completion of the Acquisition.
Further details in relation to the Mix and Match
Facility will be contained in the Scheme Document.
9. Strategic Plans for
i3 Energy, i3
Energy Directors, management, employees and
locations Gran Tierra intends to use the combined
company’s scale and enhanced financial capacity to accelerate
development of i3 Energy’s Canadian assets as well as Gran Tierra's
existing Colombian and Ecuadorian assets. Following completion of
the Acquisition, Gran Tierra intends to conduct a review of i3
Energy's UK assets. This will not result in any reduction in
headcount beyond that which is stated below. Gran Tierra does not
intend to relocate any of i3 Energy's fixed assets, save for
relocating i3 Energy's London headquarters and headquarter
functions to Gran Tierra's headquarters in Calgary.
Gran Tierra holds the skills, knowledge and
expertise of i3 Energy’s management and employees in high regard
and believes the Acquisition will provide exciting opportunities to
i3 Energy's Canada based employees. Gran Tierra does not intend to
make any material changes to the balance of skills and functions of
employees and management of i3 Energy in Canada. Gran Tierra
confirms that, following completion of the Acquisition, the
existing contractual and statutory employment rights of i3 Energy's
employees will be fully safeguarded in accordance with applicable
law. Gran Tierra intends that the current employment arrangements
of all employees and management based in Canada will be terminated
on completion of the Acquisition and any severance obligations owed
to them paid in accordance with the terms of those arrangements.
Gran Tierra intends to then rehire the Canadian employees and
management on terms and compensation arrangements consistent with
Gran Tierra's employment terms and existing programs. Becoming part
of a larger organisation, there may be opportunities for i3 Energy
employees to be immediately integrated into the Gran Tierra
operations outside of Canada. Gran Tierra does not expect that
there will be any material reduction in i3 Energy’s Canada based
employee headcount following the rehiring offers being made to all
employees and management.
Concurrent with completion of the Acquisition,
Gran Tierra intends to reduce the i3 Energy UK headcount in its
entirety as part of the relocation of i3 Energy's London
headquarters and headquarter functions to Gran Tierra's
headquarters in Calgary. This will affect all relevant employees of
whom there are four, including the chief executive officer. This
reduction in headcount will be undertaken in consultation with the
affected employees and in accordance with applicable law.
It is also envisaged that the remaining i3
Energy Directors will resign on completion of the Acquisition.
Gran Tierra confirms that it does not intend to
seek or implement, as a result of the Acquisition, any material
changes regarding the continued employment of the employees and
management of the Gran Tierra Group, including any material change
in the conditions of employment or in the balance of the skills and
functions of the employees and management.
Subject to the Scheme becoming Effective, i3
Energy will make an application to the London Stock Exchange for
the cancellation of the admission to trading of the i3 Energy
shares on the AIM market of the London Stock Exchange , and to the
TSX for the delisting of the i3 Energy Shares from the TSX, to take
effect on or shortly after the Effective Date. It is expected that
Gran Tierra will, subject to applicable Canadian securities laws,
subsequently apply to have i3 Energy cease to be a reporting issuer
in all jurisdictions in Canada in which it is a reporting
issuer.
i3 Energy does not have any research and
development functions and Gran Tierra does not intend to create
such functions. i3 Energy does not operate any defined benefit
pension schemes and Gran Tierra does not intend to create any such
schemes.
No statements in this paragraph 11 constitute
"post-offer undertakings" for the purposes of Rule 19.5 of the
Code.
10. Deferred Shares In
addition to its ordinary share capital, i3 Energy has 5,000
Deferred Shares in issue. The Deferred Shares were issued by i3
Energy in 2017 shortly before i3 Energy’s AIM IPO. The Deferred
Shares were subscribed by two of i3 Energy’s then founder directors
for an aggregate subscription price of £50,000 in order to enable
i3 Energy to meet the minimum share capital requirements ahead of
such AIM IPO.
The i3 Energy articles of association provide
for the holders of the Deferred Shares to be paid an aggregate
amount of £50,000 in the event of a transaction such as the
Acquisition, but with such £50,000 being funded out of the sale
proceeds that would be due to the i3 Energy Shareholders. It is not
possible to facilitate this arrangement with the terms of the
Scheme, so it was agreed that the parties concerned enter into the
Deferred Shares Share Purchase Agreements.
Gran Tierra has entered into conditional share
purchase agreements with Neill Carson (a non-executive director of
i3 Energy) and Graham Heath (the former CFO of i3 Energy) pursuant
to which Gran Tierra has agreed to purchase the Deferred Shares for
an aggregate consideration of £50,000 conditional only upon the
Scheme having become Effective. In addition, each of Neill Carson
and Graham Heath has given an irrevocable undertaking to vote in
favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the i3 Energy General Meeting in respect of their i3
Energy Shares and, to the extent required, in respect of their
Deferred Shares.
11. i3 Energy Share Plans
Participants in the i3 Energy Share Plans will be contacted
regarding the effect of the Acquisition on their rights under the
i3 Energy Share Plans and appropriate proposals will be made to
such participants in due course.
12. Offer related
Arrangements Confidentiality
Agreement
Gran Tierra and i3 Energy have entered into a
mutual non-disclosure agreement dated 28 February 2024 pursuant to
which each of Gran Tierra and i3 Energy has undertaken, among other
things, to keep certain information relating to the Acquisition and
the other party confidential and not to disclose it to third
parties (other than to permitted parties) unless required by law or
regulation.
Cooperation Agreement Gran Tierra
and i3 Energy entered into a Co-operation Agreement dated 19 August
2024, pursuant to which Gran Tierra and i3 Energy have agreed: (i)
to co-operate, use reasonable endeavours and provide each other
with reasonable information, assistance and access in relation to
the filings, submissions and notifications to be made in relation
to regulatory clearances and authorisations that are required in
connection with the Acquisition; (ii) to co-operate, use reasonable
endeavours and provide each other with reasonable information,
assistance and access in relation to the notifications to, and
obtention of consents from, certain regulatory authorities; and
(iii) to certain provisions if the Scheme should switch to a
Takeover Offer. Gran Tierra has also agreed to provide i3 Energy
with certain information for the purposes of the Scheme Document
and to otherwise assist with the preparation of the Scheme
Document.
The Co-operation Agreement records the intention
of Gran Tierra and i3 Energy to implement the Acquisition by way of
the Scheme, subject to Gran Tierra's right to switch to a Takeover
Offer in certain circumstances.
The Co-operation Agreement may be terminated
with immediate effect in the following circumstances, among
others:
- if Gran Tierra and i3 Energy so agree in writing;
- the i3 Energy Board (i) withdraws or adversely modifies the i3
Energy Board recommendation, (ii) recommends a competing proposal,
or (iii) makes a statement in relation its intention to do so;
or
- upon notice by Gran Tierra to i3 Energy if: (i) a competing
proposal is announced which the i3 Energy Board has recommended or
has noted its intention to recommend; or (ii) i3 Energy announces
that it or any member of the Wider i3 Energy Group has entered into
one or more legally binding agreements to effect a competing
proposal.
The Co-operation Agreement also contains
provisions that will apply in respect of the i3 Energy Share
Plans.
13. Irrevocable undertakings
The i3 Energy Directors, who have been so advised by Zeus Capital
as to the financial terms of the Acquisition, consider the terms of
the Acquisition to be fair and reasonable. In providing its advice
to the i3 Energy Directors, Zeus Capital has taken into account the
commercial assessments of the i3 Energy Directors. In addition, the
i3 Energy Directors consider the terms of the Acquisition to be in
the best interests of the i3 Energy Shareholders as a whole. Zeus
Capital is providing independent financial advice to the i3 Energy
Directors for the purposes of Rule 3 of the Takeover Code.
Accordingly, the i3 Energy Directors intend to
recommend unanimously that the i3 Energy Shareholders vote in
favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the i3 Energy General Meeting as those i3 Energy
Directors who hold i3 Energy Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of in aggregate
32,139,532 i3 Energy Shares representing approximately 2.7 per
cent. of the existing issued ordinary share capital of i3 Energy on
the Last Practicable Date (excluding any i3 Energy Shares held in
treasury).
Gran Tierra has also received irrevocable
undertakings to vote (or, in relation to the i3 Energy CFDs, to use
best endeavours to procure votes) in favour of the Scheme at the
Court Meeting and the resolutions to be proposed at the i3 Energy
General Meeting from the Polus Funds and Graham Heath in respect of
a total of 238,537,465 i3 Energy Shares and 118,006,332 i3 Energy
CFDs, which represent, in aggregate, approximately 19.84 per cent.
and 9.81 per cent. respectively, of i3 Energy's existing issued
ordinary share capital on the Last Practicable Date (excluding any
i3 Energy Shares held in treasury). Therefore, the total number of
i3 Energy Shares and i3 Energy CFDs that are subject to irrevocable
undertakings received by Gran Tierra from the Polus Funds and
Graham Heath is 356,543,797 i3 Energy Shares and i3 Energy CFDs,
representing in aggregate approximately 29.65 per cent. of i3
Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in
treasury).
Therefore, Gran Tierra has received irrevocable
undertakings to vote (or, in relation to the i3 Energy CFDs, to use
best endeavours to procure votes) in favour of the Scheme at the
Court Meeting and the resolutions to be proposed at the i3 Energy
General Meeting from holders of 238,537,465 i3 Energy Shares and
118,006,332 i3 Energy CFDs, which represent, in aggregate,
approximately 19.84 per cent. and 9.81 per cent. respectively, of
i3 Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in treasury).
The total number of i3 Energy Shares and i3 Energy CFDs that are
subject to irrevocable undertakings received by Gran Tierra from i3
Energy Shareholders is 356,543,797 i3 Energy Shares and i3 Energy
CFDs, representing in aggregate approximately 29.65 per cent. of i3
Energy's existing issued ordinary share capital on the Last
Practicable Date (excluding any i3 Energy Shares held in
treasury).
Further details of the irrevocable undertakings
are set out in Appendix 3 to this Announcement.
14. Scheme of Arrangement It
is intended that the Acquisition will be implemented by way of a
court sanctioned scheme of arrangement under Part 26 of the
Companies Act, further details of which are contained in the full
text of this Announcement and full details of which will be set out
in the Scheme Document to be published by i3 Energy in due course.
However, Gran Tierra reserves the right, with the consent of the
Panel, to implement the Acquisition by way of a Takeover Offer. The
procedure involves, among other things, an application by i3 Energy
to the Court to sanction the Scheme, in consideration for which
Scheme Shareholders who are on the register of members at the
Scheme Record Time will receive the Consideration. The purpose of
the Scheme is to provide for Gran Tierra to become the holder of
the entire issued ordinary share capital of i3 Energy.
The Acquisition will be subject to the
Conditions and certain further terms set out in Appendix 1 to this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document, including the approval of the Scheme by
the Scheme Shareholders, the sanction of the Scheme by the Court,
the satisfaction of the NSTA Condition, the Minority Shareholder
Protection Condition and the Competition Act Condition, and the
approval of the TSX.
To become effective, the Scheme requires the
approval of Scheme Shareholders by the passing of a resolution at
the Court Meeting. The resolution must be approved by a majority in
number of the Scheme Shareholders present and voting (and entitled
to vote), either in person or by proxy, representing not less than
75 per cent. in value of the Scheme Shares voted by such Scheme
Shareholders. In addition, a special resolution relating to the
Acquisition must be passed at the i3 Energy General Meeting, which
requires the approval of i3 Energy Shareholders representing at
least 75 per cent. of the votes cast at the i3 Energy General
Meeting (either in person or by proxy).
The Scheme must also be approved by a simple
majority of the votes cast on the relevant resolution at the i3
Energy Meetings, in each case by i3 Energy Shareholders after
excluding the votes cast by Neill Carson as a result of his role as
a director of i3 Energy and his entry into the Deferred Shares
Share Purchase Agreement with Gran Tierra, together with any other
person (if any) whose vote may not be included under Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions of the Canadian Securities Administrators.
The i3 Energy General Meeting will be held
immediately after the Court Meeting.
The i3 Energy Meetings are to be held no later
than the 22nd day after the expected date of the i3 Energy Meetings
to be set out in the Scheme Document in due course (or such later
date, if any, as Gran Tierra may determine with the agreement of i3
Energy or with the consent of the Panel and approval of the Court,
if such approval is required).
Following the i3 Energy Meetings, the Scheme
must be sanctioned by the Court no later than the 22nd day after
the expected date of the Scheme Court Hearing to be set out in the
Scheme Document in due course (or such later date, if any, as Gran
Tierra may determine with the agreement of i3 Energy or with the
consent of the Panel and approval of the Court, if such approval is
required ). The Scheme will only become effective once a copy of
the Court Order is delivered to the Registrar of Companies.
The Scheme is expected to become effective in Q4
2024, subject to the satisfaction or, where permitted, waiver of
the Conditions and certain further terms set out in Appendix 1 to
this Announcement.
Upon the Scheme becoming Effective, it will be
binding on all i3 Energy Shareholders, irrespective of whether or
not they attended or voted at the i3 Energy Meetings and share
certificates in respect of i3 Energy Shares will cease to be valid
and entitlements to i3 Energy Shares held within the CREST system
will be cancelled.
The Scheme Document will include full details of
the Scheme, together with notices of the Court Meeting and the i3
Energy General Meeting and the expected timetable of principal
events, and will specify the action to be taken by Scheme
Shareholders. It is expected that the Scheme Document, together
with the Forms of Proxy and Forms of Election (and/or where
required, Letters of Transmittal) in relation to the Mix and Match
Facility, will be published as soon as practicable and in any event
within 28 days of the date of this Announcement (or such later date
as may be agreed by Gran Tierra and i3 Energy with the consent of
the Panel). The Scheme will be governed by English law and will be
subject to the jurisdiction of the Courts of England and Wales. The
Scheme will be subject to the applicable requirements or
acceptance, as applicable, of the Takeover Code, Canadian
Securities Laws, the Panel, the London Stock Exchange, the TSX, the
NYSE American, the FCA and the AIM Rules.
15. Admission of New Gran Tierra
Shares It is a Condition that the New Gran Tierra Shares
be admitted to the Official List and to trading on the London Stock
Exchange's Main Market for listed securities respectively. It is
expected that such Admission will become effective and that
dealings for normal settlement in the New Gran Tierra Shares will
commence at 8.00 a.m. (London time) on the first Business Day
following the Effective Date.
It is a Condition that the TSX Approval shall
have been obtained. In addition, it is a condition to the
Acquisition that the New Gran Tierra Shares be approved for listing
on the NYSE American, subject to official notice of issuance. There
can be no assurance that the New Gran Tierra Shares will be listed
on the TSX, the NYSE American or the London Stock Exchange.
The New Gran Tierra Shares will be issued in
non-certificated book-entry form and, upon issuance, will be
validly issued, credited as fully paid, and non-assessable. They
will rank pari passu in all respects with the existing Gran Tierra
Shares, including the rights to receive all dividends and other
distributions (if any) declared, made or paid by Gran Tierra by
reference to a record date falling after the Effective Date.
Fractions of New Gran Tierra Shares will not be
allotted or issued pursuant to the Acquisition and entitlements of
Scheme Shareholders will be rounded down to the nearest whole
number of New Gran Tierra Shares. All fractional entitlements to
New Gran Tierra Shares will be aggregated and sold in the market as
soon as practicable after the Effective Date. The net proceeds of
such sale (after deduction of all expenses and commissions incurred
in connection with the sale) will be distributed by Gran Tierra in
due proportions to Scheme Shareholders who would otherwise have
been entitled to such fractions provided that individual
entitlements to amounts of less than £5.00 will not be paid to
Scheme Shareholders but will be retained for the benefit of Gran
Tierra.
16. Delisting Prior to the
Scheme becoming Effective, an application will be made by i3 Energy
for the cancellation of trading of the i3 Energy Shares on the AIM
market of the London Stock Exchange and the delisting of the i3
Energy Shares from the TSX, to take effect on or shortly after the
Effective Date. On the AIM market of the London Stock Exchange, the
last day of dealings in i3 Energy Shares is expected to be the
Business Day immediately prior to the Effective Date and no
transfers shall be registered after 6:00 p.m. (London time) on that
date.
