TIDMSLE
RNS Number : 1015N
San Leon Energy PLC
26 August 2011
Not for distribution or release in or into the United States,
Australia, Russia, South Africa or Japan
SAN LEON ENERGY
("San Leon" or the "Company")
San Leon Energy plc and Realm Energy International Corporation
Announce Merger
London and White Rock, British Columbia, 26 August 2011 - San
Leon Energy plc ("San Leon" or the "Company"; AIM:SLE) and Realm
Energy International Corporation ("Realm"; TSXV:RLM) are pleased to
announce that they have entered into an agreement (the "Arrangement
Agreement") pursuant to which San Leon will acquire all of the
issued and outstanding shares of Realm (the "Acquisition").
Pursuant to the Acquisition, each Realm shareholder will
receive, for each Realm share, at such shareholder's election: i)
C$1.30 in cash; or ii) 3.30 ordinary shares in the capital of San
Leon (or the same number of exchangeable shares of an indirect
Canadian subsidiary of San Leon exchangeable on a one-for-one basis
directly for ordinary shares in the capital of San Leon, subject to
adjustment); or iii) a combination thereof; subject to a maximum of
C$17.7 million in cash (subject to adjustment) being paid to Realm
shareholders in aggregate. The Acquisition will be implemented by
means of a Canadian plan of arrangement and result in Realm
becoming an indirect subsidiary of San Leon, with closing expected
in November 2011.
The terms of the Acquisition value Realm at approximately C$1.30
per share, based on the San Leon volume-weighted average price
("VWAP") for the 60 trading days prior to and including 25 August
2011 of 25 pence per share and a Canadian Dollar per British Pound
exchange rate of 1.603. Up to approximately 481 million newly
issued San Leon shares are expected to be issued to Realm
shareholders (assuming that such shareholders elect to receive the
consideration payable to them fully in new San Leon shares).
The Board of Directors of each of San Leon and Realm have
unanimously approved the Acquisition. The Board of Directors of
Realm has received the opinion of its financial advisors that the
consideration to be received pursuant to the Acquisition is fair,
from a financial point of view, to Realm shareholders and has
resolved to recommend that Realm shareholders vote in favour of the
Acquisition.
The directors and officers of Realm, corporations controlled by
them and certain other significant shareholders of Realm, together
holding or controlling an aggregate of 40,912,276 Realm shares
(being more than 37.7% of the issued Realm shares) have agreed to
vote in favour of the Acquisition.
Acquisition Rationale
The Board of Directors of San Leon believes that the acquisition
of Realm has significant commercial logic and would bring together
two complementary portfolios to create a focused and large shale
acreage position in Poland's Baltic Basin. It is expected that the
enlarged group will benefit from its combined operational and
technical expertise as well as in-country experience in order to
accelerate work programmes and de-risk the acreage. The combined
position in Poland is also expected to provide cost synergies for
the aforementioned work programmes.
This increased focus on shale may be further enhanced through
the addition of any successful licence applications that Realm has
submitted in Spain and France. To complement this large shale
acreage position and associated work programmes, San Leon expects
to continue to develop its conventional acreage in Poland, Albania,
Morocco and Ireland in order to seek to build reserves, produce
near-term cash flow and provide funding for work programmes going
forward. The Board of Directors of San Leon believes that the
enlarged group will be well capitalised to carry out its existing
licence obligations through the addition of approximately C$24
million of cash currently on Realm's balance sheet.
The enlarged company will hold 28 concessions and licences in
seven countries, with a continued focus on Poland, Morocco and
Albania. San Leon is currently undertaking an extensive exploration
programme and expects to drill 16 wells over the next twelve
months.
The Board of Directors of San Leon believes that the combination
of San Leon and Realm presents a unique opportunity to create
significant value for shareholders in both companies.
The benefits of the Acquisition for Realm shareholders
include:
-- The implied value of the Acquisition is approximately C$1.30
per Realm share[1].
o a premium of 46.1% to the current share price of Realm[2];
o a premium of 116.7% to Realm's closing share price the day
prior to San Leon's first approach to Realm's Board[3]; and
o a premium of 136.4% to Realm's closing share price the day
prior to the announcement of the initiation of a strategic review
of Realm's Polish interests[4].
-- The Acquisition will result in Realm shareholders owning
approximately 36.9% of the enlarged entity[5], assuming that all
shareholders elect to receive the consideration payable to them
fully in new San Leon shares and all of the issued and outstanding
options and warrants to acquire Realm shares are exercised.
