TIDMIAE
RNS Number : 0526W
Ithaca Energy Inc
06 February 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS IN THAT JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014).
Ithaca Energy Inc.
Recommended Takeover by Delek
6 February 2017
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the
"Company") is pleased to announce that it has entered into a
definitive support agreement (the "Agreement") with Delek Group Ltd
("Delek") on the terms of a cash takeover bid for all of the issued
and to be issued common shares of Ithaca not currently owned by
Delek or any of its affiliates for C$1.95 per share (the
"Offer").
Highlights
-- The Offer is for a cash consideration of C$1.95 per share -
this equates to GBP1.20 per share based on the exchange rate on 3
February 2017(1)
-- The Offer is unanimously recommended by the Board of
Directors of Ithaca (excluding the Delek related party Directors)
and values the entire issued and to be issued share capital of the
Company at C$841 million (US$646 million)
-- The Offer provides shareholders with the opportunity to
crystallise the value of their holdings in cash and represents a
12% premium to the TSX closing price of C$1.74 per share on 3
February 2017 and a 16% and 27% premium to the 30 day and 60 day
volume weighted average prices respectively
-- The Offer price represents a substantial premium to the
average analyst consensus target price of C$1.60 per share(2)
-- The Offer implies a total enterprise value of approximately US$1.24 billion
-- Delek is an Israeli listed conglomerate with significant
natural gas exploration and production activities in the Eastern
Mediterranean and an existing 19.7% shareholder in Ithaca
Brad Hurtubise, Non-Executive Chairman, commented:
"We are very pleased to announce the Offer, which provides an
attractive opportunity for all shareholders to secure a premium
cash value for their investment following a sustained period of
share price growth and at a favourable point in the Company's
evolution."
"A Special Committee of independent Directors has fully assessed
the Offer, with input from the Company's financial advisor and an
independent valuator, and believes the Offer is fair and in the
best interest of the Company and its shareholders and unanimously
recommends that the shareholders tender their shares to the
Offer."
Further Information
The Offer is to be completed by way of a takeover bid under
applicable Canadian securities laws pursuant to which Delek or an
affiliate of Delek will offer to purchase all the issued and to be
issued common shares that the Delek group currently does not own
for a cash consideration of C$1.95 per share. Delek owns
approximately 19.7% of the issued and outstanding common shares as
at the date of this announcement through its affiliate DKL
Investments Ltd.
Board of Directors Recommendation
The Board of Directors excluding the Delek related party
Directors (the "Directors") considers the terms of the Offer to be
fair and reasonable and in the best interests of Ithaca and its
shareholders and accordingly unanimously recommends that common
shareholders accept the Offer in respect of their common
shares.
The determination of the Directors was made upon the
recommendation of a special committee of independent directors (the
"Committee"), which has been advised by RBC Capital Markets ("RBC")
in its capacity as financial advisor. The Committee received a
verbal fairness opinion from RBC, to the effect that as at 5
February 2017 and subject to the assumptions, limitations and
qualifications set out in the opinion, the consideration under the
Offer is fair, from a financial point of view, to Ithaca
shareholders (other than Delek). RBC has confirmed that it will
provide a written opinion to that effect on or before the date of
the Directors' circular.
Given Delek's existing shareholding in the Company, in
accordance with the requirements of Multilateral Instrument 61-101
Protection of Minority Security Holders in Special Transactions
("MI 61-101"), FirstEnergy Capital LLP ("GMP FirstEnergy") has
prepared and delivered a draft formal valuation of the common
shares under the supervision of the Committee and determined that
the Offer is in the range of such valuation. GMP FirstEnergy
concluded that, subject to the assumptions, qualifications and
limitations provided in the draft formal valuation as at 5 February
2017, the fair market value of an Ithaca common share is in the
range of C$1.60 to C$2.10 per common share. Details of the formal
valuation will be included in the takeover bid circular that will
be mailed to shareholders.
In view of Delek's existing shareholding in the Company, the
Agreement constitutes a related party transaction for the purpose
of Rule 13 of the AIM Rules for Companies (the "AIM Rules").
Accordingly, the Directors (excluding the Delek related party
Directors) consider, having consulted with Cenkos, the Company's
Nominated Adviser for the purposes of the AIM Rules, that the terms
of the Agreement are fair and reasonable insofar as Ithaca
shareholders are concerned.
All the Directors and officers of Ithaca have entered into
lock-up agreements under which they have irrevocably undertaken to
tender their own beneficial shareholdings in the Company, which
amount in aggregate to 11,275,940 common shares, representing
approximately 2.6% of the entire issued and to be issued common
shares of Ithaca. The lock-up agreements are subject to customary
termination provisions and can be terminated if, for instance, the
take-over circular is not mailed within the timescales set out in
the Agreement and will terminate automatically if the Agreement is
terminated. In the event that Delek does not take up its right to
match a Superior Proposal (as defined in the Appendix below) and
Ithaca terminates the Agreement in accordance with its terms, the
lock-up agreements will automatically terminate.