On the Effective Date, i3 Energy will become a
wholly-owned subsidiary of Gran Tierra and share certificates in
respect of the i3 Energy Shares will cease to be valid and should
be destroyed and entitlements to i3 Energy Shares held within the
CREST system shall be cancelled.
In addition, entitlements held within the CREST
system to the i3 Energy Shares will be cancelled.
Following the Effective Date, it is expected
that Gran Tierra will, subject to Canadian Securities Laws, apply
to have i3 Energy cease to be a reporting issuer in all Canadian
jurisdictions in which it is a reporting issuer.
- Disclosure of Interests
- As at the close of business on the Last Practicable Date, save
for the irrevocable undertakings referred to in paragraph 15
above, neither Gran Tierra, nor any of the Gran Tierra Directors,
nor, so far as Gran Tierra is aware, any person acting in concert
(within the meaning of the Takeover Code) with Gran Tierra has:
- any interest in or right to subscribe for any relevant
securities of i3 Energy;
- any short positions in respect of relevant i3 Energy Shares
(whether conditional or absolute and whether in the money or
otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require
another person to purchase or take delivery;
- borrowed or lent any relevant i3 Energy Shares (including, for
these purposes, any financial collateral arrangements of the kind
referred to in Note 3 on Rule 4.6 of the Takeover Code), save for
any borrowed shares which had been either on-lent or sold; or
- any dealing arrangement of the kind referred to in Note 11(a)
on the definition of acting in concert in the Takeover Code in
relation to i3 Energy Shares or in relation to securities
convertible or exchangeable into i3 Energy Shares.
- Consents
Each of Stifel, Eight Capital, Zeus Capital, TPH
and National Bank has given and not withdrawn their consent to the
publication of this Announcement with the inclusion herein of the
references to their names in the form and context in which they
appear.
GLJ has given and not withdrawn its consent to
the publication of its valuation report in this Announcement (by
incorporation by reference) with the inclusion herein to the
references to its name and, where applicable, report in the form
and context in which it is included (by reference).
McDaniel has given and not withdrawn its consent
to the publication of its valuation report in this Announcement (by
incorporation by reference) with the inclusion herein to the
references to its name and, where applicable, report in the form
and context in which it is included (by reference).
19. Documents available for
inspection Copies of the following documents will, by no
later than 12 noon (London time) on 20 August 2024, be published on
Gran Tierra's website at
https://www.grantierra.com/investor-relations/recommended-acquisition/
and on i3 Energy's website at
https://i3.energy/grantierra-offer-terms/:
- this Announcement;
- irrevocable undertakings listed in Appendix 3 to this
Announcement;
- the Confidentiality Agreement;
- the consent letters referred to in paragraph 20 above;
- the Valuation Reports;
- the Co-operation Agreement;
- the Facility Agreement; and
- the Deferred Shares Share Purchase Agreements.
- General
The bases and sources for certain financial
information contained in this Announcement are set out in Appendix
2 to this Announcement. A summary of the irrevocable undertakings
given in relation to the Acquisition is set out in Appendix 3 to
this Announcement. Gran Tierra's Profit Forecast is set out in
Appendix 4 to this Announcement. Certain terms used in this
Announcement are defined in Appendix 5 to this Announcement.
The Acquisition is not a “take-over bid” as
defined under Canadian Take-Over Bid Rules. However, Gran Tierra
reserves the right, with the consent of the Panel, to implement the
Acquisition by way of a Takeover Offer for the entire issued and to
be issued share capital of i3 Energy not already held by Gran
Tierra as an alternative to the Scheme. In such an event a Takeover
Offer will be implemented on the same terms (subject to appropriate
amendments), so far as applicable, as those which would apply to
the Scheme and subject to the amendments referred to in Part C of
Appendix 1 to this Announcement.
For the purposes of Rule 29.5 of the Takeover
Code, the i3 Energy Directors confirm that GLJ has confirmed to
them that an updated valuation of i3 Energy's asset valuation as at
the date of this Announcement would not be materially different
from the valuation given by GLJ as at 31 July 2024 and contained in
GLJ's valuation report available on i3 Energy’s website at
https://i3.energy/grantierra-offer-terms/.
For the purposes of Rule 29.5 of the Takeover
Code, the Gran Tierra Directors confirm that McDaniel has confirmed
to them that an updated valuation of Gran Tierra's asset portfolio
as at the date of this Announcement would not be materially
different from the valuation given by McDaniel as at 15 August 2024
and contained in the valuation report(s) available on Gran Tierra's
website at
https://www.grantierra.com/investor-relations/recommended-acquisition/.
Further Information
This Announcement is for information purposes
only and is not intended to and does not constitute or form part of
an offer, offer to acquire, invitation or the solicitation of an
offer, offer to acquire or invitation to purchase, or otherwise
acquire, offer to acquire, subscribe for, sell or otherwise dispose
of any securities or the solicitation of any vote or approval in
any jurisdiction pursuant to the Acquisition or otherwise nor shall
there be any sale, issuance or transfer of securities of Gran
Tierra or i3 Energy pursuant to the Acquisition in any jurisdiction
in contravention of applicable laws. The Acquisition will be
implemented solely pursuant to the terms of the Scheme Document
(or, in the event that the Acquisition is to be implemented by
means of an Takeover Offer, the Offer Document), which, together
with the Forms of Proxy and the Forms of Election (and/or where
required, Letters of Transmittal) in relation to the Mix and Match
Facility, will contain the full terms and conditions of the
Acquisition, including details of how to vote in respect of the
Acquisition. Any decision in respect of, or other response to, the
Acquisition should be made on the basis of the information
contained in the Scheme Document or the Forms of Proxy or the Forms
of Election (and/or where required, Letters of Transmittal) in
relation to the Mix and Match Facility. In particular, this
Announcement is not an offer of securities for sale in the United
States or in any other jurisdiction. No offer of securities shall
be made in the United States absent registration under the US
Securities Act, or pursuant to an exemption from, or in a
transaction not subject to, such registration requirements. Any
securities issued as part of the Acquisition are anticipated to be
issued in reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the US Securities Act.
Additionally, if the Acquisition is implemented by way of a scheme
of arrangement or a Takeover Offer, any New Gran Tierra Shares to
be issued in connection with the Acquisition are expected to be
issued in reliance upon the prospectus exemption provided by 2.11
or Section 2.16, as applicable, of National Instrument 45-106 –
Prospectus Exemptions of the Canadian Securities Administrators and
in compliance with the provincial securities laws of Canada.
The Acquisition will be made solely by means of
the scheme document to be published by i3 Energy in due course, or
(if applicable) pursuant to an offer document to be published by
Gran Tierra, which (as applicable) would contain the full terms and
conditions of the Acquisition. Any decision in respect of, or other
response to, the Acquisition, should be made only on the basis of
the information contained in such document(s). If, in the future,
Gran Tierra ultimately seeks to implement the Acquisition by way of
a Takeover Offer, or otherwise in a manner that is not exempt from
the registration requirements of the US Securities Act, that offer
will be made in compliance with applicable US laws and regulations.
and, to the extent such Takeover Offer extends into the provinces
of Canada, such Takeover Offer will be made in compliance with the
provincial securities laws of Canada, including, without
limitation, to the extent applicable, the rules applicable to
take-over bids under National Instrument 62-104 – Take-Over Bids
and Issuer Bids of the Canadian Securities Administrators.
The statements contained in this Announcement
are made as at the date of this Announcement, unless some other
time is specified in relation to them, and publication of this
Announcement shall not give rise to any implication that there has
been no change in the facts set forth in this Announcement since
such date.
This Announcement has been prepared for the
purpose of complying with English law and the Takeover Code and the
information disclosed may not be the same as that which would have
been disclosed if this Announcement had been prepared in accordance
with the laws of jurisdictions outside England and Wales, including
(without limitation) the United States and Canada. The Acquisition
will be subject to the applicable requirements or acceptance, as
applicable, of the Takeover Code, Canadian Securities Laws, the
Panel, the London Stock Exchange, the TSX, the NYSE American, the
FCA and the AIM Rules.
This Announcement contains inside information in
relation to each of i3 Energy and Gran Tierra for the purposes of
Article 7 of the Market Abuse Regulation. The person responsible
for making this Announcement on behalf of i3 Energy is Majid Shafiq
and the person responsible for making this Announcement on behalf
of Gran Tierra is Gary Guidry.
This Announcement does not constitute a
prospectus or circular or prospectus or circular equivalent
document, nor does this Announcement, or the information contained
herein, constitute a solicitation of proxies within the meaning of
applicable Canadian Securities Laws. Shareholders are not being
asked at this time to execute a proxy in favour of the Acquisition
or the matters described herein.
Information Relating to i3 Energy
Shareholders
Please be aware that addresses, electronic
addresses and certain other information provided by i3 Energy
Shareholders, persons with information rights and other relevant
persons for the receipt of communications from i3 Energy may be
provided to Gran Tierra during the Offer Period as required under
Section 4 of Appendix 4 of the Takeover Code or Canadian Securities
Laws, as applicable.
Overseas Jurisdictions
The release, publication or distribution of this
Announcement in or into jurisdictions other than the United Kingdom
may be restricted by law and therefore any persons who are subject
to the laws of any jurisdiction other than the United Kingdom
should inform themselves about, and observe any applicable legal or
regulatory requirements. In particular, the ability of persons who
are not resident in the United Kingdom to vote their i3 Energy
Shares with respect to the Scheme at the Court Meeting, or to
execute and deliver forms of proxy appointing another to vote at
the Court Meeting on their behalf, may be affected by the laws of
the relevant jurisdictions in which they are located. Any failure
to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law the companies and
persons involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
Unless otherwise determined by Gran Tierra or
required by the Takeover Code, and permitted by applicable law and
regulation, the availability of New Gran Tierra Shares to be issued
pursuant to the Acquisition to i3 Energy Shareholders will not be
made available, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in
that jurisdiction and no person may vote in favour of the
Acquisition by any such use, means, instrumentality or form within
a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of that jurisdiction.
Accordingly, copies of this Announcement and any formal
documentation relating to the Acquisition are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction
or any other jurisdiction where to do so would constitute a
violation of the laws of that jurisdiction, and persons receiving
such documents (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send such documents in
or into or form any Restricted Jurisdiction. Doing so may render
invalid any related purported vote in respect of the Acquisition.
If the Acquisition is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the
Takeover Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including,
but not limited to, facsimile, e-mail or other electronic
transmission or telephone) of interstate or foreign commerce of, or
of any facility of a national, state or other securities exchange
of any Restricted Jurisdiction and the Takeover Offer may not be
capable of acceptance by any such use, means, instrumentality or
facilities or from within any Restricted Jurisdiction.
The availability of New Gran Tierra Shares
pursuant to the Acquisition to i3 Energy Shareholders who are not
resident in the United Kingdom or the ability of those persons to
hold such shares may be affected by the laws or regulatory
requirements of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom should
inform themselves of, and observe, any applicable legal or
regulatory requirements. i3 Energy Shareholders who are in doubt
about such matters should consult an appropriate independent
professional adviser in the relevant jurisdiction without
delay.
Further details in relation to i3 Energy
Shareholders in overseas jurisdictions will be contained in the
Scheme Document.
Notice to US Shareholders
The Acquisition relates to the shares of an
English company with a listing on the London Stock Exchange and the
TSX and is proposed to be implemented pursuant to a scheme of
arrangement provided for under the law of England and Wales. A
transaction effected by means of a scheme of arrangement is not
subject to proxy solicitation or the tender offer rules under the
US Exchange Act. Accordingly, the Acquisition is subject to the
procedural and disclosure requirements, rules and practices
applicable in the United Kingdom to schemes of arrangement which
differ from the requirements of US proxy solicitation or tender
offer rules. . Financial information included in this Announcement
and the Scheme Document in relation to Gran Tierra has been or will
be prepared in accordance with US GAAP and in relation to i3 Energy
has been or will be prepared in accordance with International
Financial Reporting Standards ("IFRS").
If, in the future, Gran Tierra elects, with the
consent of the Panel, to implement the Acquisition by means of a
Takeover Offer and determines to extend such Takeover Offer into
the United States, such Takeover Offer will be made in compliance
with all applicable laws and regulations, including, without
limitation, to the extent applicable, Section 14(e) of the US
Exchange Act and Regulation 14E thereunder, and subject, in the
case of participation by i3 Energy Shareholders resident in the
United States, to the availability of an exemption (if any) from
the registration requirements of the US Securities Act and of the
securities laws of any state or other jurisdiction of the United
States. Such Takeover Offer would be made by Gran Tierra and no one
else. In addition to any such Takeover Offer, Gran Tierra, certain
affiliated companies and the nominees or brokers (acting as agents)
may make certain purchases of, or arrangements to purchase, shares
in i3 Energy outside such Takeover Offer during the period in which
such Takeover Offer would remain open for acceptance. If such
purchases or arrangements to purchase were to be made, they would
be made outside the United States and would comply with applicable
law, including the US Exchange Act. Any information about such
purchases will be disclosed as required in the United Kingdom,
United States and Canada and will be reported to a Regulatory
Information Service of the FCA and will be available on the London
Stock Exchange website: www.londonstockexchange.com/, and, if
required, on the SEC website at http://www.sec.gov.
The New Gran Tierra Shares have not been and
will not be registered under the US Securities Act or under the
securities laws of any state or other jurisdiction of the United
States. Accordingly, the New Gran Tierra Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into or from the United States absent
registration under the US Securities Act or an exemption therefrom
and in compliance with the securities laws of any state or other
jurisdiction of the United States. The New Gran Tierra Shares are
expected to be issued in reliance upon the exemption from the
registration requirements of the US Securities Act provided by
section 3(a)(10) thereof.
None of the securities referred to in this
Announcement have been approved or disapproved by the SEC, any
state securities commission in the United States or any other US
regulatory authority, nor have such authorities passed upon or
determined the fairness or merits of such securities or the
Acquisition or upon the adequacy or accuracy of the information
contained in this Announcement. Any representation to the contrary
is a criminal offence in the United States.
It may be difficult for US holders of i3 Energy
Shares to enforce their rights and claims arising out of the US
federal securities laws, since i3 Energy is organised in a country
other than the United States, and some or all of its officers and
directors may be residents of, and some or all of its assets may be
located in, jurisdictions other than the United States. US holders
of i3 Energy Shares may have difficulty effecting service of
process within the United States upon those persons or recovering
against judgments of US courts, including judgments based upon the
civil liability provisions of the US federal securities laws. US
holders of i3 Energy Shares may not be able to sue a non-US company
or its officers or directors in a non-US court for violations of US
securities laws. Further, it may be difficult to compel a non-US
company and its affiliates to subject themselves to a US court's
judgment.
The receipt of New Gran Tierra Shares pursuant
to the Acquisition by a US i3 Energy Shareholder may be a taxable
transaction for US federal income tax purposes, and may also be a
taxable transaction under applicable state and local tax laws, as
well as foreign and other tax laws. Each i3 Energy Shareholder is
urged to consult its independent professional adviser immediately
regarding the tax consequences of the Acquisition.
Notice to Canadian i3 Energy
Shareholders
The Acquisition relates to the securities of an
English company with a listing on the London Stock Exchange and the
TSX and is proposed to be implemented pursuant to a scheme of
arrangement provided for under the laws of England and Wales. A
transaction effected by means of a scheme of arrangement may differ
from the procedures and requirements that would be applicable to a
similar transaction under applicable Canadian corporate laws or
Canadian Securities Laws, including the rules applicable to
take-over bids under National Instrument 62-104 – Take-Over Bids
and Issuer Bids of the Canadian Securities Administrators
(“Canadian Take-Over Bid Rules”). While Gran
Tierra and i3 Energy will complete the Acquisition in accordance
with applicable Canadian Securities Laws, the Acquisition is
subject to the procedural and disclosure requirements, rules and
practices applicable to schemes of arrangement involving a target
company incorporated in England and listed on the London Stock
Exchange and the TSX, which may differ in certain areas from the
requirements applicable to similar transactions under applicable
Canadian corporate laws or Canadian Securities Laws.