-- The exchangeable shares offer certain Realm shareholders who
are residents of Canada for the purposes of the Income Tax Act
(Canada) the opportunity to obtain a full or partial deferral of
taxable capital gains for Canadian federal income tax purposes in
certain circumstances.
-- The ability to receive, at the election of Realm
shareholders, San Leon shares or exchangeable shares gives Realm
shareholders the opportunity to continue to participate in the
future growth of the development of the Realm assets through an
entity with cost and operational synergies.
-- The Arrangement Agreement provides that Realm shareholders
will have the right to dissent from participating in the
Acquisition and to elect to receive a fair value payment for their
shares from Realm post-closing.
Acquisition Highlights
The Board of Directors of San Leon believes that the combination
of San Leon and Realm will:
-- strengthen San Leon's focus and position as one of the
leading shale players in Poland;
-- materially increase San Leon's acreage in Poland's Baltic
Basin;
-- leverage San Leon's in-country technical team to add material
value to Realm's assets;
-- have the potential to add further shale acreage to the
portfolio through any successful licence applications that Realm
has made in Spain and France; and,
-- provide cost and operational synergies for upcoming seismic
and drilling programmes.
San Leon will acquire the following:
-- 4 exploration licences across Poland and Germany;
-- 10 licence applications in Spain and 10 licence applications
in France;
-- >2.4 million gross acres under application in France and
>2.0 million gross acres under application in Spain; and,
-- approximately C$24 million of cash currently on Realm's
balance sheet.
Realm's asset base is detailed in the table below:
Net Gross
Country Licence Basin Interest Operator Acres Net Acres
Poland Gniew Baltic 100% Realm 294,296 294,296
--------- ---------- --------- ---------- --------- ----------
LNG
Ilawa Baltic 50% Energy 161,109 80,555
--------- -------------------- --------- ---------- --------- ----------
LNG
Wegrow Podlasie 50% Energy 180,136 90,068
--------- -------------------- --------- ---------- --------- ----------
Lower
Germany Aschen Saxony 100% Realm 15,888 15,888
--------- ---------- --------- ---------- --------- ----------
Total 651,429 480,807
--------- ---------- --------- ----------
Additional Terms of the Agreement
Pursuant to the Arrangement Agreement, Realm will call a meeting
of its shareholders to consider and, if determined advisable,
approve the plan of arrangement implementing the Acquisition. It is
expected that the information circular relating to the Acquisition
will be mailed to Realm shareholders in September 2011 and that,
subject to the satisfaction, or where relevant waiver, of all
relevant conditions, the Arrangement will become effective and the
Acquisition completed in November 2011.
Conditions
The Acquisition is subject to a number of customary conditions,
including the receipt of approval by the Realm shareholders,
receipt of approval of the Court in the Province of British
Columbia, Canada and receipt of stock exchange approvals.
Non-Solicitation Agreement and Termination Fees
The Arrangement Agreement contains customary non-solicitation
provisions which restrict Realm from soliciting or entering third
party acquisition proposals, subject to a "fiduciary out" and a
matching right in favour of San Leon. Pursuant to the Arrangement
Agreement, each of Realm and San Leon has agreed to pay the other a
termination fee of C$4.0 million if the Arrangement Agreement or
terminated in specified circumstances.
Realm Share Options and Warrants
In connection with the Acquisition, outstanding options and
warrants to acquire an aggregate of 37.4 million Realm shares will
become options and warrants to acquire San Leon shares on
substantially equivalent terms and conditions.
Oisin Fanning, Executive Chairman of San Leon, commented:
"We are delighted to have reached agreement with the Realm board
and its major shareholders. This is San Leon's most significant
acquisition to date and offers a unique opportunity to increase our
exposure to the prospective upside that the Baltic Basin offers,
which we expect will be enhanced by any successful shale licence
applications in Spain and France. We also expect this deal to bring
significant cost and operational synergies across the upcoming
drilling programme whilst further enhancing the technical expertise
in the Company.
The Board of San Leon believe that this acquisition will create
significant value for shareholders in both companies without
reducing exposure to the potential upside, whilst the Company
continues to develop its conventional acreage across its portfolio
in order to seek to build reserves, produce near-term cash flow and
provide funding for work programmes going forward."
