SASKATOON, SK and CALGARY, AB, May 2, 2022
/CNW/ - Royal Helium Ltd. (TSXV: RHC) ("Royal") and Imperial
Helium Corp. (TSXV: IHC) ("Imperial" or "IHC") are
pleased to announce that they have entered into an agreement dated
May 2, 2022 (the "Arrangement
Agreement") to effect the arm's length acquisition of Imperial
by Royal through a plan of arrangement (the "Arrangement").
Under the terms of the Arrangement, Imperial Shareholders (as
defined herein) will receive 0.614 of a Royal common share (each
whole share, a "Royal Share")
for each Imperial common share ("Imperial Share") held,
which equates to a 10.01% premium to Imperial shareholders based on
the closing price for Imperial and Royal on April 29, 2022.
Strategic Highlights and Benefits of the Arrangement
The board of directors and executive management teams of both
Royal and Imperial believe that the Arrangement will provide
significant benefits to the shareholders of both companies. The
Arrangement:
- represents an attractive opportunity for Imperial Shareholders
to own shares in a larger, more liquid publicly traded entity at an
exchange ratio that implies a 10.01% premium to the current trading
price of Imperial Shares;
- allows Imperial Shareholders to participate in the exploration
and development growth upside with Royal's 1 million+ acre helium
land base comprised of over 10 separate potential helium fairways
that has seen over $20 million of
capital investment to date in the form of magnetic surveys, seismic
surveys, geoscience and exploration drilling;
- creates a larger entity with increased access to capital to
enable the financing of ongoing exploration, development and
processing plant expenditures;
- represents the accretive acquisition of two ready-to-produce
helium wells to bring on production along with Royal's Climax
wells;
- increases Royal's near-term production assets and expected
early cash flow;
- creates a logical consolidator of additional helium exploration
and development opportunities with Imperial Shareholders expected
to realize the benefit of being early shareholders;
- creates an entity with significant indicative helium capacity
enabling the expedition of offtake discussions and increased
opportunity to monetize assets;
- materially reduces Royal and Imperial's aggregate general and
administrative costs;
- creates an entity of a scale that is expected to be more
relevant to international investors with the combination creating
one of the largest diversified helium companies listed on a
Canadian exchange; and
- reduces the exploration risk of Imperial Shareholders by
offering upside exposure to all of Royal's exploration lands.
Andrew Davidson, President and
Chief Executive Officer of Royal Helium Ltd. states, "We are
excited to have entered into this agreement with Imperial. The
Steveville property, along with all of the other properties that
Imperial has been targeting, make an accretive addition to Royal's
near-term Climax field as well as adding to the expansive
properties currently held by Royal. This acquisition would allow
Royal to initiate production and significant cash flow from
multiple fields near term, accelerate its production profile and
enhance future growth for all shareholders."
Kyler Hardy, Co-Chairman of
Imperial Helium Corp. commented, "Imperial sees this agreement as
an opportunity to be a part of a bigger and stronger helium
exploration and development company. Following Royal's successful
exploration campaign at Climax, they have completed some tremendous
work to make helium production in Canada a near term reality and the addition of
the Steveville property will further assist in achieving this goal.
The combined company will be very well positioned to offer stable
supply of helium to the world's largest market at a time when
existing supplies are challenged by geopolitical events."
Summary of the Arrangement
Pursuant to the Arrangement Agreement, Royal has agreed to
acquire all of the issued and outstanding Imperial Shares
(including Imperial Shares issuable on the vesting and conversion
of preferred shares of Imperial) by way of a statutory plan of
arrangement under the Business Corporations Act
(British Columbia) (the
"BCBCA") and the terms of a final order of the Supreme Court
of British Columbia (the
"Court") under Section 291 of the BCBCA. Pursuant to the
terms of the Arrangement, shareholders of Imperial (the
"Imperial Shareholders") will receive 0.614 (the
"Exchange Ratio") of a Royal
Share, for every Imperial Share held. Imperial Shareholders
will retain a meaningful stake in the combined entity and exposure
to the continued success of the combined company.
Following the Arrangement, each outstanding warrant to purchase
an Imperial Share (the "Imperial Warrants") outstanding
shall receive upon the exercise of such Imperial Warrant, in lieu
of each Imperial Share to which such holder was theretofore
entitled upon such exercise, and for the same aggregate
consideration payable therefor, the fraction of a Royal Share represented by the Exchange Ratio
that the holder would have been entitled to receive as a result of
the transactions contemplated by the Arrangement if, immediately
prior to the effective time of the Arrangement, such holder had
been the registered holder of the number of Imperial Shares to
which the holder was theretofore entitled upon the exercise of such
Imperial Warrant. Pursuant to the Arrangement, outstanding stock
options to acquire Imperial Shares will be exchanged for options to
acquire Royal Shares, at numbers and exercise prices adjusted for
the Exchange Ratio, and exercisable for a period of 30 days
following closing.
The Arrangement Agreement contains representations and
warranties for the benefit of each of Royal and Imperial,
conditions relating to Imperial Shareholder, Court and regulatory
approvals, material adverse changes and compliance with the
Arrangement Agreement as are in each case customary in comparable
transactions of this nature.
Completion of the Arrangement is subject to a number of
conditions being satisfied or waived by one or both of Royal and
Imperial at or prior to closing of the Arrangement, including
approval of the Imperial Shareholders, together with any requisite
minority approvals, the receipt of all necessary regulatory and
Court approvals and the satisfaction of certain other closing
conditions customary for a transaction of this nature.
Details of this arm's-length Arrangement will be disclosed in a
management information circular of Imperial, which will be mailed
to Imperial Shareholders and will also be available on SEDAR
at www.sedar.com. A copy of the Arrangement Agreement will
also be available on SEDAR at www.sedar.com.