The Acquisition is not a “take-over bid” as
defined under Canadian Take-Over Bid Rules. However, if, in the
future, Gran Tierra elects, with the consent of the Panel, to
implement the Acquisition by means of a Takeover Offer and
determines to extend such Takeover Offer into the provinces of
Canada, such Takeover Offer will be made in compliance with all
Canadian Securities Laws, including, without limitation, to the
extent applicable, the Canadian Take-Over Bid Rules. In addition to
any such Takeover Offer, Gran Tierra, certain affiliated companies
and the nominees or brokers (acting as agents) may make certain
purchases of, or arrangements to purchase, shares in i3 Energy
outside such Takeover Offer during the period in which such
Takeover Offer would remain open for acceptance. If such purchases
or arrangements to purchase were to be made, they would be made
outside of Canada and would comply with Canadian Securities Laws.
Any information about such purchases will be disclosed as required
in the United Kingdom, will be reported to a Regulatory Information
Service of the UK Financial Conduct Authority and will be available
on the London Stock Exchange website
www.londonstockexchange.com.
Any New Gran Tierra Shares to be issued in
connection with the Acquisition have not been and will not be
qualified for distribution under Canadian Securities Laws.
Accordingly, the New Gran Tierra Shares may not be offered, sold,
resold, delivered, distributed or otherwise transferred, directly
or indirectly, in or into or from Canada absent a qualification for
distribution or an exemption from the prospectus requirements and
in compliance with Canadian Securities Laws. If the Acquisition is
implemented by way of a scheme of arrangement or a Takeover Offer,
any New Gran Tierra Shares to be issued in connection with the
Acquisition are expected to be issued in reliance upon the
prospectus exemption provided by Section 2.11 or Section 2.16, as
applicable, of National Instrument 45-106 – Prospectus Exemptions
of the Canadian Securities Administrators and in compliance with
Canadian Securities Laws.
The receipt of consideration pursuant to the
Acquisition by a Canadian i3 Energy Shareholder as consideration
for the transfer of its i3 Energy Shares may be a taxable
transaction for Canadian federal income tax purposes and under
applicable Canadian provincial income tax laws, as well as foreign
and other tax laws. Each i3 Energy Shareholder is urged to consult
their independent professional adviser immediately regarding the
tax consequences of the Acquisition applicable to them.
None of the securities referred to in this
Announcement have been approved or disapproved by any Canadian
securities regulatory authority nor has any Canadian regulatory
authority passed upon or determined the fairness or merits of such
securities or the Acquisition or upon the adequacy or accuracy of
the information contained in this Announcement. Any representation
to the contrary is an offence.
i3 Energy is located in a country other than
Canada, and some or all of its officers and directors may be
residents of a country other than Canada. It may be difficult for
Canadian i3 Energy Shareholders to enforce judgments obtained in
Canada against any person that is incorporated, continued or
otherwise organised under the laws of a foreign jurisdiction or
resides outside of Canada, even if the party has appointed an agent
for service of process.
Important Notices Relating to Financial
Advisers
Stifel Nicolaus Europe Limited
("Stifel"), which is authorised and regulated by
the FCA in the UK, is acting as financial adviser exclusively for
Gran Tierra and no one else in connection with the matters referred
to in this Announcement and will not be responsible to anyone other
than Gran Tierra for providing the protections afforded to its
clients or for providing advice in relation to matters referred to
in this Announcement. Neither Stifel, nor any of its affiliates,
owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of Stifel
in connection with this Announcement, any statement contained
herein or otherwise.
Eight Capital ("Eight
Capital"), which is authorised and regulated by the
Canadian Investment Regulatory Organization in Canada, is acting
exclusively for Gran Tierra and for no one else in connection with
the subject matter of this Announcement and will not be responsible
to anyone other than Gran Tierra for providing the protections
afforded to its clients or for providing advice in connection with
the subject matter of this Announcement.
Zeus Capital Limited ("Zeus"),
which is authorised and regulated by the FCA in the United Kingdom,
is acting exclusively for i3 Energy as financial adviser, nominated
adviser and joint broker and no one else in connection with the
matters referred to in this Announcement and will not be
responsible to anyone other than i3 Energy for providing the
protections afforded to clients of Zeus, or for providing advice in
relation to matters referred to in this Announcement. Neither Zeus
nor any of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Zeus in connection with the matters referred to in
this Announcement, any statement contained herein or otherwise.
Tudor, Pickering, Holt & Co. Securities –
Canada, ULC ("TPH&Co."), regulated by the
Canadian Investment Regulatory Organization and a member of the
Canadian Investor Protection Fund, is acting exclusively for i3
Energy by way of its engagement with i3 Energy Canada, a
wholly-owned subsidiary of i3 Energy, in connection with the
matters set out in this Announcement and for no one else, and will
not be responsible to anyone other than i3 Energy for providing the
protections afforded to its clients nor for providing advice in
relation to the matters set out in this Announcement. Neither
TPH&Co. nor any of its subsidiaries, branches or affiliates and
their respective directors, officers, employees or agents owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of TPH&Co. in
connection with this Announcement, any statement contained herein
or otherwise.
National Bank Financial Inc.
("NBF"), regulated by the Canadian Investment
Regulatory Organization and a member of the Canadian Investor
Protection Fund, is acting exclusively for i3 Energy by way of its
engagement with i3 Energy Canada, a wholly-owned subsidiary of i3
Energy, in connection with the matters set out in this
Announcement. Neither NBF, nor any of its subsidiaries, branches or
affiliates and their respective directors, officers, employees or
agents owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of NBF in connection with this Announcement, any statement
contained herein or otherwise.
Cautionary Note Regarding Forward
Looking Statements
This Announcement (including information
incorporated by reference into this Announcement), oral statements
regarding the Acquisition and other information published by Gran
Tierra and i3 Energy contain certain forward looking statements
with respect to the financial condition, strategies, objectives,
results of operations and businesses of Gran Tierra and i3 Energy
and their respective groups and certain plans and objectives with
respect to the Combined Group. These forward looking statements can
be identified by the fact that they do not relate only to
historical or current facts. Forward looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections of the management of
Gran Tierra and i3 Energy about future events, and are therefore
subject to risks and uncertainties which could cause actual results
to differ materially from the future results expressed or implied
by the forward looking statements. The forward looking statements
contained in this Announcement include, without limitation,
statements relating to the expected effects of the Acquisition on
Gran Tierra and i3 Energy, the expected timing method of
completion, and scope of the Acquisition, the expected actions of
Gran Tierra upon completion of the Acquisition, Gran Tierra's
ability to recognise the anticipated benefits from the Acquisition,
expectations regarding the business and operations of the Combined
Group, and other statements other than historical facts. Forward
looking statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "strategy", "focus",
"envision", "goal", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar
meaning. These statements are based on assumptions and assessments
made by Gran Tierra, and/or i3 Energy in light of their experience
and their perception of historical trends, current conditions,
future developments and other factors they believe appropriate. By
their nature, forward looking statements involve risk and
uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors
described in the context of such forward looking statements in this
Announcement could cause actual results and developments to differ
materially from those expressed in or implied by such forward
looking statements. Although it is believed that the expectations
reflected in such forward looking statements are reasonable, no
assurance can be given that such expectations will prove to have
been correct and readers are therefore cautioned not to place undue
reliance on these forward looking statements. Actual results may
vary from the forward looking statements.
There are several factors which could cause
actual results to differ materially from those expressed or implied
in forward looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward looking statements are changes in the global, political,
economic, business, competitive, market and regulatory forces,
future exchange and interest rates, changes in tax rates and future
business acquisitions or dispositions.
Each forward looking statement speaks only as at
the date of this Announcement. Neither Gran Tierra nor i3 Energy,
nor their respective groups assume any obligation to update or
correct the information contained in this Announcement (whether as
a result of new information, future events or otherwise), except as
required by applicable law or by the rules of any competent
regulatory authority.
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
The estimates of Gran Tierra's and i3 Energy's
respective future production and 2024 EBITDA and in the case of i3
Energy, 2024 net operating income, set forth in this Announcement
may be considered to be future-oriented financial information or a
financial outlook for the purposes of applicable Canadian
Securities Laws. Financial outlook and future-oriented financial
information contained in this Announcement about prospective
financial performance and operational performance are provided to
give the reader a better understanding of the potential future
performance of Gran Tierra, i3 Energy and the Combined Group in
certain areas and are based on assumptions about future events,
including economic conditions and proposed courses of action, based
on Gran Tierra's and i3 Energy's respective management’s assessment
of the relevant information currently available, and to become
available in the future. In particular, this Announcement contains
Gran Tierra and i3 Energy projected financial and operational
information for 2024. These projections contain forward-looking
statements and are based on a number of material assumptions and
factors set out above and in Appendix 4 to this Announcement.
Actual results may differ significantly from the projections
presented herein. These projections may also be considered to
contain future-oriented financial information or a financial
outlook. The actual results of Gran Tierra’s and i3 Energy’s
respective operations for any period will likely vary from the
amounts set forth in these projections, and such variations may be
material. See above for a discussion of the risks that could cause
actual results to vary. The future-oriented financial information
and financial outlooks contained in this Announcement have been
approved by the respective management of Gran Tierra and i3 Energy,
as applicable, as of the date of this Announcement. Readers are
cautioned that any such financial outlook and future-oriented
financial information contained herein should not be used for
purposes other than those for which it is disclosed herein. Gran
Tierra, i3 Energy and their respective management believe that the
prospective financial and operational information has been prepared
on a reasonable basis, reflecting Gran Tierra and i3 Energy
respective management’s best estimates and judgments, and
represent, to the best of Gran Tierra’s and i3 Energy's respective
management’s knowledge and opinion, Gran Tierra’s and i3 Energy's
expected respective course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. See Gran Tierra’s press
release dated 23 January 2024 and most recent reports on Form 10-K
and Form 10-Q for additional information regarding the 2024
financial and production outlook of Gran Tierra, and i3 Energy’s
press release dated 13 August 2024 regarding the financial and
production outlook of i3 Energy.
Non-IFRS, Non-GAAP and Other Specified
Financial Measures
This Announcement contains references to Gran
Tierra’s EBITDA, adjusted EBITDA, net debt, net debt to adjusted
EBITDA ratio, i3 Energy’s EBITDA, net operating income, free cash
flow, net cash surplus and net debt, which are specified financial
measures that do not have any standardized meaning as prescribed by
US GAAP in the case of Gran Tierra or UK adopted IFRS in the case
of i3 Energy and, therefore, may not be comparable with the
calculation of similar measures presented by other applicable
issuers. You are cautioned that these measures should not be
construed as alternatives to net income or loss, or other measures
of financial performance as determined in accordance with US GAAP
in the case of Gran Tierra and UK adopted IFRS in the case of i3
Energy. Gran Tierra’s and i3 Energy’s methods of calculating these
measures may differ from other companies and, accordingly, they may
not be comparable to similar measures used by other companies. Each
non-GAAP and non-IFRS financial measure is presented along with the
corresponding GAAP or IFRS measure so as to not imply that more
emphasis should be placed on the non-GAAP or non-IFRS measure. For
an explanation of the composition of i3 Energy’s EBITDA, adjusted
EBITDA, net operating income, free cash flow, net cash surplus and
net debt, see "Non-IFRS Financial Measures" in i3 Energy’s
Management Discussion and Analysis dated August 13, 2024, and for
an explanation of Gran Tierra’s EBITDA, adjusted EBITDA, net debt
and adjusted EBITDA to net debt ratio, see “Non-GAAP Measures” in
Gran Tierra’s quarterly and annual reports, which are available on
i3 Energy’s SEDAR+ issuer profile at www.sedarplus.ca and Gran
Tierra’s SEC EDGAR issuer profile at www.sec.gov, or and on their
respective websites at https://i3.energy/ and
https://www.grantierra.com/. These measures should not be
considered in isolation or as a substitute for measures prepared in
accordance with IFRS or US GAAP, as applicable. The non-IFRS and
non-US GAAP measures used in this Announcement are summarized as
follows:
EBITDA and Adjusted EBITDA (Gran Tierra):
EBITDA, as presented, is defined as net income
(or loss) adjusted for depletion, depreciation and accretion
(“DD&A”) expenses, interest expense and income
tax expense or recovery.
Adjusted EBITDA, as presented, is defined as
EBITDA adjusted for non-cash lease expense, lease payments, foreign
exchange gain or loss, stock-based compensation expense or
recovery, other gain or loss and financial instrument loss.
Gran Tierra’s management uses these supplemental
measures to analyse performance and income generated by its
principal business activities prior to the consideration of how
non-cash items affect that income and believes that these financial
measures are useful supplemental information for investors to
analyse its performance and its financial results. A reconciliation
from net (loss) income to EBITDA and adjusted EBITDA are as
follows:
|
|
Three Months Ended |
|
(Thousands of U.S. Dollars) |
June 30,2024 |
March 31,2024 |
December 31,2023 |
September 30,2023 |
|
Net income (loss) |
36,371 |
-78 |
7,711 |
6,527 |
|
Adjustments to reconcile net income to EBITDA and Adjusted
EBITDA |
|
|
|
|
|
DD&A expenses |
55,490 |
56,150 |
52,635 |
55,019 |
|
Interest expense |
18,398 |
18,424 |
17,789 |
13,503 |
|
Income tax (recovery) expense |
-9,072 |
17,395 |
5,499 |
40,333 |
|
EBITDA (non-GAAP) |
101,187 |
91,891 |
83,634 |
115,382 |
|
Non-cash lease expense |
1,381 |
1,413 |
1,479 |
1,235 |
|
Lease payments |
-1,311 |
-1,058 |
-1,100 |
-676 |
|
Foreign exchange (gain) loss |
-4,413 |
-815 |
3,696 |
1,717 |
|
Stock-based compensation expense |
6,160 |
3,361 |
1,974 |
1,931 |
|
Other (gain) loss |
- |
- |
3,266 |
-354 |
|
Unrealized derivative instruments gain |
- |
- |
- |
- |
|
Other financial instruments loss |
- |
- |
15 |
- |
|
Adjusted EBITDA (non-GAAP) |
103,004 |
94,792 |
92,964 |
119,235 |
Net Debt (Gran Tierra):
Gran Tierra’s net debt, as presented, is defined
as Gran Tierra’s senior notes and borrowings under Gran Tierra’s
credit facility, excluding deferred financing fees, less cash and
cash equivalents.
Gran Tierra’s management uses this supplemental
measure to evaluate the financial sustainability of Gran Tierra’s
business and leverage. The most directly comparable US GAAP measure
is total debt. A reconciliation from total debt to net debt is as
follows:
|
In thousands of US$ |
As at 30 June 2024 |
|
Senior
notes(i) |
US$ |
637,000 |
|
Credit
facility |
|
— |
|
Total
debt |
US$ |
637,000 |
|
Cash and cash
equivalents |
|
115,000 |
|
Net
debt |
US$ |
521,000 |
(i) Calculated using the sum of US$24.8 million
aggregate principal amount of Gran Tierra’s 6.25% Senior Notes due
2025, US$24.2 million aggregate principal amount of Gran Tierra’s
7.75% Senior Notes due 2027, and US$587.6 million aggregate
principal amount of Gran Tierra’s 9.50% Senior Notes due 2029,
excluding deferred financing fees.
EBITDA and Adjusted EBITDA (i3 Energy):
EBITDA is defined as earnings before
depreciation and depletion, financial costs, and tax. Adjusted
EBITDA is defined as EBITDA before gain on bargain purchase and
asset dispositions and acquisition costs. i3 Energy management
believes that EBITDA provides useful information into the operating
performance of i3 Energy, is commonly used within the oil and gas
sector, and assists its management and investors by increasing
comparability from period to period. Adjusted EBITDA removes the
gain or loss on bargain purchase and asset dispositions and the
related acquisition costs which management does not consider to be
representative of the underlying operations of i3 Energy.
