RNS Number:1588Q
Sterling Energy PLC
25 September 2003
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA OR JAPAN
Offer for Fusion Oil & Gas plc
by Evolution Beeson Gregory Limited
on behalf of
Sterling Energy plc
and
Placing to raise #10 million
PART I
The board of Sterling Energy plc announces an offer to be made by Evolution
Beeson Gregory Limited on behalf of Sterling for the whole of the issued and to
be issued ordinary share capital of Fusion Oil & Gas plc not already owned by
Sterling.
The Offer will be made on the following basis:
* The Offer
3.5 New Sterling Shares for every Fusion Share
This values the issued share capital of Fusion at approximately #39.5 million,
and represents a premium of 28.8 per cent., based upon Sterling's Closing Price
yesterday and Fusion's Closing Price of 31.25p on 11 September 2003, the day
before Sterling announced that it had made an approach to Fusion.
Or
* The Partial Cash Alternative
Shareholders will be able to elect to receive some of their consideration in
cash on the following basis:
10p in cash and 2.5 New Sterling Shares for every Fusion Share
This values the issued share capital of Fusion at approximately #38.1 million,
and represents a premium of 24.0 per cent., based upon Sterling's Closing Price
yesterday and Fusion's Closing Price on 11 September 2003, the day before
Sterling announced that it had made an approach to Fusion.
Key Points
* Sterling is an independent oil and gas company. The majority of
Sterling's production is in the US Gulf of Mexico where it has been adding to
its producing reserves through acquisition, drilling and workovers as well as
identifying and maturing prospects for drilling on its licences.
* On 19 September 2003 Sterling agreed to acquire 20.4 per cent. of
Fusion's then issued ordinary share capital as a result of its acquisition of
Westmount Resources from Westmount Energy.
* Derek Williams, Chairman of Westmount Energy and a director of Fusion,
cited "mounting disappointment in the performance of our investment in Fusion
since the flotation, and our strong belief in the merits of combining Sterling's
strengths with Fusion's exploration portfolio" as a reason for the sale.
* Sterling has received indications of support from holders of a further
20,767,500 Fusion Shares, such that it owns or has indications of support for
the Offer in respect of, in aggregate, approximately 41.5 per cent. of Fusion's
issued share capital.
* Placing of 90,909,090 new Sterling Shares at 11p per share with
institutional and other investors to raise #10.0 million (before expenses of the
Placing and the Offer) in order to fund the Partial Cash Alternative. The
Placing is fully underwritten by Evolution Beeson Gregory.
* A successful Offer will create a balance between Sterling's primarily
production portfolio and Fusion's exploration potential. The Sterling Directors
believe that the Gulf of Mexico and West Africa are likely to be key strategic
areas for oil and gas development in the future.
* The stronger balance sheet of the Enlarged Group should enable it to
exploit greater value from its portfolio of exploration assets and increase the
ability to exploit new opportunities.
* The increased market capitalisation of the Enlarged Group should
result in greater liquidity for the benefit of all shareholders.
Commenting on the Offer, Richard O'Toole, Chairman of Sterling, said:
"To date, Sterling has concentrated most of its efforts into building up a
production portfolio in the Gulf of Mexico through asset purchases and
successful drilling. Our stated strategy has been to complement our success in
this area with a range of high potential exploration interests. The Sterling
Directors believe that the combination of Sterling and Fusion will create a
company with a geographically focused portfolio of production, appraisal and
exploration assets. We also believe that by creating a larger independent oil
company with a stronger balance sheet, we will be able to extract greater value
from the existing exploration portfolio. We continue to look to acquire
additional production in the Gulf of Mexico if and when suitable opportunities
arise."
Enquiries:
Harry Wilson, Chief Executive, Sterling Energy plc: 01582 462 121
Graeme Thomson, Finance Director, Sterling Energy plc: 01582 462 121
Chris Callaway, Evolution Beeson Gregory Limited: 020 7071 4309
Allan Piper, First City Financial Public Relations: 020 7436 7486
This summary should be read in conjunction with the full text of the following
announcement.
This announcement does not constitute an offer to sell or an invitation to
purchase any securities in any jurisdiction.
This announcement contains forward looking statements. As such statements
relate to future events, they are subject to risks and uncertainties, which may
cause the actual results to differ materially.
Evolution Beeson Gregory, which is regulated in the UK by the Financial Services
Authority, is acting exclusively for Sterling and no one else in connection with
the Offer and other matters described herein and will not be responsible to
anyone other than Sterling for providing the protections afforded to customers
of Evolution Beeson Gregory or for giving advice in relation to the Offer or any
other matter described in this announcement.