Transaction Process & Timeline
Further details regarding the terms and conditions of the Offer,
as provided for in the Agreement, and the process for tendering
shares will be set out in a takeover bid circular, which is to be
mailed to shareholders prior to 31 March 2017. The tendering
process will remain open for a period of at least 35 days following
commencement of the Offer.
Take up and payment for the shares is subject to a minimum
tender condition that requires more than 50% of the common shares
being deposited pursuant to the Offer (excluding common shares
already owned by the Delek group) (the "Minimum Tender Condition").
There is no obligation on Delek to undertake any form of subsequent
acquisition transaction to acquire the remaining common shares of
Ithaca. The transaction is subject to customary closing conditions,
including all necessary regulatory approvals.
The Offer is not subject to any financing condition. As is
customary, Delek has confirmed that it has sufficient resources
available to fund the cash consideration for all of the shares
acquired pursuant to the Offer and for all payments that may become
payable as a result of Delek and its affiliates owning more than
50% of the shares.
The Agreement provides for, amongst other things, a customary
Board of Directors support condition, a non-solicitation covenant
in respect of any competing offers from third parties, a "right to
match" provision for Delek and a provision which provides for the
payment by Ithaca to Delek of a break fee in the event that the
Agreement terminates in certain circumstances. Further details on
the Agreement are set out in the Appendix to this announcement.
Copies of the Agreement, the lock-up agreements, the takeover
bid circular, the directors' circular and certain other related
documents will be filed with Canadian securities regulators and
will be available on SEDAR at www.sedar.com.
Stella Update
Good progress has been made on completing the remedial work on
the FPF-1 electrical junction boxes, with the start-up of
production from the Stella field still anticipated later this
month.
Conference Call
A conference call and webcast for investors and analysts will be
held today at 08.30 GMT. Listen to the call live via the Company's
website (www.ithacaenergy.com) or alternatively dial-in on one of
the following telephone numbers and request access to the Ithaca
Energy conference call: UK +44 203 059 8125; Canada +1 855 442
0877; US +1 855 287 9927.
Glossary
C$ Canadian dollar
US$ United States dollar
TSX Toronto Stock Exchange
-S -
Enquiries:
Ithaca Energy
Les Thomas lthomas@ithacaenergy.com +44 (0)1224 650 261
Graham Forbes gforbes@ithacaenergy.com +44 (0)1224 652 151
Richard Smith rsmith@ithacaenergy.com +44 (0)1224 652 172
FTI Consulting
Edward Westropp edward.westropp@fticonsulting.com +44 (0)203 727 1521
Kim Camilleri kim.camilleri@fticonsulting.com +44 (0)203 727
1349
RBC Capital Markets
Matthew Coakes matthew.coakes@rbccm.com +44 (0)207 653 4000
Martin Copeland martin.copeland@rbccm.com +44 (0)207 653 4000
Cenkos Securities
Neil McDonald nmcdonald@cenkos.com +44 (0)207 397 8900
Beth McKiernan bmckiernan@cenkos.com +44 (0)131 220 9778
Nick Tulloch ntulloch@cenkos.com +44 (0)131 220 9772
Notes
1. Closing exchange rate source: Capital IQ
2. The average analyst consensus target price is calculated
based on the targets produced by the institutions that cover the
Company, being: Barclays, BMO, Canaccord Genuity, Cenkos, FinnCap,
GMP FirstEnergy, Investec, Mackie Research Capital Corporation,
Macquarie, Peel Hunt, RBC. Price targets quoted in pounds sterling
have been converted to Canadian dollars using the exchange rate on
3 February 2017.
Advisors
RBC is acting as financial advisor to the Committee and GMP
FirstEnergy is acting as the formal valuator under the terms of MI
61-101. Pinsent Masons LLP and Burstall Winger Zammit LLP are
acting as legal counsel to Ithaca. The Company also received
strategic advice from Geopoint Advisory Limited.
About Ithaca Energy
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) is a North Sea oil
and gas operator focused on the delivery of lower risk growth
through the appraisal and development of UK undeveloped discoveries
and the exploitation of its existing UK producing asset portfolio.
Ithaca's strategy is centred on generating sustainable long term
shareholder value by building a highly profitable 25kboe/d North
Sea oil and gas company. For further information please consult the
Company's website www.ithacaenergy.com.