A reconciliation of profit as reported under
IFRS to EBITDA and Adjusted EBITDA is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Profit for the period |
14,463 |
|
728 |
8,369 |
|
10,944 |
|
Depreciation and depletion |
8,027 |
|
8,702 |
16,660 |
|
19,410 |
|
Finance costs |
950 |
|
2,312 |
3,115 |
|
4,682 |
|
Tax |
4,840 |
|
1,104 |
7,036 |
|
3,525 |
|
EBITDA |
28,280 |
|
12,846 |
35,180 |
|
38,561 |
|
Gain on asset dispositions |
(15,779) |
|
– |
(15,779) |
|
– |
|
Adjusted EBITDA |
12,501 |
|
12,846 |
19,104 |
|
38,561 |
|
Adjusted EBITDA presented in
USD(i) |
15,770 |
|
16,088 |
24,163 |
|
47,546 |
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Net Operating Income (i3 Energy):
Net operating income is defined as gross profit
before depreciation and depletion, gains or losses on risk
management contracts, and other operating income, which equals
revenue from the sale of oil and gas and processing income, less
production costs. i3 Energy management believes that net operating
income is a useful supplementary measure as it provides investors
with information on operating margins before non-cash depreciation
and depletion charges and gains or losses on risk management
contracts. These metrics are also presented on a per BOE basis.
A reconciliation of gross profit as reported
under IFRS to net operating income is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Gross profit |
7,796 |
|
5,775 |
|
8,698 |
|
22,985 |
|
|
Depreciation and depletion |
8,027 |
|
8,702 |
|
16,660 |
|
19,410 |
|
|
(Gain) / loss on risk management contracts |
(1,624) |
|
(387) |
|
1,459 |
|
(3,343) |
|
|
Other operating income |
(1,786) |
|
– |
|
(1,816) |
|
(107) |
|
|
Net operating income |
12,413 |
|
14,090 |
|
25,001 |
|
38,945 |
|
|
Net operating income presented in
USD(i) |
5,659 |
|
17,646 |
|
31,621 |
|
48,019 |
|
|
Total Sales Production (BOE) |
1,662,661 |
|
1,686,139 |
|
3,428,516 |
|
3,735,840 |
|
|
Net operating income per BOE (£/BOE) |
7.47 |
|
8.36 |
|
7.29 |
|
10.42 |
|
|
Net operating income per BOE presented in
USD(i) |
9.42 |
|
10.47 |
|
9.22 |
|
12.85 |
|
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Free Cash Flow (i3 Energy):
Free cash flow is defined as cash from operating
activities plus proceeds on disposal of PP&E and E&E, less
cash capital expenditures on PP&E and E&E. i3 Energy
management believes that free cash flow provides useful information
to management and investors about i3 Energy’s ability to pay
dividends. This definition was expanded in Q2 2024 to include
proceeds on disposal of PP&E and E&E as i3 Energy completed
material dispositions in the period.
A reconciliation of cash from operating
activities to free cash flow is provided below.
|
|
Three-months Ended |
Six-months Ended |
|
|
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
30 Jun 2024 £’000 |
30 Jun 2023 £’000 |
|
Net cash from operating activities |
6,053 |
|
3,186 |
|
19,569 |
|
24,294 |
|
|
Disposal of property, plant & equipment |
17,956 |
|
– |
|
17,956 |
|
– |
|
|
Disposal of E&E assets |
1,234 |
|
– |
|
1,234 |
|
– |
|
|
Expenditures on property, plant & equipment |
(2,567) |
|
(3,274) |
|
(3,985) |
|
(15,225) |
|
|
Expenditures on exploration and evaluation assets |
(62) |
|
(173) |
|
(361) |
|
(1,200) |
|
|
Free cash flow |
22,614 |
|
369 |
|
34,413 |
|
7,869 |
|
|
FCF presented in USD(i) |
28,528 |
|
462 |
|
43,526 |
|
9,702 |
|
(i) Amounts converted at the period-average
GBP:USD exchange rates of 1.2615 and 1.2648 for the three and six
months ended 30 June 2024, respectively, and 1.2524 and 1.2330 for
the three and six months ended 30 June 2023 periods,
respectively.
Net Cash Surplus and Debt (i3 Energy):
Net cash surplus or net debt is defined as
borrowings and leases and trade and other payables, less cash and
cash equivalents and trade and other receivables. This definition
was expanded in 2023 and 2024 to include other non-current
liabilities and other non-current assets which are new account
balances that arose during the respective years. When net debt is
negative it is referred to as a net cash surplus. i3 Energy
management believes that net cash surplus or net debt is a
meaningful measure to monitor the liquidity position of i3
Energy.
A reconciliation of the various line items per
the statement of financial position to net cash surplus or net debt
is provided below.
|
|
30 Jun 2024 £’000 |
31 Dec 2023 £’000 |
|
Borrowings and leases |
209 |
|
34,569 |
|
|
Trade and other payables |
23,479 |
|
27,640 |
|
|
Other non-current liabilities |
431 |
|
84 |
|
|
Income taxes (receivable) / payable |
(27) |
|
(205) |
|
|
Cash and cash equivalents |
(8,802) |
|
(23,507) |
|
|
Trade and other receivables |
(19,658) |
|
(20,534) |
|
|
Other non-current assets |
(1,136) |
|
– |
|
|
Net (cash surplus) / debt |
(5,504) |
|
18,047 |
|
|
Net (cash surplus) / debt presented in
USD(ii) |
(6,958) |
|
23,005 |
|
(ii) Amounts converted at the period-end GBP:USD
exchange rates of 1.2642 and 1.2747 for the 2024 and 2023 periods,
respectively.
Disclosure of Oil and Gas
Information
All reserves and production volumes are on an
average working interest before royalties (“WI”)
basis unless otherwise indicated. Production is expressed in
barrels of oil per day (“BOPD”) in respect of Gran
Tierra and in barrels of oil equivalent per day
(“BOEPD”) in respect of i3 Energy while reserves
are expressed in million barrels of oil equivalent
(“MMBOE”), unless otherwise indicated.
Gran Tierra’s 2023 year-end reserves, future net
revenue and ancillary information were evaluated by Gran Tierra’s
independent qualified reserves evaluator McDaniel in a report with
an effective date of 31 December 2023 (the “Gran Tierra
McDaniel Reserves Report”). In conjunction with the
Acquisition, McDaniel has prepared a fair market valuation report
dated 15 August 2024 in respect of certain of Gran Tierra's
reserves, future net revenue and net present values (the
“Gran Tierra Valuation Report”) with an effective
date of 31 December 2023 for the purposes of Rule 29 of the
Takeover Code in which the referenced reserves, future net revenue
and net present values disclosed therein matches the corresponding
reserves future net revenue and net present values provided for in
the Gran Tierra McDaniel Reserves Report. All reserves values,
future net revenue and ancillary information contained in this
Announcement, with respect to the assets of Gran Tierra, have been
prepared by McDaniel and calculated in compliance with Canadian
National Instrument 51-101 – Standards of Disclosure for Oil and
Gas Activities (“NI 51-101”) and the Canadian Oil
and Gas Evaluation Handbook (“COGEH”) and derived
from the Gran Tierra Valuation Report and the Gran Tierra McDaniel
Reserves Report.
Certain of i3 Energy’s ancillary information
presented in this Announcement were evaluated by i3 Energy’s
independent qualified reserves evaluator GLJ in a report with an
effective date of 31 December 2023 (the “i3 Energy GLJ
Reserves Report”). In conjunction with the Acquisition,
GLJ has prepared a fair market valuation report dated 16 August
2024 in respect of i3 Energy's reserves, future net revenue and net
present values (the “i3 Energy Valuation Report”)
with an effective date of 31 July 2024 for the purposes of Rule 29
of the Takeover Code. All reserves values, future net revenue and
ancillary information contained in this Announcement, with respect
to the assets of i3 Energy, have been prepared by GLJ and
calculated in compliance with NI 51-101 and COGEH, and derived from
the i3 Energy Valuation Report or the i3 Energy GLJ Reserves Report
as applicable. The results of i3 Energy's GLJ Reserves Report were
disclosed on i3 Energy’s press release dated 25 March 2024, a copy
of which is available on i3 Energy's website at
https://i3.energy/.
Barrel of oil equivalents
(“BOE”) have been converted on the basis of six
thousand cubic feet (“Mcf”) natural gas to 1
barrel (“bbl”) of oil. BOE’s may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf:
1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. In addition, given that the value
ratio based on the current price of oil as compared with natural
gas is significantly different from the energy equivalent of six to
one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be
misleading as an indication of value.
The following reserves categories are discussed
in this Announcement: Proved (“1P”), 1P plus
Probable (“2P”) and 2P plus Possible
(“3P”), Proved Developed Producing, Proved
Developed Non-Producing and Proved Undeveloped.
Proved reserves are those reserves that can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves. Probable reserves are those
additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated proved plus probable reserves. Possible reserves are
those additional reserves that are less certain to be recovered
than Probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
Proved developed reserves are those proved
reserves that are expected to be recovered from existing wells and
installed facilities or, if facilities have not been installed,
that would involve a low expenditure (e.g., when compared to cost
of drilling a well) to put reserves on production. Developed
category may be subdivided into producing and non-producing.
Undeveloped reserves are those reserves expected to be recovered
from known accumulations where a significant expenditure (e.g.,
when compared to the cost of drilling a well) is required to render
them capable of production. They must fully meet the requirements
of the reserves category (proved, probable, possible) to which they
are assigned.
Estimates of net present value and future net
revenue contained herein do not necessarily represent fair market
value. Estimates of reserves and future net revenue for individual
properties may not reflect the same level of confidence as
estimates of reserves and future net revenue for all properties,
due to the effect of aggregation. There is no assurance that the
forecast price and cost assumptions applied by McDaniel or GLJ in
evaluating Gran Tierra’s or i3 Energy’s reserves, respectively,
will be attained and variances could be material. See the Gran
Tierra Valuation Report for a summary of the price forecasts
employed by McDaniel therein. See the i3 Energy Valuation Report
for a summary of the price forecasts employed by GLJ therein. There
are numerous uncertainties inherent in estimating quantities of
crude oil and natural gas reserves. The reserves information set
forth in the Gran Tierra McDaniel Reserves Report, the i3 Energy
GLJ Reserves Report, the Gran Tierra Valuation Report and the i3
Energy Valuation Report are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may be greater than or less than the estimates provided
therein.
All reserves assigned in the Gran Tierra
McDaniel Reserves Report and the Gran Tierra Valuation Report are
located in Colombia and Ecuador and presented on a consolidated
basis by foreign geographic area. References to a formation where
evidence of hydrocarbons has been encountered is not necessarily an
indicator that hydrocarbons will be recoverable in commercial
quantities or in any estimated volume. Gran Tierra’s reported
production is a mix of light crude oil and medium and heavy crude
oil for which there is not a precise breakdown since Gran Tierra’s
oil sales volumes typically represent blends of more than one type
of crude oil. Well test results should be considered as preliminary
and not necessarily indicative of long-term performance or of
ultimate recovery. Well log interpretations indicating oil and gas
accumulations are not necessarily indicative of future production
or ultimate recovery. If it is indicated that a pressure transient
analysis or well-test interpretation has not been carried out, any
data disclosed in that respect should be considered preliminary
until such analysis has been completed. References to thickness of
“oil pay” or of a formation where evidence of hydrocarbons has been
encountered is not necessarily an indicator that hydrocarbons will
be recoverable in commercial quantities or in any estimated
volume.
All evaluations of future net revenue contained
in the Gran Tierra McDaniel Reserves Report, the i3 Energy GLJ
Reserves Report, the Gran Tierra Valuation Report and the i3 Energy
Valuation Report are after the deduction of royalties, operating
costs, development costs, production costs and abandonment and
reclamation costs but before consideration of indirect costs such
as administrative, overhead and other miscellaneous expenses. It
should not be assumed that the estimates of future net revenues
presented in this Announcement represent the fair market value of
the reserves. There are numerous uncertainties inherent in
estimating quantities of crude oil reserves and the future cash
flows attributed to such reserves. The reserve and associated cash
flow information set forth in the Gran Tierra McDaniel Reserves
Report, the i3 Energy GLJ Reserves Report, the Gran Tierra
Valuation Report and the i3 Energy Valuation Report are estimates
only and there is no guarantee that the estimated reserves will be
recovered. Actual reserves may be greater than or less than the
estimates provided therein.
Booked drilling locations of i3 Energy disclosed
herein are derived from the i3 Energy GLJ Reserves Report and
account for drilling locations that have associated 2P
reserves.
This Announcement contains reference to reserves
replacement of Gran Tierra which is an oil and gas metric that does
not have a standardised meaning or standard method of calculation
and therefore such measure may not be comparable to similar
measures used by other companies and should not be used to make
comparisons. That metric has been included herein to provide
readers with an additional measure to evaluate Gran Tierra's
performance; however, that measure is not a reliable indicator of
the future performance of Gran Tierra and future performance may
not compare to the performance in previous periods. Reserves
replacement is calculated as reserves in the referenced category
divided by estimated referenced production. Gran Tierra management
uses this measure to determine the relative change of its reserves
base over a period of time.
References in this Announcement to IP30, IP90
and other short-term production rates of Gran Tierra are useful in
confirming the presence of hydrocarbons, however such rates are not
determinative of the rates at which such wells will commence
production and decline thereafter and are not indicative of
long-term performance or of ultimate recovery. While encouraging,
readers are cautioned not to place reliance on such rates in
calculating the aggregate production of Gran Tierra. Gran Tierra
cautions that such results should be considered to be
preliminary.
No Profit Forecasts or
Estimates
The Gran Tierra Profit Forecast and the i3
Energy Profit Forecast are profit forecasts for the purposes of
Rule 28 of the Takeover Code. As required by Rule 28.1 of the
Takeover Code, the assumptions on which the Gran Tierra Profit
Forecast is stated are set out in Appendix 4 to this Announcement
and the assumptions on which the i3 Energy Profit Forecast is
stated are set out in paragraph 6 of this Announcement.
Other than the Gran Tierra Profit Forecast and
the i3 Energy Profit Forecast, no statement in this Announcement is
intended as a profit forecast or estimate for any period and no
statement in this Announcement should be interpreted to mean that
earnings or earnings per share or dividend per share for Gran
Tierra or i3 Energy, as appropriate, for the current or future
financial years would necessarily match or exceed the historical
published earnings or earnings per share or dividend per share for
Gran Tierra or i3 Energy as appropriate.
Dealing and Opening Position Disclosure
Requirements
Under Rule 8.3(a) of the Takeover Code, any
person who is interested in one per cent. or more of any class of
relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is
likely to be, solely in cash) must make an Opening Position
Disclosure following the commencement of the Offer Period and, if
later, following the Announcement in which any securities exchange
offeror is first identified.
An Opening Position Disclosure must contain
details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An
Opening Position Disclosure by a person to whom Rule 8.3(a) applies
must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10th
Business Day following the Announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any
person who is, or becomes, interested in one per cent. or more of
any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or
of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s), save to the extent that these
details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 p.m. (London time) on the Business Day following
the date of the relevant dealing. If two or more persons act
together pursuant to an agreement or understanding, whether formal
or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror,
they will be deemed to be a single person for the purpose of Rule
8.3.
Opening Position Disclosures must also be made
by the offeree company and by any offeror and Dealing Disclosures
must also be made by the offeree company, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and
8.4). Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
Offer Period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 20
7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Rounding
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover
Code, i3 Energy confirms that as at the date of this Announcement,
it has in issue and admitted to trading on the London Stock
Exchange and the TSX 1,202,447,663 ordinary shares of 0.01 pence
each (excluding ordinary shares held in treasury). The
International Securities Identification Number (ISIN) of the
ordinary shares is GB00BDHXPJ60.
