Ithaca Buys Valiant For Cash, Shares

Transaction Type
Announce Date
Post Date
Estimated Price
0MM
Description

Purchase of Valiant Petroleum Plc.

Ithaca Energy Inc. (TSXV: IAE) and Valiant Petroleum Plc (LSE: VPP) have reached agreement on the terms of a recommended acquisition under which Ithaca Energy Holdings (UK) Ltd. will acquire the entire issued and to be issued share capital of Valiant.

Under the terms of the acquisition, Valiant shareholders will be entitled to receive 307 pence in cash and 1.33 Ithaca consideration shares for each Valiant share held at the scheme record time.

Based on the closing price of an Ithaca share of C $1.97 (126 pence) on Feb. 28, the acquisition values the entire issued and to be issued share capital of Valiant at £203 million (equivalent to US $309 million and C $318 million) and each Valiant share at 475 pence.

Ithaca, through its wholly owned subsidiary, Ithaca Energy (UK) Ltd., is an oil and gas operator focused on production, appraisal and development activities in the North Sea. Ithaca's strategy is to grow shareholder value by building a highly cash-generative North Sea oil and gas business.

Valiant has a balanced portfolio of production, development and exploration assets with a primary focus on the UK and Norway. Formed in 2004, Valiant has developed a stable production foundation providing it with sustained cash flows which fund on-going investment. Valiant has built a broad and attractive portfolio in stable geographies where it has deep knowledge of the geology and regulatory environment.

The acquisition is anticipated to result in:

• The establishment of Ithaca as a leading mid cap North Sea oil and gas operator, with 2P reserves of approximately 74million barrels of oil equivalent, of which 50% relates to currently producing assets;

• More than doubling of Ithaca's current forecast 2013 production to 14 to 16 thousand barrels of oil equivalent per day (90% oil), to 27 thousand barrels of oil equivalent in 2015; and

• About a fourfold increase in Ithaca's anticipated 2013 cash flow from operations to US $400 million, rising to over US $700 million in 2015.

According to the release, on completion of the acquisition, two existing Valiant directors, Jannik Lindbæk and Michael Bonte-Friedheim, will be appointed to the Ithaca’s board as non-executive directors. Both Lindbæk and Bonte-Friedheim have oil and gas industry experience, in the North Sea and internationally, and will be central to ensuring a seamless and efficient integration of Valiant's assets into Ithaca's existing operations.

The cash consideration payable under the terms of the acquisition will be funded from a bridge credit facility provided to Ithaca Bidco by Banc of America Securities Ltd., BNP Paribas and The Bank of Nova Scotia, together with Ithaca's existing cash resources.

Valiant was advised by Morgan Stanley & Co. Ltd.

Valiant is a full-cycle E&P company with a primary focus on the UK and Norwegian Continental Shelves. Valiant has headquarters in Woking, UK, and Oslo, Norway.

Headquartered in Aberdeen, Ithaca is a Canadian incorporated company engaged in the exploration, development, and production of oil and gas in the UK sector of the North Sea.