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails or by any means or instrumentality (including without limitation,
telephonically or electronically) of interstate or foreign commerce of, or by
any facilities of a national, state or other securities exchange of, the United
States or Canada or Australia or Japan or any other jurisdiction if to do so
would constitute a violation of the relevant laws of such jurisdiction and the
Offer should not be accepted by any such use, means, instrumentality or
facility, or from within the United States or Canada or Australia or Japan or
any such jurisdiction and doing so may render invalid any purported acceptance
of the Offer. Accordingly, copies of this announcement and any documents related
to the Offer are not being and must not be mailed, forwarded, sent, transmitted
or otherwise distributed in, into or from the United States or Canada or
Australia or Japan or any such other jurisdiction and all persons receiving such
announcement (including, without limitation, custodians, nominees and trustees)
should observe these restrictions and must not distribute, forward, mail or
transmit or send them into or from the United States or Canada or Australia or
Japan or any such other jurisdiction. The availability of the Offer to persons
who are not resident in the United Kingdom may be affected by laws of the
relevant jurisdictions. Persons who are not resident in the United Kingdom
should inform themselves about and observe any applicable requirements.
The New Sterling Shares to be issued pursuant to the Offer have not been, and
will not be, registered under the United States Securities Act of 1933, as
amended, or under any of the relevant securities laws of any state or district
of the United States, Canada, Australia or Japan. Accordingly, unless an
exemption under such Act or other laws is available, the New Sterling Shares may
not be offered, sold, transferred or delivered, directly or indirectly, in or
into the United States, Canada, Australia or Japan or to or for the account or
benefit of any United States, Canadian, Australian or Japanese person.
The Offer will be subject, inter alia, to the conditions set out in Appendix I.
Words and phrases used in this press release have the meanings set out in
Appendix III.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA OR JAPAN
Offer for Fusion Oil & Gas plc
by Evolution Beeson Gregory Limited
on behalf of
Sterling Energy plc
and
Placing to raise #10 million
Introduction
The board of Sterling Energy plc announces an offer to be made by Evolution
Beeson Gregory Limited on behalf of Sterling for the whole of the issued and to
be issued ordinary share capital of Fusion Oil & Gas plc not already owned by
Sterling.
In addition to its 20.4 per cent. shareholding in Fusion acquired from Westmount
Energy on 19 September 2003, Sterling has letters of intent to either accept the
Offer or to sign an irrevocable to accept the Offer from holders of, in
aggregate, 20,767,500 Fusion Shares, representing approximately 21.1 per cent.
of Fusion's issued ordinary share capital. Consequently Sterling either owns or
has received written indications of support for the Offer in respect of, in
aggregate, approximately 41.5 per cent. of Fusion's issued share capital.
On 12 September 2003 it was announced that Sterling had made an approach to the
board of Fusion which might or might not lead to an offer.
The Offer
On behalf of Sterling, Evolution Beeson Gregory will offer to acquire, on the
terms and subject to the conditions to be set out in the Offer Document and in
the Form of Acceptance, all of the issued and to be issued share capital of
Fusion that Sterling does not already own on the following basis:
The Offer:
for every Fusion Share 3.5 New Sterling Shares
and so in proportion for any other number of Fusion Shares held.
Based on the Closing Price of 11.5p per Sterling Share on 24 September 2003
(being the last dealing day prior to this announcement), the Offer values the
whole of Fusion's issued ordinary share capital at approximately #39.5 million
and each Fusion Share at 40.25p. This represents a premium of approximately 28.8
per cent. to the Closing Price of 31.25p per Fusion Share on 11 September 2003,
being the last dealing day prior to the announcement that Sterling had
approached Fusion and a premium of approximately 32.1 per cent. to the average
Closing Price per Fusion Share of 30.46p during the six months prior to 11
September 2003.
Partial Cash Alternative
As an alternative to receiving the whole of their consideration in New Sterling
Shares, Fusion Shareholders who validly accept the Offer may elect to receive
some of their consideration in cash on the following basis:
for every Fusion Share 10p in cash and 2.5 New Sterling
Shares
and so in proportion for any other number of Fusion Shares held.
Elections for the Partial Cash Alternative may be made for up to any number of
Fusion Shares for which a Fusion Shareholder has validly accepted the Offer. The
aggregate of the cash payable pursuant to the Partial Cash Alternative will not
exceed #8.3 million. Any cash consideration which may be payable under the
Partial Cash Alternative will be funded from resources to be made available to
Sterling pursuant to the proceeds of the Placing.