In accordance with Rule 2.9 of the Takeover
Code, Gran Tierra confirms that as at the date of this
Announcement, it has in issue and admitted to trading on the NYSE
American, the London Stock Exchange and the TSX 30,665,305 ordinary
shares of US$0.001 each. The International Securities
Identification Number (ISIN) of the ordinary shares is
US38500T2006.
Publication on website and availability
of hard copies
A copy of this Announcement is and will be
available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, for inspection on Gran
Tierra's website
https://www.grantierra.com/investor-relations/recommended-acquisition/
and on i3 Energy 's website
https://i3.energy/grantierra-offer-terms/ by no later than 12 noon
(London time) on the Business Day following this Announcement. For
the avoidance of doubt, the contents of the websites referred to in
this Announcement are not incorporated into and do not form part of
this Announcement.
In accordance with Rule 30.3 of the Takeover
Code, i3 Energy Shareholders and persons with information rights
may request a hard copy of this Announcement by contacting i3
Energy's registrars, Link Group or by calling Link Group on +44
(0)371 664 0321. Calls are charged at the standard geographical
rate and will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Lines are
open between 9.00 a.m. to 5.30 p.m. (London time), Monday to Friday
(except public holidays in England and Wales). Please note that
Link Group cannot provide any financial, legal or tax advice. Calls
may be recorded and monitored for security and training purposes.
For persons who receive a copy of this Announcement in electronic
form or via a website notification, a hard copy of this
Announcement will not be sent unless so requested. Such persons may
also request that all future documents, announcements and
information to be sent to them in relation to the Acquisition
should be in hard copy form. For the avoidance of doubt, the
contents of the aforementioned websites, and any websites
accessible from hyperlinks on those websites, are not incorporated
into and do not form part of this Announcement.
If you are in any doubt about the contents of
this Announcement or the action you should take, you are
recommended to seek your own independent financial advice
immediately from your stockbroker, bank manager, solicitor,
accountant or independent financial adviser duly authorised under
the Financial Services and Markets Act 2000 (as amended) if you are
resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser.
Qualified Person's
Statement
In accordance with the AIM Note for Mining and
Oil and Gas Companies, i3 Energy discloses that Majid Shafiq is the
qualified person who has reviewed the technical information
contained in this Announcement. He has a Master's Degree in
Petroleum Engineering from Heriot-Watt University and is a member
of the Society of Petroleum Engineers. Majid Shafiq consents to the
inclusion of the information in the form and context in which it
appears.
APPENDIX 1
CONDITIONS OF AND CERTAIN FURTHER TERMS
OF THE ACQUISITION
Part
A: Conditions
of the Acquisition
1. The Acquisition will be
conditional upon the Scheme becoming unconditional and Effective,
subject to the provisions of the Takeover Code, by no later than
11.59 p.m. (London time) on the Long Stop Date.
2. Scheme
approval
The Scheme will be conditional upon:
(a) its approval by a majority
in number representing not less than 75 per cent. in value of the
Scheme Shareholders (or the relevant class or classes thereof, if
applicable) present and voting, either in person or by proxy, at
the Court Meeting and at any separate class meeting which may be
required by the Court or at any adjournment of any such meeting on
or before the 22nd day after the expected date of the Court Meeting
to be set out in the Scheme Document in due course (or such later
date, if any, as Gran Tierra may determine with the agreement of i3
Energy or with the consent of the Panel and approval of the Court,
if such approval is required);
(b) all resolutions necessary to
approve and implement the Scheme being duly passed by the requisite
majority or majorities at the i3 Energy General Meeting or at any
adjournment of that meeting on or before the 22nd day after the
expected date of the i3 Energy General Meeting to be set out in the
Scheme Document in due course (or such later date, if any, as Gran
Tierra may determine with the agreement of i3 Energy or with the
consent of the Panel and approval of the Court, if such approval is
required);
(c) the sanction of the Scheme
with or without modification (but subject to any such modification
being acceptable to Gran Tierra and i3 Energy) by the Court on or
before the 22nd day after the expected date of the Scheme Court
Hearing to be set out in the Scheme Document in due course (or such
later date, if any, as Gran Tierra may determine with the agreement
of i3 Energy or with the consent of the Panel and approval of the
Court, if such approval is required); and
(d) the delivery of a copy of
the Court Order to the Registrar of Companies in England and
Wales.
3. General
conditions
In addition, subject to: (i) the terms of Part B
of this Appendix 1; and (ii) the requirements of the Panel, Gran
Tierra and i3 Energy have agreed that the Acquisition will be
conditional on the following Conditions having been satisfied or,
where applicable, waived and accordingly the necessary actions to
make the Scheme effective will not be taken unless such Conditions
have been so satisfied or, where relevant, waived:
(a) Admission to
listing
the FCA having
acknowledged to Gran Tierra or its agent (and such acknowledgement
not having been withdrawn) that the application for the admission
of the New Gran Tierra Shares to the Official List has been
approved and (after such satisfaction of any conditions to which
such approval is expressed to be subject ("Listing
Conditions")) that admission will become effective as soon
as a dealing notice has been issued by the FCA and any Listing
Conditions having been satisfied;
(b) Admission to
trading
the London Stock
Exchange having acknowledged to Gran Tierra (or its agent) (and
such acknowledgement not having been withdrawn) that the New Gran
Tierra Shares will be admitted to trading on the Main Market for
listed securities;
(c) TSX
Approval
the conditional
approval of the TSX for the listing and posting for trading of the
New Gran Tierra Shares, including confirmation from the TSX that
the New Gran Tierra Shares will be listed and posted for trading
not later than the third Business Day following the Effective Date,
subject only to compliance with customary requirements of the TSX,
including customary post-closing deliveries for transactions of a
nature similar to the Scheme, in each case, acceptable to Gran
Tierra, acting reasonably;
(d) NYSE American
Approval
the New Gran Tierra
Shares shall be approved for listing on the NYSE American exchange,
subject to official notice of issuance;
(e) Official
Authorisations, regulatory clearances and third-party
clearances
(i) if required, the receipt of the
written unconditional consent (or consent provided in any form
which is at that time customary) of the North Sea Transition
Authority (the "NSTA"), pursuant to UKCS Licence
P.2358, in respect of the proposed change of control of i3 Energy’s
subsidiary, i3 Energy North Sea Limited pursuant to the Acquisition
(the "NSTA Condition");
(ii) (A) the receipt of an advance
ruling certificate in respect of the Acquisition under the
Competition Act (Canada); or (B) both (1) the expiry or waiver of
the waiting period under the Competition Act (Canada) and (2)
receipt of a notice from the Commissioner of Competition or his
designee under the Competition Act (Canada) that the Commissioner
of Competition does not, at that time, intend to make an
application under section 92 in respect of the Acquisition (the
“Competition Act Condition”);
(iii) the Scheme being approved by a
simple majority of the votes cast by i3 Energy Shareholders after
excluding the votes cast by those persons whose vote may not be
included under Multilateral Instrument 61-101 – Protection of
Minority Security Holders in Special Transactions of the Canadian
Securities Administrators (the "Minority Shareholder
Protection Condition");
(iv) the waiver (or non-exercise
within any applicable time limits) by any Third Party of any
termination right, right of pre-emption, first refusal or similar
right (which is material in the context of the Wider i3 Energy
Group taken as a whole) arising as a result of or in connection
with the Acquisition including, without limitation, its
implementation and financing or the proposed direct or indirect
acquisition of any shares or other securities in, or control or
management of, i3 Energy by Gran Tierra or any member of the Wider
Gran Tierra Group;
(v) all necessary filings or
applications having been made in connection with the Acquisition
and all statutory or regulatory obligations in any jurisdiction
having been complied with in connection with the Acquisition or the
acquisition by any member of the Wider Gran Tierra Group of any
shares or other securities in, or control of, i3 Energy and all
authorisations, orders, grants, recognitions, determinations,
confirmations, consents, licences, clearances, permissions,
exemptions and approvals deemed necessary or appropriate by Gran
Tierra or any member of the Wider Gran Tierra Group for or in
respect of the Acquisition including, without limitation, its
implementation and financing or the proposed direct or indirect
acquisition of any shares or other securities in, or control of,
Gran Tierra or any member of the Wider Gran Tierra Group by any
member of the Wider Gran Tierra Group having been obtained in terms
and in a form satisfactory to Gran Tierra from all appropriate
Third Parties or persons with whom any member of the Wider i3
Energy Group has entered into contractual arrangements and all such
authorisations, orders, grants, recognitions, determinations,
confirmations, consents, licences, clearances, permissions,
exemptions and approvals deemed necessary or appropriate to carry
on the business of any member of the Wider i3 Energy Group which
are material in the context of the Gran Tierra Group or the i3
Energy Group as a whole or for or in respect of the Acquisition
including, without limitation, its implementation or financing
remaining in full force and effect and all filings necessary for
such purpose having been made and there being no notice or
intimation of any intention to revoke or not to renew any of the
same at the time at which the Acquisition becomes otherwise
unconditional and all necessary statutory or regulatory obligations
in any jurisdiction having been complied with;
(vi) other than in relation to
Conditions 3(e)(i) and 3(e)(ii), no Third Party having given notice
of a decision to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference (and, in each
case, not having withdrawn the same), or having enacted, made or
proposed any statute, regulation, decision or order, or change to
published practice or having taken any other step, and there not
continuing to be outstanding any statute, regulation, decision or
order, which in each case would or might reasonably be expected
to:
(A) require, prevent or delay the
divestiture, or materially alter the terms envisaged for any
proposed divestiture by any member of the Wider Gran Tierra Group
or any member of the Wider i3 Energy Group of all or any portion of
their respective businesses, assets or property or impose any
limitation on the ability of any of them to conduct their
respective businesses (or any of them) or to own any of their
respective assets or properties or any part thereof which, in any
such case, is material in the context of the Wider Gran Tierra
Group or the Wider i3 Energy Group in either case taken as a whole
or in the context of the Acquisition;
(B) require, prevent or delay the
divestiture by any member of the Wider Gran Tierra Group of any
shares or other securities in i3 Energy;
(C) impose any material limitation on,
or result in a delay in, the ability of any member of the Wider
Gran Tierra Group directly or indirectly to acquire or to hold or
to exercise effectively any rights of ownership in respect of
shares or loans or securities convertible into shares or any other
securities (or the equivalent) in any member of the Wider i3 Energy
Group or the Wider Gran Tierra Group or to exercise voting or
management control over any such member;
(D) otherwise adversely affect the
business, assets, profits or prospects of any member of the Wider
Gran Tierra Group or of any member of the Wider i3 Energy Group to
an extent which is material in the context of the Wider Gran Tierra
Group or the Wider i3 Energy Group in either case taken as a whole
or in the context of the Acquisition;
(E) make the Acquisition or its
implementation or the Acquisition or proposed acquisition by Gran
Tierra or any member of the Wider Gran Tierra Group of any shares
or other securities in, or control of i3 Energy void, illegal,
and/or unenforceable under the laws of any jurisdiction, or
otherwise, directly or indirectly, restrain, restrict, prohibit,
delay or otherwise interfere with the same, or impose additional
conditions or obligations with respect thereto;
(F) other than pursuant to the
implementation of the Scheme, require any member of the Wider Gran
Tierra Group or the Wider i3 Energy Group to offer to acquire any
shares or other securities (or the equivalent) or interest in any
member of the Wider i3 Energy Group or the Wider Gran Tierra Group
owned by any third party;
(G) impose any limitation on the
ability of any member of the Wider i3 Energy Group to coordinate
its business, or any part of it, with the businesses of any other
members which is adverse to and material in the context of the
Wider i3 Energy Group taken as a whole or in the context of the
Acquisition; or
(H) result in any member of the Wider
i3 Energy Group ceasing to be able to carry on business under any
name under which it presently does so,
and all applicable
waiting and other time periods (including any extensions thereof)
during which any such Third Party could institute, implement or
threaten any action, proceeding, suit, investigation, enquiry or
reference or any other step under the laws of any jurisdiction in
respect of the Acquisition or the acquisition or proposed
acquisition of any i3 Energy Shares having expired, lapsed or been
terminated;
(f) Certain matters
arising as a result of any arrangement, agreement etc.