About Delek
The Delek Group, Israel's dominant integrated energy company, is
the pioneering leader of the natural gas exploration and production
activities that are transforming the Eastern Mediterranean's Levant
Basin into one of the energy industry's most promising emerging
regions. Having discovered Tamar and Leviathan, two of the world's
largest natural gas finds since 2000, Delek and its partners are
now developing a balanced, world-class portfolio of exploration,
development and production assets. Delek's headoffice is located at
19 Abba Eban Blvd., P.O.B. 2054, Herzeliya 4612001, Israel.
Forward-Looking Statements
This announcement may contain, in addition to historical
information, certain forward-looking statements. Often, but not
always, forward looking statements can be identified by the use of
words such as "plans", "expects", "expected", "scheduled",
"estimates", "intends", "anticipates", or "believes", or variations
of such words and phrases or state that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved. Such forward looking statements are subject to
known and unknown risks, uncertainties and other factors that could
cause actual results, performance or achievements of Ithaca to
differ materially from any future results, performance or
achievements expressed or implied by such forward looking
statements, including the risk that all conditions of the offer
will not be satisfied. Many of these risks and uncertainties relate
to factors that are beyond Ithaca's ability to control or estimate
precisely, such as future market conditions, changes in regulatory
environment, the behaviour of other market participants and the
failure to satisfy the conditions to the mailing or completion of
the Offer (including the Minimum Tender Condition and receiving any
required regulatory approvals), the risk of unexpected costs or
liabilities relating to the Offer. Ithaca cannot give any assurance
that such forward-looking statements will prove to have been
correct. The reader is cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this announcement. Ithaca disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by applicable law.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. Such an offer may only be made pursuant to an
offer and takeover bid circular filed with the securities
regulatory authorities in Canada and pursuant to registration or
qualification under the securities laws of any other applicable
jurisdiction. The distribution of this press release in or into
certain jurisdictions may be restricted by law and therefore
persons into whose possession this press release comes should
inform themselves about, and observe, such restrictions. Any
failure to comply with the restrictions may constitute a violation
of the securities law of any such jurisdiction.
This material is not a substitute for the offer and takeover bid
circular or the Directors' circular which will be filed with the
securities regulatory authorities in Canada regarding the proposed
transaction or for any other document which Ithaca or Delek may
file with securities regulators and send to Ithaca shareholders in
connection with the proposed transaction. SECURITY HOLDERS OF
ITHACA ARE URGED TO READ ANY SUCH DOCUMENTS CAREFULLY IN THEIR
ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. If
and when they become available to eligible viewers, the offer and
takeover bid circular and the Directors' circular, along with any
related documents, will be available free of charge under the
profile of Ithaca on the website maintained by the Canadian
securities regulators at www.sedar.com.
Appendix
Summary Terms of the Agreement
In addition to the provisions set out above the Agreement also
contains the following key provisions:
(a) certain conditions to the takeover circular being published
by Delek including inter alia no material adverse change having
occurred in respect of Ithaca and its subsidiaries, taken as a
whole;
(b) conditions to Delek being obliged to take up the Offer
following posting of the Offer Documents (as defined in the
Agreement) including inter alia satisfaction of the Minimum Tender
Condition, no notice having been received from the UK Oil and Gas
Authority requiring a revocation of the licences held by the Ithaca
group or a further change of control of such licences as a result
of the Offer and no material adverse change having occurred in
respect of Ithaca and its subsidiaries, taken as a whole;
(c) customary representations and warranties from Delek in
respect of its authority to enter into and ability to consummate
the Offer;
(d) customary representations and warranties from Ithaca in
respect of the business and assets of the Ithaca group together
with positive and negative interim period covenants being provided
by Ithaca in respect of the conduct of the Ithaca group from the
date of the Agreement;
(e) mutual covenants from Ithaca and Delek to use all
commercially reasonable efforts to make the Offer effective
including co-operation to satisfy all conditions to the Offer;
(f) in the event that, following the date of the Agreement,
Ithaca receives an unsolicited superior proposal, being a proposal
to acquire, inter alia, all of the Common Shares or substantially
all of the assets of the Ithaca group which is not subject to a
finance condition or (unless it is at a material premium to the
Offer Price) a due diligence condition and is, in the opinion of
the Board of Directors (excluding the Delek related party
Directors), reasonably capable of completion without delay and is
more favourable to the shareholders of Ithaca than the Offer (a
"Superior Proposal"), Ithaca is obliged to notify Delek of such
Superior Proposal and Delek will have right to match such superior
proposal for a period of five business days from the date of notice
and in the event that Delek does not exercise its right to match,
Ithaca will have the right to proceed with such Superior Proposal
subject to satisfaction of certain other criteria set out in the
Agreement;
(g) termination rights for both Delek and Ithaca including, for
Delek, a right to terminate the Agreement in circumstances
where:
i) Ithaca breaches its non-solicitation covenant;
ii) Ithaca accepts a Superior Proposal; or
iii) where the Minimum Tender Condition is not satisfied and
Ithaca completes an alternative acquisition proposal with any
person other than Delek or a subsidiary of Delek within eight
months following the termination of the Agreement,
and in such circumstances Ithaca shall pay a break fee to Delek
of C$17,059,465.
A copy of the Agreement will be filed with Canadian securities
regulators and will be available at www.sedar.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
OFBGGGDDBDGBGRL
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