Craig Steinke, Executive Chairman and CEO of Realm,
commented:
"A combination of Realm and San Leon provides shareholders with
diversity and substantial scale in the Baltic Basin of Poland,
which is generally viewed as one of the most opportune new shale
plays in Europe. As well, currently under government application in
France and Spain, Realm has targeted over 4.4 million acres of
organic rich shales, which subject to final awards, provides vast
additional resource potential."
Information with respect to Realm
Realm is an independent oil and gas exploration and appraisal
company listed on the TSX Venture Exchange (ticker symbol: RLM).
The company holds 4 exploration licences across Poland and Germany
as well as 10 licence applications in Spain and 10 licence
applications in France. Its strategy is to focus on shale
exploration and development opportunities.
Realm has been awarded 635,000 gross acres in Poland (465,000
net) and 15,888 gross acres in Germany (15,888 net). In addition,
Realm has >2.4 million gross acres under application in France
and >2.0 million gross acres under application in Spain. Realm's
asset base is detailed in the table below:
Net Gross
Country Licence Basin Interest Operator Acres Net Acres
Poland Gniew Baltic 100% Realm 294,296 294,296
--------- ---------- --------- ---------- --------- ----------
LNG
Ilawa Baltic 50% Energy 161,109 80,555
--------- -------------------- --------- ---------- --------- ----------
LNG
Wegrow Podlasie 50% Energy 180,136 90,068
--------- -------------------- --------- ---------- --------- ----------
Lower
Germany Aschen Saxony 100% Realm 15,888 15,888
--------- ---------- --------- ---------- --------- ----------
Total 651,429 480,807
--------- ---------- --------- ----------
Overseas Shareholders of Realm
Participation in the Acquisition and the plan of arrangement
effecting the Acquisition by persons who are not resident in Canada
or the United Kingdom ("Overseas Shareholders") may be affected by
the laws of the jurisdictions ("Overseas Jurisdictions") in which
they are resident. Such persons should inform themselves about and
observe any applicable requirements. Further details in relation to
Overseas Shareholders will be contained in the information circular
to be forwarded to Realm shareholders.
Any failure to comply with applicable restrictions may
constitute a violation of the securities laws of any such Overseas
Jurisdiction. To the fullest extent permitted by applicable law,
the companies involved in the Acquisition disclaim any
responsibility or liability for the violation of such restrictions
by any person.
This announcement has been prepared for the purposes of
complying with Canadian law and the AIM Rules for Companies and the
information disclosed herein may not be the same as that which
would have been prepared in accordance with the laws of other
jurisdictions.
Unless otherwise determined by San Leon, and permitted by
applicable law and regulation, the San Leon shares to be issued in
connection with the Acquisition will not be issued directly to
Realm shareholders in, and will not be capable of acceptance in or
from, any Overseas Jurisdiction where to do so would constitute a
breach of securities laws in that jurisdiction. Copies of this
announcement are not being, and must not be, mailed or otherwise
forwarded, distributed or sent in, into or from any Overseas
Jurisdiction where to do so would constitute a breach of securities
laws in that jurisdiction. Persons receiving this announcement
(including custodians, nominees and trustees) should observe these
restrictions and should not send or distribute this announcement
in, into or from any such jurisdictions.
Neither the San Leon shares nor the exchangeable shares to be
issued by a subsidiary of San Leon pursuant to the Acquisition
("exchangeable shares") have been, nor will they be, registered
under the US Securities Act of 1933 (the "Securities Act") or under
any of the relevant securities laws of any state or other
jurisdiction of the United States. Neither the US Securities and
Exchange Commission nor any US state securities commission has
approved of the San Leon shares or the exchangeable shares or
determined if this document is accurate or complete. Any
representation to the contrary is a criminal offence in the United
States. The San Leon shares and the exchangeable shares to be
issued pursuant to the plan of arrangement are intended to be
issued in reliance upon the exemption from the registration
requirements of the Securities Act provided by section 3(a)(10)
thereof and only to the extent that corresponding exemptions from
the registration or qualification requirements of state "blue sky"
securities laws are available. Neither the San Leon shares nor the
exchangeable shares may be offered or sold in the United States
except pursuant to an exemption from the Securities Act or in a
transaction not subject to the registration requirements of the
Securities Act.
General
The Acquisition is subject to the terms and conditions of the
Arrangement Agreement which will be described in the information
circular which Realm intends to mail to its shareholders in
September 2011. That information circular, a form of proxy and a
form of election and transmittal letter, to be included therein,
will be made available to all Realm shareholders at no cost to
them. Realm shareholders are advised to read the information
circular and the accompanying documents when they are sent to them
because they will contain important information. The documents will
be posted under Realm's profile at www.sedar.com.