(i) save as Disclosed, there being no
provision of any agreement, arrangement, licence, permit or other
instrument to which any member of the Wider i3 Energy Group is a
party or by or to which any such member of the Wider i3 Energy
Group (“such member”) or any of its assets may be
bound, entitled or subject, or any circumstance which in
consequence of the Acquisition or the proposed acquisition of any
shares or other securities (or equivalent) in i3 Energy or because
of a change in the control or management of i3 Energy or otherwise,
could or might result in any of the following to an extent which is
material and adverse in the context of the Wider i3 Energy Group,
or the Wider Gran Tierra Group, in either case taken as a whole, or
in the context of the Acquisition:
(A) any moneys borrowed by or any
other indebtedness or liabilities (actual or contingent) of, or
grant available to any such member, being or becoming repayable or
capable of being declared repayable immediately or earlier than
their or its stated maturity date or repayment date or the ability
of any such member to borrow moneys or incur any indebtedness being
withdrawn or inhibited or being capable of becoming or being
withdrawn or inhibited;
(B) any such agreement, arrangement,
licence, permit or instrument or the rights, liabilities,
obligations or interests of any such member thereunder being
terminated or adversely modified or affected or any obligation or
liability arising or any action being taken or arising
thereunder;
(C) any asset or interest of any such
member being or failing to be disposed of or charged or ceasing to
be available to any such member or any right arising under which
any such asset or interest could be required to be disposed of or
charged or could cease to be available to any such member otherwise
than in the ordinary course of business;
(D) the creation or enforcement of any
mortgage, charge or other security interest over the whole or any
part of the business, property, assets or interest of any such
member;
(E) the rights, liabilities,
obligations or interests of any such member, or the business of any
such member with, any person, firm, company or body (or any
arrangement or arrangements relating to any such interest or
business) being terminated, adversely modified or affected;
(F) the value of any such member or
its financial or trading position or prospects being prejudiced or
adversely affected;
(G) any such member ceasing to be able
to carry on business under any name under which it presently does
so; or
(H) the creation or acceleration of
any liability, actual or contingent, by any such member (including
any material tax liability or any obligation to obtain or acquire
any material authorisation, order, grant, recognition,
determination, confirmation, consent, licence, clearance,
permission, exemption, approval, notice, waiver, concession,
agreement or exemption from any Third Party or any person) other
than trade creditors or other liabilities incurred in the ordinary
course of business or in connection with the Acquisition,
and no event having
occurred which, under any provision of any agreement, arrangement,
licence, permit or other instrument to which any member of the
Wider i3 Energy Group is a party or by or to which any such member
or any of its assets may be bound, entitled or subject, would or
might be expected to result in any of the events or circumstances
as are referred to in subparagraphs (A) to (H) of this
Condition;
(G) Certain events
occurring since Last Accounts Date
(i) save as Disclosed, no member of
the Wider i3 Energy Group having, since the Last Accounts Date:
(A) save as between i3 Energy and
wholly-owned subsidiaries of i3 Energy or for i3 Energy Shares
issued under or pursuant to the exercise of options and vesting of
awards granted under the i3 Energy Share Plans, issued or agreed to
issue, authorised or proposed the issue of additional shares of any
class;
(B) save as between i3 Energy and
wholly-owned subsidiaries of i3 Energy or for the grant of options
and awards and other rights under the i3 Energy Share Plans, issued
or agreed to issue, authorised or proposed the issue of securities
convertible into shares of any class or rights, warrants or options
to subscribe for, or acquire, any such shares or convertible
securities;
(C) other than to another member of
the i3 Energy Group, prior to completion of the Acquisition,
recommended, declared, paid or made any dividend or other
distribution payable in cash or otherwise or made any bonus
issue;
(D) save for intra-i3 Energy Group
transactions, merged or demerged with any body corporate or
acquired or disposed of or transferred, mortgaged or charged or
created any security interest over any assets or any right, title
or interest in any asset (including shares and trade investments)
or authorised or proposed or announced any intention to propose any
merger, demerger, disposal, transfer, mortgage, charge or security
interest, in each case, other than in the ordinary course of
business and, in each case, to the extent which is material in the
context of the Wider i3 Energy Group taken as a whole or in the
context of the Acquisition;
(E) save for intra-i3 Energy Group
transactions, made or authorised or proposed or announced an
intention to propose any change in its loan capital in each case,
to the extent which is material in the context of the Wider i3
Energy Group taken as a whole or in the context of the
Acquisition;
(F) issued, authorised or proposed the
issue of, or made any change in or to, any debentures or (save for
intra-i3 Energy Group transactions), save in the ordinary course of
business, incurred or increased any indebtedness or become subject
to any contingent liability;
(G) purchased, redeemed or repaid or
announced any proposal to purchase, redeem or repay any of its own
shares or other securities or reduced or, save in respect to the
matters mentioned in sub-paragraphs (A) or (B) above, made any
other change to any part of its share capital in each case, to the
extent which is material in the context of the Wider i3 Energy
Group taken as a whole or in the context of the Acquisition;
(H) save for intra-i3 Energy Group
transactions, implemented, or authorised, proposed or announced its
intention to implement, any reconstruction, merger, demerger,
amalgamation, scheme, commitment or other transaction or
arrangement otherwise than in the ordinary course of business;
(I) entered into or varied or
authorised, proposed or announced its intention to enter into or
vary any contract, transaction or commitment (whether in respect of
capital expenditure or otherwise) which is of a long term, onerous
or unusual nature or magnitude or which involves or could involve
an obligation of such a nature or magnitude other than in the
ordinary course of business, in each case, to the extent which is
material in the context of the Wider i3 Energy Group taken as a
whole or in the context of the Acquisition;
(J) (other than in respect of a member
which is dormant and was solvent at the relevant time) taken any
corporate action or steps or had any legal proceedings started or
threatened against it in relation to the suspension of payments, a
moratorium of any indebtedness, its winding-up, dissolution or
reorganisation or for the appointment of a receiver, administrative
receiver, administrator, manager, trustee or similar officer of all
or any part of its assets or revenues or any analogous proceedings
in any jurisdiction or appointed any analogous person in any
jurisdiction or had any such person appointed, in each case, to the
extent which is material in the context of the Wider i3 Energy
Group taken as a whole or in the context of the Acquisition;
(K) entered into any contract,
transaction or arrangement which would be restrictive on the
business of any member of the Wider i3 Energy Group or the Wider
Gran Tierra Group other than of a nature and extent which is normal
in the context of the business concerned;
(L) waived or compromised any claim
otherwise than in the ordinary course of business which is material
in the context of the Wider i3 Energy Group taken as a whole or in
the context of the Acquisition;
(M) made any material alteration to
its memorandum or articles of association or other incorporation
documents;
(N) been unable, or admitted in
writing that it is unable, to pay its debts or commenced
negotiations with one or more of its creditors with a view to
rescheduling or restructuring any of its indebtedness, or having
stopped or suspended (or threatened to stop or suspend) payment of
its debts generally or ceased or threatened to cease carrying on
all or a substantial part of its business;
(O) entered into any contract,
commitment, arrangement or agreement otherwise than in the ordinary
course of business or passed any resolution or made any offer
(which remains open for acceptance) with respect to or announced
any intention to, or proposed to, effect any of the transactions,
matters or events referred to in this Condition 3(g);
(P) made or agreed or consented to any
change to:
(1) the terms of the trust deeds
constituting the pension scheme(s) established by any member of the
Wider i3 Energy Group for its directors, employees or their
dependents, including i3 Energy's contribution to i3 Energy's
pension schemes;
(2) the contributions payable to any
such scheme(s) or to the benefits which accrue or to the pensions
which are payable thereunder;
(3) the basis on which qualification
for, or accrual or entitlement to, such benefits or pensions are
calculated or determined; or
(4) the basis upon which the
liabilities (including pensions) of such pension schemes are
funded, valued or made,
in each case, to the
extent which is material in the context of the Wider i3 Energy
Group taken as a whole or in the context of the Acquisition;
(Q) proposed, agreed to provide or
modified the terms of any of the i3 Energy Share Plans or other
benefit constituting a material change relating to the employment
or termination of employment of a material category of persons
employed by the Wider i3 Energy Group or which constitutes a
material change to the terms or conditions of employment of any
senior employee of the Wider i3 Energy Group, save as agreed by the
Panel (if required) and by Gran Tierra, or entered into or changed
the terms of any contract with any director or senior
executive;
(R) taken (or agreed or proposed to
take) any action which requires, or would require, the consent of
the Panel or the approval of i3 Energy Shareholders in general
meeting in accordance with, or as contemplated by, Rule 21.1 of the
Takeover Code;
(S) entered into or varied in a
material way the terms of, any contracts, agreement or arrangement
with any of the directors or senior executives of any members of
the Wider i3 Energy Group; or
(T) waived or compromised any claim
which is material in the context of the Wider i3 Energy Group taken
as a whole or in the context of the Acquisition, otherwise than in
the ordinary course;
(h) No
adverse change, litigation or regulatory enquiry
(i) save as Disclosed, since the Last
Accounts Date:
(A) no adverse change or deterioration
having occurred in the business, assets, financial or trading
position or profits or prospects or operational performance of any
member of the Wider i3 Energy Group which, in any such case, is
material in the context of the Wider i3 Energy Group taken as a
whole or in the context of the Acquisition and no circumstances
have arisen which would or might be expected to result in such
adverse change or deterioration;
(B) no litigation, arbitration
proceedings, prosecution or other legal proceedings to which any
member of the Wider i3 Energy Group is or may become a party
(whether as a plaintiff, defendant or otherwise) and no enquiry,
review or investigation by, or complaint or reference to, any Third
Party or other investigative body against or in respect of any
member of the Wider i3 Energy Group having been instituted,
announced, implemented or threatened by or against or remaining
outstanding in respect of any member of the Wider i3 Energy Group
which in any such case has had or might reasonably be expected to
have a material adverse effect on the Wider i3 Energy Group taken
as a whole or in the context of the Acquisition;
(C) no contingent or other liability
of any member of the Wider i3 Energy Group having arisen or become
apparent to Gran Tierra or increased which has had or might
reasonably be expected to have a material adverse effect on the
Wider i3 Energy Group taken as a whole or in the context of the
Acquisition;
(D) no enquiry or investigation by, or
complaint or reference to, any Third Party having been threatened,
announced, implemented, instituted by or remaining outstanding
against or in respect of any member by or the Wider i3 Energy Group
which in any case is material in the context of the Wider i3 Energy
Group taken as a whole;
(E) no member of the Wider i3 Energy
Group having conducted its business in breach of any applicable
laws and regulations and which is material in the contract of the
Wider i3 Energy Group as a whole or in the context of the
Acquisition; and
(F) no steps having been taken which
are likely to result in the withdrawal, cancellation, termination
or modification of any licence or permit held by any member of the
Wider i3 Energy Group which is necessary for the proper carrying on
of its business and the withdrawal, cancellation, termination or
modification of which has had, or would reasonably be expected to
have, an adverse effect which is material in the context of the
Wider i3 Energy Group taken as a whole or in the context of the
Acquisition;
(i) No discovery of
certain matters
(i) save as Disclosed, Gran Tierra not
having discovered:
(A) that any financial, business or
other information concerning the Wider i3 Energy Group as contained
in the information publicly disclosed at any time by or on behalf
of any member of the Wider i3 Energy Group is misleading, contains
a misrepresentation of fact or omits to state a fact necessary to
make that information not misleading and which was not subsequently
corrected before the date of this Announcement by disclosure either
publicly or otherwise to Gran Tierra or its professional advisers,
in each case, to the extent which is material in the context of the
Wider i3 Energy Group taken as a whole or in the context of the
Acquisition;
(B) that any member of the Wider i3
Energy Group or partnership, company or other entity in which any
member of the Wider i3 Energy Group has a significant economic
interest and which is not a subsidiary undertaking of i3 Energy, is
subject to any liability (contingent or otherwise) which is not
disclosed in the i3 Energy Annual Report and Accounts, in each
case, to the extent which is material in the context of the Wider
i3 Energy Group taken as a whole or in the context of the
Acquisition; or
(C) any information which affects the
import of any information disclosed at any time by or on behalf of
any member of the Wider i3 Energy Group and which is material in
the context of the Wider i3 Energy Group taken as a whole or in the
context of the Acquisition;
(ii) save as Disclosed, Gran Tierra
not having discovered that:
(A) any past or present member of the
Wider i3 Energy Group has failed to comply with any and/or all
applicable legislation or regulation, of any jurisdiction with
regard to the use, treatment, handling, storage, carriage,
disposal, spillage, release, discharge, leak or emission of any
waste or hazardous substance or any substance likely to impair the
environment or harm human health or animal health or otherwise
relating to environmental matters or the health and safety of
humans, or that there has otherwise been any such use, treatment,
handling, storage, carriage, disposal, spillage, release,
discharge, leak or emission (whether or not the same constituted a
non-compliance by any person with any such legislation or
regulations, and wherever the same may have taken place) any of
which storage, carriage, disposal, spillage, release, discharge,
leak or emission would be likely to give rise to any liability
(actual or contingent) or cost on the part of any member of the
Wider i3 Energy Group and which is material in the context of the
Wider i3 Energy Group taken as a whole or in the context of the
Acquisition;
(B) there is, or is likely to be, for
any reason whatsoever, any liability (actual or contingent) of any
past or present member of the Wider i3 Energy Group to make good,
remediate, repair, reinstate or clean up any property or any
controlled waters now or previously owned, occupied, operated or
made use of or controlled by any such past or present member of the
Wider i3 Energy Group (or on its behalf) or by any person for which
a member of the Wider i3 Energy Group is or has been responsible,
or in which any such member may have or previously have had or be
deemed to have had an interest, under any environmental
legislation, regulation, notice, circular or order of any Third
Party and which is material in the context of the Wider i3 Energy
Group taken as a whole or in the context of the Acquisition;
(C) circumstances exist (whether as a
result of the making of the Acquisition or otherwise) which would
be reasonably likely to lead to any Third Party instituting, or
whereby any member of the Wider Gran Tierra Group or any present or
past member of the Wider i3 Energy Group would be likely to be
required to institute, an environmental audit or take any other
steps which would in any such case be reasonably likely to result
in any liability (whether actual or contingent) to improve, modify
existing or install new plant, machinery or equipment or carry out
changes in the processes currently carried out or make good,
remediate, repair, reinstate or clean up any land or other asset
currently or previously owned, occupied or made use of by any past
or present member of the Wider i3 Energy Group (or on its behalf)
or by any person for which a member of the Wider i3 Energy Group is
or has been responsible, or in which any such member may have or
previously have had or be deemed to have had an interest which is
material in the context of the Wider i3 Energy Group taken as a
whole or in the context of the Acquisition; or
(D) circumstances exist whereby a
person or class of persons would be likely to have any claim or
claims in respect of any product or process of manufacture or
materials used therein currently or previously manufactured, sold
or carried out by any past or present member of the Wider i3 Energy
Group which claim or claims would be likely, materially and
adversely, to affect any member of the Wider i3 Energy Group and
which is material in the context of the Wider i3 Energy Group taken
as a whole or in the context of the Acquisition; and
(j) Anti-corruption,
economic sanctions, criminal property and money
laundering
(i) save as Disclosed, Gran Tierra not
having discovered that:
(A) (a) any past or present member,
director, officer or employee of the Wider i3 Energy Group is or
has at any time engaged in any activity, practice or conduct which
would constitute an offence under the Bribery Act 2010, the US
Foreign Corrupt Practices Act of 1977, the Corruption of Foreign
Public Officials Act (Canada) or any other applicable
anti-corruption or anti-bribery law, rule or regulation or any
other applicable law, rule, or regulation concerning improper
payments or kickbacks or (b) any person that performs or has
performed services for or on behalf of the Wider i3 Energy Group is
or has at any time engaged in any activity, practice or conduct in
connection with the performance of such services which would
constitute an offence under the Bribery Act 2010, the US Foreign
Corrupt Practices Act of 1977, the Corruption of Foreign Public
Officials Act (Canada) or any other applicable anti-corruption or
anti-bribery law, rule or regulation or any other applicable law,
rule, or regulation concerning improper payments or kickbacks;
or
(B) any asset of any member of the
Wider i3 Energy Group constitutes criminal property as defined by
section 340(3) of the Proceeds of Crime Act 2002 (but disregarding
paragraph (b) of that definition) or proceeds of crime under any
other applicable law, rule, or regulation concerning money
laundering or proceeds of crime or any member of the Wider i3
Energy Group is found to have engaged in activities constituting
money laundering under any applicable law, rule, or regulation
concerning money laundering; or
(C) any past or present member,
director, officer or employee of the Wider i3 Energy Group, or any
other person for whom any such person may be liable or responsible,
is or has engaged in any conduct which would violate applicable
economic sanctions or dealt with, made any investments in, made any
funds or assets available to or received any funds or assets
from:
(1) any government, entity or
individual in respect of which US, UK, Canadian or European Union
persons, or persons operating in those territories, are prohibited
from engaging in activities or doing business, or from receiving or
making available funds or economic resources, by US, UK, Canadian
or European Union laws or regulations, including the economic
sanctions administered by the United States Office of Foreign
Assets Control, or HMRC; or
(2) any government, entity or
individual targeted by any of the economic sanctions of the United
Nations, the United States, the United Kingdom, Canada, the
European Union or any of its member states, save that this shall
not apply if and to the extent that it is or would be unenforceable
by reason of breach of any applicable Blocking Law; or
(D) any past or present member,
director, officer or employee of the Wider i3 Energy Group, or any
other person for whom any such person may be liable or
responsible:
(1) has engaged in conduct which would
violate any relevant anti-terrorism laws, rules, or regulations,
including but not limited to the U.S. Anti-Terrorism Act;
(2) has engaged in conduct which would
violate any relevant anti-boycott law, rule, or regulation or any
applicable export controls, including but not limited to the Export
Administration Regulations administered and enforced by the U.S.
Department of Commerce, the International Traffic in Arms
Regulations administered and enforced by the U.S. Department of
State, the Export and Import Permits Act (Canada) or the Special
Import Measures Act (Canada);
(3) has engaged in conduct which would
violate any relevant laws, rules, or regulations concerning human
rights, including but not limited to any law, rule, or regulation
concerning false imprisonment, torture or other cruel and unusual
punishment, or child labour; or
(4) is debarred or otherwise rendered
ineligible to bid for or to perform contracts for or with any
government, governmental instrumentality, or international
organization or found to have violated any applicable law, rule, or
regulation concerning government contracting or public procurement;
or
(E) any member of the Wider i3 Energy
Group is or has been engaged in any transaction which would cause
Gran Tierra to be in breach of any law or regulation upon
completion of the Acquisition, including but not limited to the
economic sanctions of the United States Office of Foreign Assets
Control, or HMRC, or any other relevant government authority.
Part B: Waiver and Invocation of the
Conditions
1. Subject to the requirements
of the Panel in accordance with the Takeover Code:
(a) Gran
Tierra reserves the right, in its sole discretion, to waive:
(i) any of the deadlines set out in
paragraph 2 of Part A for the timing of the Court Meeting, i3
Energy General Meeting and the Scheme Court Hearing. If any such
deadline is not met, Gran Tierra shall make an announcement by 8.00
a.m. (London time) on the Business Day following such deadline
confirming whether it has invoked or waived the relevant Condition
or agreed with i3 Energy to extend the deadline in relation to the
relevant Condition; and
(ii) in whole or in part, all or any
of the Conditions in Part A, except for Conditions 1, 2, and
3(a) to 3(d) (inclusive), which cannot be waived.
2. The Acquisition shall lapse unless all of
the Conditions have been fulfilled or, where permitted, waived or,
where appropriate, have been determined by Gran Tierra to be or
remain satisfied, by midnight (London time) on the earlier of the
Effective Date and the Long Stop Date.