For example, a holder of 100 Fusion Shares who validly accepts the Offer and
elects in full for the Partial Cash Alternative would receive 250 New Sterling
Shares and #10 in cash.
On the basis set out above, the value of the Partial Cash Alternative is 38.75p
per Fusion Share, which is a premium of 24.0 per cent. to the aforementioned
Closing Price of 31.25p per Fusion Share on 11 September 2003.
Additional Cash Election
Fusion Shareholders who validly accept the Offer and elect for the Partial Cash
Alternative in respect of their total holding will be able to elect to receive
more of the proportion of their consideration in cash (but only to the extent
that such cash is available, as explained below) by making the Additional Cash
Election. This will be available only to the extent that other Fusion
Shareholders who accept the Offer by the time and date on which the Additional
Cash Election closes do not elect to receive their maximum entitlement under the
Partial Cash Alternative. The cash consideration which those other Fusion
Shareholders could have elected to receive will be available to those Fusion
Shareholders who make the Additional Cash Election pro rata to the number of
Fusion Shares in respect of which they have made the Additional Cash Election.
To the extent that elections can be satisfied, Fusion Shareholders will receive
cash instead of New Sterling Shares to which they are entitled under the Partial
Cash Alternative at a rate of 11p for each New Sterling Share that they would
otherwise have received, up to a maximum of 37.5p for each Fusion Share
(inclusive of the basic entitlement to cash under the Partial Cash Alternative).
To the extent that elections are made under the Additional Cash Election such
that the aggregate amount of cash payable under the Partial Cash Election and
the Additional Cash Election exceeds #8.3 million, the Additional Cash Elections
will be scaled back pro rata so that the aggregate cash payable under the
Partial Cash Alternative and the Additional Cash Election shall not exceed an
aggregate of #8.3 million. The balance of the consideration due will be
satisfied in the form of New Sterling Shares at the rate applicable under the
Offer.
Other terms
The Fusion Shares which are the subject of the Offer will be acquired fully paid
and free from all liens, charges, equitable interests, encumbrances and third
party rights and together with all rights now or hereafter attaching thereto,
including the right to all dividends and other distributions (if any) declared,
made or paid hereafter.
The New Sterling Shares will be issued credited as fully paid and will rank pari
passu in all respects with the existing Sterling Shares.
Fractions of Sterling Shares will not be allotted or issued to Fusion
Shareholders. Fractional entitlements to Sterling Shares will be aggregated and
sold in the market and the net proceeds of sale will be retained for the benefit
of the Enlarged Group.
Full acceptance of the Offer (assuming no elections under the Partial Cash
Alternative and none of the Fusion NL Partly Paid Shares being paid up) would
result in the issue of approximately 273.7 million New Sterling Shares,
representing approximately 33.6 per cent. of the issued share capital of
Sterling following the Offer and the issue of the Placing Shares.
The Offer will be subject to the terms, and, inter alia, to the conditions which
are set out in Appendix I, which will be set out in the Offer Document and Form
of Acceptance and to such further terms as may be required to comply with the
regulations of the London Stock Exchange and the provisions of the Code.
Placing and financing of the Offer
Sterling also today announced a placing of 90,909,090 new Sterling Shares at 11p
per share to raise #10.0 million in order to provide funding for the Partial
Cash Alternative and cover expenses of the Placing and the Offer. The Placing
has been fully underwritten by Evolution Beeson Gregory. Application has been
made for the Placing Shares to be admitted to trading on AIM and such admission
is expected to take place on 1 October 2003.
Further terms of the Offer
The Offer is conditional upon, inter alia:
(i) valid acceptances being received by 3.00 p.m. on the first closing
date of the Offer (or such later time and/or date as Sterling may, subject to
the rules of the Code, decide) such that these, when aggregated with the Fusion
Shares already held by Sterling, are at the level of not less than 90 per cent.
(or such lesser percentage as Sterling, subject to the rules of the Code, may
decide) of the issued share capital of Fusion; and
(ii) Admission.
The Offer will be subject to the conditions and further terms set out in
Appendix I to this announcement.
Intentions to accept the Offer
In addition to the 20,000,211 Fusion Shares owned by Sterling (representing
approximately 20.4 per cent. of the existing issued share capital of Fusion),
Sterling has received letters of intent from Fusion Shareholders confirming
their intention to enter into an irrevocable undertaking to accept the Offer and
/or to accept the Offer in respect of an aggregate of 20,767,500 Fusion Shares
representing approximately 21.1 per cent. of the existing issued share capital
of Fusion.