It is expected that the special meeting of Imperial Shareholders
(the "Meeting") to approve the proposed Arrangement will be
held in the second half of June 2022 and, if approved at the
Meeting, it is expected that the Arrangement would close shortly
thereafter.
Currently, Royal has 142,741,726 shares outstanding, and will
have 203,843,231 shares outstanding once the Arrangement is
completed.
There are no finders fees payable in conjunction with the
Arrangement.
Governance
At closing, the board of directors of Royal will be increased to
include one additional member from Imperial's board of directors
and will be led by Royal's current Chairman, Andrew Davidson. Further, incumbent senior
officers, management and employees of Royal shall be retaining
their current positions after closing.
Shareholder Approvals, Support Agreements and Closing
Implementation of the Arrangement will be subject to the
approval of Imperial Shareholders at a special meeting to be held
in the second half of June 2022, by a
majority of not less than two-thirds of the votes cast by Imperial
Shareholders.
Management, insiders and directors of Imperial holding
approximately 16% of the outstanding Imperial Shares on a diluted
basis including outstanding performance shares have entered into
support agreements under which they have agreed, among other
things, to vote in favour of the Arrangement.
The Arrangement Agreement provides for non-solicitation
covenants on the part of Imperial with respect to alternative
transactions, subject to its ability to consider, pursuant to the
fiduciary obligations of the Imperial board of directors, a
proposal for an alternative transaction that meets specified
criteria and the right of Royal to match any such proposal, and for
the payment of certain fees by Imperial if the Arrangement
Agreement is terminated. The Arrangement Agreement includes break
fee of $1,000,000 payable by Imperial
to Royal pursuant to the terms of the Arrangement Agreement.
Fairness Opinion
Haywood Securities Inc. has provided the board of directors of
Imperial with an opinion to the effect that, as of the date of the
Arrangement Agreement, the consideration to be received by the
Imperial Shareholders under the Arrangement is fair, from a
financial point of view, to such Imperial Shareholders.
Advisors
Cormark Securities Inc. is acting as the exclusive financial
advisor to Royal with respect to the Arrangement. Bennett Jones LLP
is acting as Royal's legal advisor.
Eight Capital is acting as financial advisor to Imperial. Borden
Ladner Gervais LLP is acting as Imperial's legal advisor.
Recommendation of the Imperial Board
The Arrangement Agreement has been approved by the board of
directors of Royal and Imperial, and the board of directors of
Imperial recommends that the Imperial Shareholders vote in favour
of the Arrangement.
About Royal Helium Ltd.
Royal controls over 1,000,000 acres of prospective helium land
in southwestern and south-east Saskatchewan. All of Royals' lands are in
close vicinity to highways, roads, cities and importantly, close to
existing oil and gas infrastructure, with a significant portion of
its land in close proximity to existing helium producing locations.
With stable, rising prices and limited, non-renewable sources for
helium worldwide, Royal intends to become a leading North American
producer of this high value commodity.
About Imperial Helium Corp.
Imperial Helium Corp. is focused on the exploration and
development of helium assets in North
America, initially through the anticipated commercialization
of its Steveville, Alberta helium
discovery.
Forward-Looking Information
This news release contains certain forward-looking information
and statements within the meaning of applicable Canadian securities
laws concerning the proposed transaction and the business,
operations and financial performance and condition of Royal and
Imperial. Forward-looking statements and forward-looking
information include, but are not limited to, the successful
completion of proposed acquisition; synergies and financial impact
of the acquisition; the benefits of the development potential of
the properties of Royal and Imperial; the future price of helium;
the estimation of reserves and resources; the realization of
reserve estimates; the timing and amount of any estimated future
production; costs of production; success of exploration activities;
market volatility and disruptions in many aspects of Royal's and
Imperial's business due to a pandemic virus outbreak, such as
COVID-19, resulting from government policies restricting mobility
assembly, or contact to, employees and suppliers across the global
supply chain; and currency exchange rate fluctuations. Except for
statements of historical fact relating to Royal and Imperial,
certain information contained herein constitutes forward-looking
statements. Forward-looking statements are frequently characterized
by words such as "plan," "expect," "project," "intend," "believe,"
"anticipate", "estimate" and other similar words, or statements
that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions and estimates
of the management of Royal or Imperial at the date the statements
are made, and are based on a number of assumptions and subject to a
variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those
projected in the forward-looking statements. Many of these
assumptions are based on factors and events that are not within the
control of Royal or Imperial and there is no assurance they will
prove to be correct.
Factors that could cause actual results to vary materially from
results anticipated by such forward-looking statements include:
risks of the helium exploration and development industry; the
spread of COVID-19 and its variants and the impact of government
policies to ameliorate COVID-19 and its variants; failure of plant,
equipment or processes to operate as anticipated; changes in market
conditions; risks relating to operations; fluctuating helium prices
and currency exchange rates; changes in project parameters; and the
possibility of project cost overruns or unanticipated costs.
These factors are discussed in greater detail in Royal's most
recent annual information form, and the most recent management's
discussion and analysis for each of Royal and Imperial, which are
filed on Royal's and Imperial's respective SEDAR profiles and
provide additional general assumptions in connection with these
statements. Royal and Imperial caution that the foregoing list of
important factors is not exhaustive. Investors and others who base
themselves on forward-looking statements should carefully consider
the above factors as well as the uncertainties they represent and
the risk they entail. Royal and Imperial believe that the
expectations reflected in those forward-looking statements are
reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements
included in this presentation should not be unduly relied upon.
Although Royal and Imperial have attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events
or results not to be as anticipated, estimated or intended. There
can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Neither Royal or Imperial undertakes any obligation to update
forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to place
undue reliance on forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Royal Helium Ltd.