3. Gran Tierra shall be under no
obligation to waive (if capable of waiver) or to treat as satisfied
any of the Conditions that it is entitled (with the consent of the
Panel and subject to the rules of the Takeover Code) to waive by a
date earlier than the latest date for the fulfilment of that
Condition, notwithstanding that the other Conditions may at such
earlier date have been waived or fulfilled and that there are at
such earlier date no circumstances indicating that any such
Condition(s) may not be capable of fulfilment.
4. Under Rule 13.5(a) of the Takeover Code,
Gran Tierra may only invoke a Condition so as to cause the Scheme
not to proceed, to lapse or to be withdrawn with the consent of the
Panel. The Panel will normally only give its consent if the
circumstances which give rise to the right to invoke the condition
are of material significance to Gran Tierra in the context of the
Acquisition. This will be judged by reference to the facts of each
case at the time that the relevant circumstances arise. Any
Condition that is subject to Rule 13.5(a) of the Takeover Code may
be waived by Gran Tierra.
5. Conditions 1, 2, and 3(a) to 3(d)
(inclusive) and, if applicable, any acceptance condition if the
Acquisition is implemented by means of a Takeover Offer, are not
subject to Rule 13.5(a) of the Takeover Code.
6. The Acquisition will lapse if the Scheme
does not become Effective by no later than 11.59 p.m. (London time)
on the Long Stop Date.
Part C: Implementation by way of
Takeover Offer
1. If Gran Tierra is required by the Panel to
make a Takeover Offer for i3 Energy shares under the provisions of
Rule 9 of the Takeover Code, Gran Tierra may make such alterations
to any of the above Conditions and terms of the Acquisition as are
necessary to comply with the provisions of that Rule and applicable
laws, including Canadian Securities Laws and the Canadian Take-Over
Bid Rules.
2. Gran Tierra reserves the right to elect,
with the consent of the Panel (where necessary), to implement the
Acquisition by way of a Takeover Offer as an alternative to the
Scheme. In such event, such Takeover Offer will be implemented on
the same terms and conditions (subject to appropriate amendments,
to reflect the change in method of effecting the Acquisition,
including (without limitation) an acceptance condition set at 90
per cent. of the issued share capital of i3 Energy (or such lower
percentage (being more than 50 per cent.) of the issued share
capital of i3 Energy as Gran Tierra may, subject to the rules of
the Takeover Code, applicable laws and with the consent of the
Panel, decide) as those which would apply to the Scheme. If the
Acquisition is effected by way of a Takeover Offer, and such
Takeover Offer becomes or is declared unconditional and sufficient
acceptances are received in respect of such Takeover Offer, Gran
Tierra intends to exercise its rights to apply the provisions of
Chapter 3 of Part 28 of the Companies Act so as to acquire
compulsorily the remaining i3 Energy Shares in respect of which the
Takeover Offer has not been accepted. In the event that the
Acquisition is implemented by way of a Takeover Offer, the issued
share capital of i3 Energy acquired shall be acquired with full
title guarantee, fully paid and free from all liens, equities,
charges, encumbrances, options, rights of pre-emption and any other
third-party rights and interests of any nature and together with
all rights now or hereafter attaching or accruing to them.
Part D: Certain further terms of the
Acquisition
1. The Acquisition and Scheme will be
governed by English law and be subject to the jurisdiction of the
Courts and to the conditions and further terms set out in this
Appendix 1 and the full terms and conditions set out in the Scheme
Document to be published in due course. The Acquisition will be
subject to the applicable requirements or acceptance, as
applicable, of the Takeover Code, Canadian Securities Laws, the
Panel, the London Stock Exchange, the TSX, the FCA, the AIM Rules
and the Registrar of Companies. This Announcement does not
constitute, or form part of, an offer, offer to acquire, or
invitation to purchase i3 Energy Shares or any other
securities.
2. Each of the Conditions shall be regarded
as a separate Condition and shall not be limited by reference to
any other Condition.
3. Fractions of New Gran Tierra Shares will
not be allotted or issued pursuant to the Acquisition and
entitlements of Scheme Shareholders will be rounded down to the
nearest whole number of New Gran Tierra Shares. All fractional
entitlements to New Gran Tierra Shares will be aggregated and sold
in the market as soon as practicable after the Effective Date. The
net proceeds of such sale (after deduction of all expenses and
commissions incurred in connection with the sale) will be
distributed by Gran Tierra in due proportions to Scheme
Shareholders who would otherwise have been entitled to such
fractions provided that individual entitlements to amounts of less
than £5.00 will not be paid to Scheme Shareholders but will be
retained for the benefit of Gran Tierra.
4. The Acquisition is not being made,
directly or indirectly, in or into, or by use of the mails of, or
by any means or instrumentality (including, but not limited to,
facsimile e-mail or other electronic transmission, telex or
telephone ) of interstate or foreign commerce of, or of any
facility of a national, state or other securities exchange of, any
Restricted Jurisdiction where to do so would violate the laws of
that jurisdiction.
5. The availability of the Acquisition to i3
Energy Shareholders not resident in the United Kingdom may be
affected by the laws of the relevant jurisdictions. Persons who are
not resident in the United Kingdom should inform themselves about
and observe any applicable requirements. Further details in
relation to Overseas Shareholders will be contained in the Scheme
Document in due course. The New Gran Tierra Shares to be issued
pursuant to the Acquisition have not been and will not be
registered or qualified for distribution under the US Securities
Act, under any laws or with any securities regulatory authority of
any State or other jurisdiction of the United States, under any of
the relevant securities laws of any other Restricted Jurisdiction
or under Canadian Securities Laws. Accordingly, the New Gran Tierra
Shares may not be offered, sold or delivered, directly or
indirectly, into the United States, Canada or any other Restricted
Jurisdiction, except pursuant to exemptions from applicable
securities law requirements of any such jurisdiction, including,
without limitation, the exemption from the registration
requirements of the US Securities Act provided by Section 3(a)(10)
thereof and the prospectus exemption provided by Section 2.11 or
Section 2.16 of National Instrument 45-106 – Prospectus Exemptions
of the Canadian Securities Administrators and in compliance with
Canadian Securities Laws.
6. The New Gran Tierra Shares will be issued
in non-certificated book-entry form, and, upon issuance, will be
validly issued, credited as fully paid and non-assessable and will
rank pari passu in all respects with the existing Gran Tierra
Shares. It is a Condition that the New Gran Tierra Shares
are to be admitted to the Official List, TSX and NYSE American and
to the London Stock Exchange, TSX and NYSE American for the New
Gran Tierra Shares to be admitted to trading.
7. The i3 Energy Shares which will be
acquired under the Acquisition will be acquired fully paid and free
from all liens, equities, charges, encumbrances, options, rights of
pre-emption and any other third party rights and interests of any
nature and together with all rights now or hereafter attaching or
accruing to them, including voting rights and the right to receive
and retain in full all dividends and other distributions (if any)
(save for the Acquisition Dividend) declared, made or paid, or any
other return of capital (whether by reduction of share capital or
share premium account or otherwise) made, on or after the date of
this Announcement.
8. Subject to the terms of the Scheme, if, on
or after the date of this Announcement and prior to the Acquisition
becoming Effective, any dividend, distribution or other return of
value is announced, declared, made, paid or becomes payable by i3
Energy in respect of the i3 Energy Shares other than the
Acquisition Dividend, Gran Tierra will (without prejudice to any
right of Gran Tierra to invoke Condition 3(g)(i)(C) in Part A of
this Appendix 1) to reduce the cash consideration payable by the
amount of any such dividend, distribution or other return of value,
in which case: (a) any reference in this Announcement or in the
Scheme Document to the consideration payable for the i3 Energy
Shares will be deemed to be a reference to the cash consideration
payable as so reduced; and (b) the relevant eligible i3 Energy
Shareholders will be entitled to receive and retain such dividend,
distribution or return of value. To the extent that any such
dividend, distribution or other return of value announced,
declared, made or paid is: (x) transferred pursuant to the
Acquisition on a basis which entitles Gran Tierra to receive the
dividend or distribution and to retain it; or (y) cancelled, the
cash consideration payable by Gran Tierra will not be subject to
change in accordance with this paragraph. Any exercise by Gran
Tierra of its rights referred to in this paragraph shall be the
subject of an announcement and, for the avoidance of doubt, shall
not be regarded as constituting any revision or variation of the
Acquisition.
APPENDIX 2
SOURCES OF INFORMATION AND BASES OF
CALCULATION
Unless otherwise stated, the following
constitute the sources of information and bases of calculations in
this Announcement:
Unless otherwise stated, the following
constitute the sources of information and bases of calculations in
this Announcement:
- The financial
information relating to Gran Tierra has been extracted or derived
(without any adjustment) from Gran Tierra’s quarterly accounts for
the three-months ended 30 June 2024.
- The financial
information relating to i3 Energy has been extracted or derived
(without any adjustment) from i3 Energy’s quarterly accounts for
the three-months and interim results for the six-months ended 30
June 2024.
- As at the close
of business on the last Business Day prior to this Announcement i3
Energy had in issue 1,202,447,663 i3 Energy Shares.
- As at the close
of business on the last Business Day prior to this Announcement
Gran Tierra had in issue 30,665,305 Gran Tierra Shares.
- Any reference
to the issued and to be issued share capital of i3 Energy is based
on: (a) the 1,202,447,663 i3 Energy Shares in issue; and (b) a
total number of 48,740,236 outstanding share options. Of the total
number of options outstanding, based on the Acquisition value, of
43,540,236 of them are in-the-money based on the Gran Tierra share
price as of the Last Practicable Date.
- Unless
otherwise stated, all prices for i3 Energy Shares are closing
middle market quotations derived from the London Stock Exchange
Daily Official List (SEDOL), obtained from FactSet.
- Unless
otherwise stated, all prices for Gran Tierra Shares are closing
middle market quotations derived from the NYSE American, obtained
from FactSet.
- Unless
otherwise stated, i3 Energy’s volume weighted average prices
referred to in this Announcement are calculated from pricing and
volume data from both the London Stock Exchange and the Toronto
Stock Exchange, obtained from FactSet.
- Where amounts
are shown in both US dollars and sterling in the Announcement, an
exchange rate of 1.2945 has been used, as at the Last Practicable
Date prior to this Announcement.
- Where amounts
are shown in both Canadian dollars and sterling in the
Announcement, an exchange rate of 1.3717 has been used, the Last
Practicable Date prior to this Announcement.
APPENDIX 3
Part 1: DETAILS OF IRREVOCABLE
UNDERTAKINGS IN RESPECT OF I3 ENERGY SHARES
i3 Energy Directors' Irrevocable
Undertakings
The following i3 Energy Directors who hold i3
Energy Shares have given irrevocable undertakings to vote in favour
of the Scheme at the Court Meeting and the i3 Energy Resolution at
the i3 Energy General Meeting in respect of their own beneficial
holdings of i3 Energy Shares (or those i3 Energy Shares over which
they have control):
|
Name of i3 Energy Director |
Number of i3 Energy Shares |
Percentage of i3 Energy issued share capital (per
cent.) |
|
John Festival |
3,072,360 |
0.26% |
|
|
Majid Shafiq |
10,071,900 |
0.84% |
|
|
Ryan Heath |
8,483,945 |
0.71% |
|
|
Neill Carson |
7,666,111 |
0.64% |
|
|
Richard Ames |
1,539,723 |
0.13% |
|
|
Linda Beal |
1,305,493 |
0.11% |
|
|
TOTAL |
32,139,532 |
2.67% |
|
The undertakings provided by the i3 Energy
Directors will cease to be binding if:
- Gran Tierra announces, with the consent of the Panel, that it
does not intend to proceed with the Acquisition and no new, revised
or replacement acquisition is announced in accordance with Rule 2.7
of the Takeover Code at the same time; or
- the Offer or Scheme lapses or is withdrawn and no new, revised
or replacement acquisition is announced in accordance with Rule 2.7
of the Takeover Code at the same time.
i3 Energy Shareholder Irrevocable
Undertaking
The following i3 Energy Shareholder has given
and irrevocable undertaking to vote (or, in relation to the i3
Energy CFDs, to use best endeavours to procure votes) in favour of
the Scheme at the Court Meeting and the i3 Energy Resolution at the
i3 Energy General Meeting in respect of the following holding of i3
Energy Shares (or those i3 Energy Shares over which they have
control):
|
Name of i3 Energy Shareholder |
Number of i3 Energy Shares |
Percentage of i3 Energy issued share capital (per
cent.) |
|
Polus Funds (i3 Energy Shares): |
|
Bybrook Capital Hazelton Master Fund LP |
43,597,388 |
3.63% |
|
|
Bybrook Capital Master Fund LP |
60,118,848 |
5.00% |
|
|
Bybrook Capital Badminton Fund LP |
130,618,707 |
10.86% |
|
|
Other (i3 Energy Shares): |
|
Graham Heath |
4,202,522 |
0.35% |
|
|
Polus Funds (i3 Energy CFDs): |
|
Bybrook Capital Badminton 405 Fund LP |
3,684,080 |
0.31% |
|
|
Bybrook Capital Hazelton Master Fund LP |
4,426,981 |
0.37% |
|
|
Bybrook Capital Master Fund LP |
47,094,537 |
3.92% |
|
|
Bybrook Capital Badminton Fund LP |
41,539,706 |
3.45% |
|
|
Westonbirt Fund LP |
21,261,028 |
1.77% |
|
|
TOTAL |
356,543,797 |
29.65% |
|
The irrevocable undertakings provided by the i3 Energy
Shareholders will cease to be binding if:
- Gran Tierra announces, with the consent of the Panel, that it
does not intend to proceed with the Acquisition; or
- the Offer or Scheme lapses or is withdrawn (other than where
the lapse or withdrawal is announced in connection Gran Tierra
exercising its right to implement the Acquisition by way of a
Takeover Offer rather than a Scheme, or vice versa, and such lapse
or withdrawal is followed within five days by an announcement under
Rule 2.7 of the Takeover Code by Gran Tierra of a firm intention to
implement the Acquisition by such Offer or Scheme (as
applicable)).
APPENDIX 4
Gran Tierra Profit Forecast
On 23 January 2024 Gran Tierra announced its
2024 Guidance and Operations Update (the "January
Announcement"), which included the following guidance in
relation to EBITDA for the year ending 31 December 2024:
|
2024 Budget |
Low Case |
Base Case |
High Case |
|
EBITDA (US$ million) |
335 – 395 |
400 – 460 |
480 - 540 |
|
|
|
|
|
Application of Rule 28 to Gran Tierra
Profit Forecast
The EBITDA figure of US$ 335 million included in
the January Announcement sets expectations for the minimum EBITDA
of Gran Tierra for the period ending 31 December 2024 and for
purposes of Rule 28.1(c) of the Takeover Code constitutes a profit
forecast (the "Gran Tierra Profit Forecast").
Gran Tierra's Directors'
confirmation
The Gran Tierra Directors confirm that, as at
the date of this Announcement, the Gran Tierra Profit Forecast
remains valid and that it has been complied on the basis of the
assumptions stated below and that the basis of accounting used is
consistent with Gran Tierra's accounting policies which are in
accordance with US GAAP and those non-US GAAP measures that Gran
Tierra applied in preparing its financial statements for the year
ended 31 December 2023.
Basis of preparation and principal
assumptions
The Gran Tierra Profit Forecast and each of the
EBITDA ranges set out above are based upon internal Gran Tierra
forecasts. In confirming the Gran Tierra Profit Forecast and the
EBITDA ranges, the Gran Tierra Directors have made the following
assumptions, neither of which are within their control:
- a Brent oil
price in the range of $70/bbl to $90/bbl; and
- a production
rate from Gran Tierra’s existing assets in the range of 32,000
BOEPD to 35,000 BOEPD.