In aggregate therefore Sterling either owns or has received letters of intent in
respect of 40,767,711 Fusion Shares representing approximately 41.5 per cent. of
the issued share capital of Fusion.
Acquisition of Westmount Resources
On 19 September 2003, the Company announced that it had agreed to buy Westmount
Resources Limited, a wholly owned subsidiary of Westmount Energy Limited.
Westmount Resources' assets consist of 20,000,000 Fusion Shares and 500,000
Fusion NL Partly Paid Shares. The consideration payable is based on 70,000,000
new Sterling Shares in respect of the 20,000,000 Fusion Shares and a further
1,375,000 new Sterling Shares in respect of the 500,000 Fusion NL Partly Paid
Shares. Westmount Energy has agreed not to sell such Sterling Shares for the
later of the period of twelve months from their admission to AIM, which will
become effective today, and such time as the Offer has lapsed, or the
consideration due under the Offer has been posted to accepting Fusion
Shareholders.
Background to and reasons for the Offer
The Sterling Directors are confident that the combination of Sterling and Fusion
will bring benefits to both sets of shareholders. Since October 2002 when the
Company was readmitted to AIM, Sterling's new executive management team has
concentrated most of its efforts into building up a production portfolio in the
Gulf of Mexico through asset purchases and successful drilling. Sterling's
stated strategy has been to complement its increasingly cash generative
production portfolio with a range of high potential exploration interests.
The principal strategic benefits of combining Sterling and Fusion are:
* It will create a balance between Sterling's primarily
production portfolio and Fusion's exploration potential. The Sterling Directors
believe that the Gulf of Mexico and West Africa are likely to be key strategic
areas for oil and gas development in the future.
* The stronger balance sheet of the Enlarged Group should
enable it to realise more fully the value of success of exploration discoveries
and increase the ability to exploit new opportunities.
* The increased market capitalisation of the Enlarged Group
should result in greater liquidity for the benefit of all shareholders.
The Sterling management has transformed the business and prospects of Sterling
since they took executive control of the Company following the acquisition of
Sterling Energy Limited in October 2002. As a result a loss making company,
which previously had few assets, has become an international oil and gas company
with increasing operating cash flows, drilling success and an unaudited profit
before tax of #1.1 million for the six months ended 30 June 2003. Over this
period the Company's share price has appreciated by 187.5 per cent. from the
acquisition price of 4p to 11.5p yesterday.
In contrast, despite the fact that Fusion has assembled a portfolio of licence
interests, its share price has declined by 37.5 per cent. over the period
between the Company's flotation in September 2000 and the day before the
commencement of the Offer Period. On the same basis the Closing Price of a
Fusion Share immediately prior to the commencement of the Offer Period had
declined by 30.5 per cent. from the placing price of 45p at which the Company
issued 4,500,000 Fusion Shares in order to raise #1.9 million additional working
capital in September 2002.
The Sterling Directors believe that the combination of Fusion and Sterling can
reverse the downward trend experienced by Fusion Shareholders prior to the
announcement of our possible offer by creating an Enlarged Group with a
geographically focused portfolio of production, appraisal and exploration assets
with enhanced opportunities for all shareholders.
Information on Sterling
Sterling was readmitted to AIM on 21 October 2002 following its reverse takeover
of Sterling Energy Limited for approximately #7.9 million at which time the
existing management took executive control of the Company. At the time of the
reverse takeover the Company raised #2.4 million by way of a placing and open
offer and since then it has raised a further #16.4 million from institutional
and other investors (including the #10.0 million to be raised in the Placing to
fund the Partial Cash Alternative).
Sterling is an independent oil and gas company focused on the exploration,
development and production of oil and gas. Over the last twelve months Sterling
has increased the size of its US gas reserves through acquisition, drilling and
workovers. Sterling currently has production interests in seven Gulf of Mexico
fields covering 16 leases, together with minor production onshore in the US and
Canada and a license interest offshore Philippines on which discoveries of gas
have previously been made. The Company will continue to look to acquire
additional production in the Gulf of Mexico, if and when suitable opportunities
arise.
Approximately 95 per cent. of Sterling's current production is gas. The Company
has today announced its unaudited results for the six months ended 30 June 2003
which show that the Company has continued to make significant progress since its
acquisition of Sterling Energy Limited in October 2002, before which it had
virtually no production. Turnover of approximately #2.6 million and profit
before tax of #1.1million reflect the much increased average production in the
period to 4.2 mmcfe/d, compared with 3.3mmcfe/d at the end of 2002 and virtually
nil in the corresponding period of 2002. Your attention is drawn to the interim
results announcement released today which is included in Appendix II.