This announcement is not intended to be and does not constitute,
or form part of, an offer to sell or an invitation to purchase or
subscribe for any securities or the solicitation of an offer to buy
or subscribe for any securities pursuant to the Acquisition or
otherwise, nor shall there be any purchase, sale or exchange of
securities or such solicitation in any jurisdiction in which such
offer, solicitation or sale or exchange would be unlawful prior to
the registration or qualification under the laws of such
jurisdiction.
The distribution of this announcement in jurisdictions or into
certain jurisdictions may be restricted by the laws of those
jurisdictions. Accordingly, copies of this announcement and all
other documents relating to the Acquisition and/or the plan of
arrangement are not being, and must not be, released, published,
mailed or otherwise forwarded, distributed or sent in, into or from
the United States, Australia, South Africa, Russia or Japan.
Persons receiving such documents (including, without limitation,
nominees, trustees and custodians) should observe these
restrictions. Failure to do so may constitute a violation of the
securities laws of any such jurisdiction.
Forward Looking Statements
This announcement contains certain forward-looking statements
with respect to the financial condition, results of operations and
business of Realm and San Leon and certain plans and objectives of
the boards of directors of Realm and San Leon. These
forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts. Forward-looking
statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "will",
"may", "should", "would", "could" or other words of similar
meaning. By their nature, forward-looking statements involve risks
and uncertainties that could cause actual results and developments
to differ materially from those expressed in or implied by such
forward-looking statements. Many of these risks and uncertainties
relate to factors that are beyond Realm's and San Leon's abilities
to control or estimate precisely, such as future market conditions
and the behaviours of other market participants, and therefore
undue reliance should not be placed on such statements. Should one
or more of these risks or uncertainties materialise, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described in this announcement. There are
risks also inherent in the nature of the Acquisition, including
failure to realize anticipated synergies or cost savings; risks
regarding the integration of the two entities; incorrect
assessments of the values of the other entity; and failure to
obtain the required securityholder, Court, regulatory and other
third party approvals. Realm and San Leon assume no obligation and
do not intend to update or correct these forward-looking
statements, except as required pursuant to applicable law.
Notes to Editors
San Leon
San Leon is an independent oil and gas exploration and
production company listed on London's Alternative Investment Market
(ticker symbol: SLE). The company holds exploration assets in
Poland, Morocco, Albania, Ireland, and Italy. San Leon's focus is
on both shale and conventional exploration across its
portfolio.
Realm
Realm is a Canadian domiciled global energy company focused on
driving the exploration and development of major shale plays
throughout Europe and emerging countries. The Company presently has
projects in Poland and Germany and is in the process of acquiring
additional petroleum and natural gas rights in other European
basins which have been identified as high potential. Realm is
committed to leveraging the most advanced shale technology to bring
these resources into production. Visit Realm's website at
www.realmenergy.ca.
Advisors
San Leon has engaged Macquarie Capital (Europe) Limited as its
exclusive financial advisor in connection with the Acquisition.
Realm has engaged GMP Securities L.P. as its exclusive financial
advisor in connection with the Acquisition.
For further information contact:
San Leon Energy Plc Tel: + 353 1291 6292
Oisin Fanning, Executive Chairman
Macquarie Capital (Europe) Limited Tel: +44 (0) 20 3037
2000
Paul Connolly
Ben Colegrave
College Hill Associates Tel: +44 (0) 207 457
2020
Nick Elwes
Realm Energy International Corporation Tel: + 1 (604) 637-4974
Craig Steinke, Executive Chairman
and CEO
GMP Securities L.P. Tel: + 1 (403) 543-3043
Wade Felesky
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.
[1] Based on San Leon's 60-day VWAP prior to and including 25
August 2011 of 25 pence per share and a Canadian Dollar per British
Pound exchange rate of 1.603
[2] Based on Realm's mid-market closing price on 25 August 2011
of 0.89 Canadian dollars per share, as provided by the Toronto
Stock Exchange
[3] Based on Realm's mid-market closing price on 16 June 2011 of
0.60 Canadian dollars per share, as provided by the Toronto Stock
Exchange
[4] Based on Realm's mid-market closing price on 26 May 2011 of
0.55 Canadian dollars per share, as provided by the Toronto Stock
Exchange
[5]Assumes all outstanding Realm options and warrants are
exercised
This information is provided by RNS
The company news service from the London Stock Exchange
END
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