APPENDIX 5
DEFINITIONS
|
"Acquisition" |
|
the proposed Acquisition of the entire issued and to be issued
share capital of i3 Energy by Gran Tierra, to be effected by the
Scheme as described in this Announcement (or by a Takeover Offer
under certain circumstances described in this Announcement). |
|
"Acquisition Dividend" |
|
a dividend of 0.2565 pence per i3 Energy Share to be paid in lieu
of the ordinary dividend in respect of the three months ended 30
September 2024. |
|
"Admission" |
|
admission of the New Gran Tierra Shares to the Official List and to
trading on the London Stock Exchange's Main Market for listed
securities respectively. |
|
"AIM" |
|
the AIM market operated by the London Stock Exchange. |
|
"AIM Rules" |
|
the AIM Rules for Companies, as amended from time to time. |
|
"Announcement" |
|
this announcement made pursuant to Rule 2.7 of the Takeover
Code. |
|
"Blocking Law" |
|
means (i) any provision of Council Regulation (EC) No 2271/1996 of
22 November 1996 (or any law or regulation implementing such
Regulation in any member state of the European Union); or (ii) any
provision of Council Regulation (EC) No 2271/1996 of 22 November
1996, as it forms part of domestic law of the United Kingdom by
virtue of the European Union (Withdrawal) Act 2018. |
|
"Board" |
|
the board of directors of i3 Energy or Gran Tierra as constituted
from time to time, as the context requires. |
|
"Business Day" |
|
a day, (other than a Saturday, Sunday, public or bank holiday) on
which banks are generally open for business in London, Toronto and
Calgary. |
|
"Canadian Securities Laws" |
|
in the context that refers to one or more persons, means,
collectively, and as the context may require, the securities
legislation of each of the provinces of Canada, and all rules,
regulations, instruments, notices, blanket orders and policies
published and/or promulgated thereunder, as amended from time to
time prior to the Effective Date, that apply to such person or
persons or its business, undertaking, property or securities |
|
“Canadian i3 Energy Shareholders” |
|
i3 Energy Shareholders in Canada, resident in Canada or with a
registered address in Canada, and any custodian, nominee or trustee
holding i3 Energy Shares for persons in Canada or with a registered
address in Canada |
|
"Closing Price" |
|
the closing middle market quotations of a share derived from the
daily official list of the London Stock Exchange. |
|
"Combined Group" |
|
the enlarged group following completion of the Acquisition
comprising the i3 Energy Group and the Gran Tierra Group. |
|
"Companies Act" |
|
means the Companies Act 2006. |
|
"Conditions" |
|
the conditions of the implementation of the Acquisition set out in
Appendix 1 to this Announcement and to be set out in the Scheme
Document. |
|
"Confidentiality Agreement" |
|
the non-disclosure agreement dated 28 February 2024 entered into
between i3 Energy and Gran Tierra. |
|
"Cooperation Agreement" |
|
the co-operation agreement dated on or around the date of this
Announcement entered into between i3 Energy and Gran Tierra. |
|
"Court" |
|
the High Court of Justice in England and Wales. |
|
"Court Meeting" |
|
the meeting of the holders of i3 Energy Shares which are in issue
at the Scheme Record Time convened by an order of the Court
pursuant to section 896 of the Companies Act (notice of which will
be set out in the Scheme Document) for the purpose of considering
and, if thought fit, approving (with or without modification) the
Scheme (and any adjournment thereof). |
|
"Court Order" |
|
the order of the Court sanctioning the Scheme under section 899 of
the Companies Act. |
|
"CREST" |
|
the relevant system (as defined in the Uncertificated Securities
Regulations 2001 (SI 2001/3755), as it forms part of the domestic
law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018) in respect of which Euroclear UK &
Ireland Ltd is the Operator (as defined in said Regulations). |
|
"Dealing Disclosure" |
|
an announcement pursuant to Rule 8 of the Takeover Code containing
details of dealings in relevant securities of a party to an
offer. |
|
"Deferred Shares" |
|
5,000 deferred shares of £10.00 each in the capital of i3
Energy |
|
"Deferred Shares Share Purchase Agreements" |
|
the share purchase agreements entered into on or around the date of
this Announcement between (i) Gran Tierra and Neill Carson and,
(ii) Gran Tierra and Graham Heath pursuant to which Gran Tierra has
agreed to purchase the Deferred Shares |
|
"Disclosed" |
|
the information fairly disclosed by, or on behalf of i3 Energy: (i)
in the Annual Report and Accounts of the i3 Energy Group for the
financial year ended 31 December 2023; (ii) in this Announcement;
(iii) in any other public announcement made by i3 Energy in
accordance with the Market Abuse Regulation, the AIM Rules, the
Disclosure Guidance and Transparency Rules prior to this
Announcement; (iv) in any disclosure made by i3 Energy pursuant to
the Canadian Securities Laws prior to this Announcement; or (v) as
disclosed in writing prior to the date of this Announcement by or
on behalf of i3 Energy to Gran Tierra (or its respective officers,
employees, agents or advisers in their capacity as such). |
|
"Effective" |
|
either:
- if the
Acquisition is implemented by way of the Scheme, the Scheme having
become effective in accordance with its terms; or
- if Gran Tierra
elects to implement the Acquisition by way of a Takeover Offer
(with Panel consent), such Takeover Offer having been declared or
having become unconditional in accordance with the requirements of
the Takeover Code.
|
|
"Effective Date" |
|
the date on which the Scheme becomes Effective. |
|
"EU" |
|
European Union. |
|
"Facility Agreement" |
|
the facility agreement between Gran Tierra as borrower and
Trafigura PTE Ltd as lender dated on or around the date of this
Announcement |
|
"FCA" |
|
the Financial Conduct Authority. |
|
"Forms of Election" |
|
The form or forms of election (and/or where required, Letters of
Transmittal) for use in connection with the Mix and Match
Facility. |
|
"Forms of Proxy" |
|
the forms of proxy in connection with each of the Court Meeting and
the i3 Energy General Meeting which will accompany the Scheme
Document. |
|
"GLJ" |
|
GLJ Ltd. |
|
"Gran Tierra" |
|
Gran Tierra Inc, incorporated under the laws of the state of
Delaware. |
|
"Gran Tierra Directors" |
|
the directors of Gran Tierra as at the date of this Announcement
or, where the context so requires, the directors of Gran Tierra
from time to time. |
|
"Gran Tierra EIH" |
|
Gran Tierra Energy International Holdings GmbH |
|
"Gran Tierra Group" |
|
Gran Tierra its subsidiaries and its subsidiary undertakings from
time to time. |
|
"Gran Tierra Shares" |
|
the shares of common stock of Gran Tierra, par value US$0.001 per
share. |
|
"HMRC" |
|
His Majesty's Revenue and Customs. |
|
"IFRS" |
|
the International Financial Reporting Standards. |
|
"i3 Energy" |
|
i3 Energy plc, incorporated in England and Wales with registered
number 10699593. |
|
"i3 Energy Canada" |
|
i3 Energy Canada Ltd. |
|
"i3 Energy Annual Report and Accounts" |
|
the Annual Report and Accounts of the i3 Energy Group for the
financial year ended 31 December 2023. |
|
"i3 Energy Directors" |
|
the directors of i3 Energy as at the date of this Announcement or,
where the context so requires, the directors of i3 Energy from time
to time. |
|
"i3 Energy General Meeting" |
|
the general meeting (and, for the purposes of Canadian Securities
Laws, the “special meeting”) of i3 Energy Shareholders to be
convened to consider and if thought fit pass, inter alia, a special
resolution in relation to the Scheme and the Acquisition. |
|
"i3 Energy Group" |
|
i3 Energy and its subsidiary and its subsidiary undertakings from
time to time. |
|
"i3 Energy Meetings" |
|
the Court Meeting and the i3 Energy General Meeting. |
|
"i3 Energy Share Plans" |
|
the (i) i3 Energy 2018 Non-Employee Share Option Plan, (ii) i3
Energy 2020 Non-Employee Share Option Plan, (iii) i3 Energy 2018
Employee Share Option Plan, (iv) i3 Energy 2020 Employee Share
Option Plan, and (iv) i3 Energy 2022 Employee Share Option
Plan. |
|
"i3 Energy Shareholders" |
|
the holders of i3 Energy Shares. |
|
"i3 Energy Shares" |
|
the ordinary shares of 0.01 pence each in the capital of i3
Energy. |
|
"Last Accounts Date" |
|
in relation to i3 Energy 31 December 2023. |
|
"Last Practicable Date" |
|
16 August 2024, being the last practicable date prior to this
Announcement. |
|
"Letter of Transmittal" |
|
means the letter of transmittal to be sent to registered Canadian
i3 Energy Shareholders for use in connection with the Mix and Match
Facility and to surrender their certificate(s) or DRS advice(s)
formerly representing their i3 Energy Shares. |
|
"London Stock Exchange" |
|
London Stock Exchange plc. |
|
"Long Stop Date" |
|
28 February 2025 or such later date as may be agreed in writing by
Gran Tierra and i3 Energy (with the Panel's consent and as the
Court may approve (if such approval(s) are required)). |
|
"Market Abuse Regulation" |
|
Regulation (EU) No.596/2014 of the European Parliament and of the
Council of 16 April 2014 on market abuse, as applicable in the UK
by virtue of section 3 of the European Union (Withdrawal) Act 2018,
as amended from time to time (including by the Market Abuse
(Amendment) (EU Exit) Regulations 2019 (SI 2019/310)). |
|
"McDaniel" |
|
McDaniel & Associates Consultants Ltd. |
|
"Mix and Match Facility" |
|
the facility under which i3 Energy Shareholders are entitled to
elect to vary the proportions in which they receive New Gran Tierra
Shares and in which they receive cash in respect of their holdings
of i3 Energy Shares to the extent that other such i3 Energy
Shareholders make off setting elections. |
|
"New Gran Tierra Shares" |
|
the new Gran Tierra Shares to be issued pursuant to the
Scheme. |
|
"Offer Document" |
|
should the Acquisition be implemented by means of the Takeover
Offer, the document to be sent to i3 Energy Shareholders which will
contain, inter alia, the full terms and conditions of the Takeover
Offer. |
|
"Offer Period" |
|
the period commencing on 19 August 2024 and ending on the earlier
of the date on which the Scheme becomes effective and/or the date
on which the Scheme lapses or is withdrawn (or such other date as
the Takeover Code may provide or the Panel may decide). |
|
"Official List" |
|
the Official List of the FCA. |
|
"Opening Position Disclosure" |
|
an announcement containing details of interests or short positions
in, or rights to subscribe for, any relevant securities of a party
to the offer if the person concerned has such a position. |
|
"Overseas Shareholders" |
|
Scheme Shareholders who have a registered address in a jurisdiction
outside the UK, or whom Gran Tierra reasonably believes to be
citizens, residents or nationals of a jurisdiction outside the
UK. |
|
"Panel" |
|
the UK Panel on Takeovers and Mergers. |
|
"Polus Funds" |
|
means Bybrook Capital Hazelton Master Fund LP, Bybrook Capital
Master Fund LP, Bybrook Capital Badminton Fund LP, Bybrook Capital
Badminton 405 Fund LP, Bybrook Capital Hazelton Master Fund LP,
Bybrook Capital Master Fund LP, Bybrook Capital Badminton Fund LP
and Westonbirt Fund LP. |
|
"Registrar of Companies" |
|
the Registrar of Companies in England and Wales. |
|
"Regulatory Information Service" |
|
any information service authorised from time to time by the FCA for
the purpose of disseminating regulatory announcements. |
|
"Restricted Jurisdiction" |
|
any jurisdiction where local laws or regulations may result in a
significant risk of civil, regulatory or criminal exposure if
information concerning the Acquisition is sent or made available to
i3 Energy Shareholders in that jurisdiction. |
|
"Scheme" |
|
the proposed scheme of arrangement under Part 26 of the Companies
Act between i3 Energy and i3 Energy Shareholders to implement the
Acquisition with or subject to any modification, addition or
condition approved or imposed by the Court. |
|
"Scheme Court Hearing" |
|
the hearing of the Court to sanction the Scheme under Part 26 of
the Companies Act including any adjournment, postponement or
reconvening thereof. |
|
"Scheme Document" |
|
the document to be dispatched to i3 Energy Shareholders including,
among other things, the Scheme, an explanatory statement in
compliance with Part 26 of the Companies Act and the notices
convening the Court Meeting and the i3 Energy General Meeting. |
|
"Scheme Record Time" |
|
the time and date specified as such in the Scheme Document, or such
later time as i3 Energy and Gran Tierra may agree. |
|
"Scheme Shareholder" |
|
holders of Scheme Shares. |
|
"Scheme Shares" |
|
- the i3 Energy
Shares in issue at the date of the Scheme Document;
- any i3 Energy
Shares issued after the date of the Scheme Document and prior to
the Voting Record Time; and
- any i3 Energy
Shares issued at or after the Voting Record Time and prior to the
Scheme Record Time in respect of which the original or any
subsequent holder thereof is bound by the Scheme, or shall by such
time have agreed in writing to be bound by the Scheme.
|
|
"SEC" |
|
the United States Securities and Exchange Commission. |
|
"Significant Interest" |
|
in relation to an undertaking, a direct or indirect interest of 30
per cent. or more of (1) the total voting rights conferred by the
equity share capital (as defined in section 548 of the Companies
Act) of such undertaking or (2) the relevant partnership
interest. |
|
"subsidiary" |
|
has the meaning given in section 1159 of the Companies Act. |
|
"subsidiary undertakings" |
|
has the meaning given in section 1162 of the Companies Act. |
|
"Takeover Code" |
|
the City Code on Takeovers and Mergers. |
|
"Takeover Offer" |
|
should the Acquisition be implemented by way of a takeover offer as
defined in Chapter 3 of Part 28 of the Companies Act, the
recommended offer to be made by or on behalf of Gran Tierra to
acquire the entire issued and to be issued ordinary share capital
of i3 Energy and, where the context admits, any subsequent
revision, variation, extension or renewal of such offer. |
|
"Third Party" |
|
any relevant government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental or
investigative body, court, trade agency, association, institution,
any entity owned or controlled by any relevant government or state,
or any other body or person whatsoever in any jurisdiction. |
|
“TSX” |
|
the Toronto Stock Exchange. |
|
“TSX Approval” |
|
the conditional approval of the TSX for the listing and posting for
trading of the New Gran Tierra Shares, including confirmation from
the TSX that the New Gran Tierra Shares will be listed and posted
for trading not later than the third Business Day following the
Effective Date, subject only to compliance with customary
requirements of the TSX, including customary post-closing
deliveries for transactions of a nature similar to the Scheme, in
each case, acceptable to Gran Tierra, acting reasonably. |
|
"UK" or "United Kingdom" |
|
the United Kingdom of Great Britain and Northern Ireland. |
|
"US" or "United States" |
|
the United States of America, its territories and possessions, any
state of the United States of America and the District of
Columbia. |
|
"US Exchange Act" |
|
the United States Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder. |
|
"US GAAP" |
|
generally accepted accounting principles in the United States. |
|
"US Securities Act" |
|
the United States Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder. |
|
"Voting Record Time" |
|
the time and date to be specified in the Scheme Document by
reference to which entitlement to vote on the Scheme will be
determined. |
|
"Wider Gran Tierra Group" |
|
Gran Tierra and its subsidiaries, subsidiary undertakings,
associated undertakings and any other body corporate partnership,
joint venture or person in which Gran Tierra and all such
undertakings (aggregating their interests) have a Significant
Interest (other than any member of the Wider i3 Energy Group). |
|
"Wider i3 Energy Group" |
|
i3 Energy and its subsidiaries, subsidiary undertakings, associated
undertakings and any other body corporate partnership, joint
venture or person in which i3 Energy and all such undertakings
(aggregating their interests) have a Significant Interest (other
than any member of the Wider Gran Tierra Group). |
|
|
|
|
All times referred to are London time unless otherwise
stated.
All references to "GBP",
"pence", "sterling" or
"£" are to the lawful currency of the United
Kingdom.
All references to statutory provision or law or
to any order or regulation shall be construed as a reference to
that provision, law, order or regulation as extended, modified,
replaced or re-enacted from time to time and all statutory
instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.
Gran Tierra Energy (TSX:GTE)
Historical Stock Chart
From Jul 2024 to Aug 2024
Gran Tierra Energy (TSX:GTE)
Historical Stock Chart
From Aug 2023 to Aug 2024