Information on Fusion
Fusion is an international oil and gas exploration company focusing on deepwater
and offshore West Africa. The Fusion Group has exploration interests in
Mauritania, Senegal, Guinea-Bissau, Cameroon and Gabon. Fusion was admitted to
trading on AIM on 28 September 2000, when it raised #15 million (before
expenses) at a price of 50p per Fusion Share. It raised further funds in
September 2002 through the issue of 4,500,000 Fusion Shares at 45p to raise #1.9
million for additional working capital.
The preliminary results of Fusion for the year ended 30 June 2003 show no
operating revenues and an operating loss of #1.75 million before exceptional
income and a profit before tax of #3.2 million including the partial sale of
Fusion's interest in its licence in Mauritania and other areas and other
exceptional income.
Fusion Share Option Scheme
The Offer will extend to any Fusion Shares issued or unconditionally allotted
upon exercise of options granted under the Fusion Share Option Scheme before the
date on which the Offer closes (or such earlier date as Sterling may, subject to
the Code, decide.) Holder of options under the Fusion Share Option Scheme will
need to consider whether to exercise such rights in order to be able to accept
the Offer. Since the exercise price of each of the options is in excess of the
value of the Offer, no separate proposal will be made to holders of options
under the Fusion Share Option Scheme.
Fusion NL Shareholders
The Offer will, subject to the terms and conditions set out or referred to in
this document, extend to any Fusion Shares issued upon the Fusion NL Partly Paid
Shares being paid up (in accordance with the terms of the offer made by Fusion
to the shareholders of Fusion NL on 16 June 2000 which became unconditional on
18 July 2000) before the date on which the Offer closes (or such earlier date,
as Sterling may, subject to the Code, decide).
In addition in the event that Fusion NL Partly Paid Shares have not been paid up
in full it is intended that appropriate proposals will be made to the holders of
Fusion NL Partly Paid Shares once the Offer becomes or is declared unconditional
in all respects.
Compulsory acquisition and delisting from AIM of Fusion Shares
If Sterling receives acceptances under the Offer in respect of, and/or otherwise
acquires, 90 per cent. or more of the Fusion Shares to which the Offer relates
and the Offer becomes unconditional in all respects, Sterling will exercise its
rights pursuant to the provisions of sections 428 to 430F of the Act to acquire
compulsorily Fusion Shares in respect of which acceptances have not then been
received.
If the Offer becomes or is declared unconditional in all respects then,
irrespective of the level of acceptances, and whether or not Sterling is in a
position to apply the provisions of sections 428 to 430F of the Act to acquire
compulsorily the remaining Fusion Shares, Sterling will procure that Fusion
applies to the London Stock Exchange for the cancellation of the admission of
Fusion Shares to AIM and seek to re-register Fusion as a private company. It is
anticipated that, with the consent of the London Stock Exchange, such
cancellation will take effect no earlier than 20 business days following the
announcement that the Offer has become or been declared unconditional in all
respects.
Such cancellation is likely to reduce significantly the liquidity and
marketability of Fusion Shares. Accordingly, the value of any Fusion Shares in
respect of which acceptance of the Offer are not made may be affected.
Overseas shareholders
Fusion Shareholders who are citizens or residents of jurisdictions outside the
United Kingdom, or who are nominees of, or custodians or trustees for, any such
person, or who intend to forward this document to any jurisdiction outside the
United Kingdom should inform themselves about and observe any applicable legal
or regulatory requirements of those jurisdictions.
The Offer will not be made, directly or indirectly, in or into the United
States, Canada, Australia or Japan. Copies of this announcement and any
documents related to the Offer are not being mailed or otherwise distributed,
into or from the United States, Canada, Australia or Japan and it may not be
possible to accept the Offer from within these jurisdictions.
Enquiries:
Harry Wilson, Chief Executive, Sterling Energy plc: 01582 462 121
Graeme Thomson, Finance Director, Sterling Energy plc: 01582 462 121
Chris Callaway, Evolution Beeson Gregory: 020 7071 4309
Allan Piper, First City Financial Public Relations: 020 7436 7486
Evolution Beeson Gregory Limited, which is regulated in the UK by the Financial
Services Authority, is acting exclusively for Sterling and no one else in
connection with the Offer and other matters described herein and will not be
responsible to anyone other than Sterling for providing the protections afforded
to customers of Evolution Beeson Gregory Limited or for giving advice in
relation to the Offer or any other matter described in this announcement.
MORE TO FOLLOW
This information is provided by RNS
The company news service from the London Stock Exchange
END
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