Sodra Petroleum AB - Re Lundin Oil's Acquisition
February 29 2000 - 6:50AM
UK Regulatory
RNS Number:3869G
Sodra Petroleum AB
29 February 2000
SODRA PETROLEUM AB
Sodra Petroleum AB announces that its parent company, Lundin
Oil AB ("Lundin") has today issued the following announcement:-
Lundin Oil AB to acquire Red Sea Oil Corporation pursuant to a
plan of arrangement
Lundin Oil AB ("Lundin Oil") and Red Sea Oil Corporation ("Red
Sea") are pleased to announce a definitive agreement for Lundin
Oil to acquire all of the issued and outstanding common shares of
Red Sea not already owned by Lundin Oil and its affiliates
pursuant to the terms of a Plan of Arrangement. Lundin Oil
currently owns 61% of the issued and outstanding common shares in
Red Sea. Red Sea has a 60% interest in and is the operator of
Area NC177 in Libya, including the undeveloped En Naga North and
West oil field. Lundin Oil has a 40% interest in Area NC177.
Under the terms of the arrangement, Red Sea shareholders (other
than Lundin Oil, its affiliates and dissenting shareholders) will
receive 0.47 Series B shares of Lundin Oil for each common share
of Red Sea. Based on the closing price for Lundin Oil Series B
shares on Monday February 28, 2000 the transaction values each Red
Sea common share at Cdn. $2.17. Lundin Oil will issue
approximately 17 million additional Series B shares, which is
equal to about 19.8% of Lundin Oil's currently outstanding shares.
The Board of Directors of Red Sea have stated their intention to
vote in favour of the transaction and have issued a recommendation
that, in the absence of a better offer to purchase all of the
outstanding common shares of Red Sea, Red Sea shareholders vote in
favour of the transaction.
As a result of Lundin Oil's current ownership in Red Sea, the
arrangement constitutes a "related party transaction" in
accordance with applicable Canadian securities legislation.
Accordingly, an independent committee of the Board of Directors of
Red Sea was formed in order to assess the fairness from a
financial point of view of the arrangement to the shareholders of
Red Sea other than Lundin Oil and its affiliates. In fulfilment
of its mandate, the independent committee engaged T. Hoare
Canaccord to prepare a valuation of the Series B shares of Lundin
Oil and the common shares of Red Sea and a fairness opinion in
order to assist the independent committee at arriving at its
conclusions. On February 28, 2000, T. Hoare Canaccord reported to
the independent committee that, based on its valuations of the
Series B shares of Lundin Oil and the common shares of Red Sea, an
exchange ratio on the range of a 0.4 to 0.5 Series B shares of
Lundin Oil for every one common share of Red Sea reflected the
relative value of Lundin Oil and Red Sea. Based upon its
valuation and discussions with the independent committee, T. Hoare
Canaccord issued an opinion to the independent committee that the
proposed arrangement is fair from a financial point of view to the
shareholders of Red Sea other than Lundin Oil and its affiliates.
At a Board of Directors meeting of Red Sea held on February 28,
2000, the independent committee issued its recommendation to the
Board of Directors of Red Sea that the proposed arrangement was in
the best interests of Red Sea and fair to the Red Sea shareholders
other than Lundin Oil and its affiliates. As a result, the Board
of Directors issued its recommendation that shareholders of Red
Sea vote in favour of the transaction.
"The goal of the independent committee of the Board of Directors
of Red Sea was to ensure that Red Sea shareholders received full
and fair value for their shares. Lundin Oil's offer for Red Sea
is a fair offer and gives the Red Sea shareholders an opportunity
to share in the upside of Area NC177 as well as Lundin Oil's
various other oil producing projects" stated John H. Craig, a
director and chairman of the independent committee of the
directors of Red Sea. "Lundin Oil, with its significant
technical, financial and personnel resources, is in the best
position to undertake the development and commencement of
commercial production from the En Naga North and West oil field."
Completion of the arrangement is subject to approval by the Red
Sea shareholders, the Lundin Oil shareholders and the Ontario
Superior Court of Justice. Pursuant to applicable Canadian
securities legislation, the arrangement is required to be approved
by two-thirds of the votes cast by all holders of Red Sea common
shares and by a majority of the votes cast by the minority
shareholders of Red Sea. Full information regarding the proposed
arrangement and Lundin Oil will be included in the management
information circular to be mailed to Red Sea shareholders.
Lundin Oil Series B shares are quoted on the OM Stockholm Exchange
and on the NASDAQ Stock Market (in the form of global depositary
shares) and the Red Sea common shares are listed on the Canadian
Venture Exchange.
For further information, please contact:
John Craig
Chairman of the Independent Committee
Red Sea Oil Corporation
+ 1 416 869 53 36
Magnus Nordin
Deputy Managing Director
Lundin Oil AB
+46 8 440-5450
Sophia Shane
Corporate Development, North America
+ 1 604-689-7842
Simon Rothschild/Judith Parry
Millham Communications
Tel: 0171 256 5756
Notes for editors:
1. Lundin is the parent company of Sodra by virtue of its
holding of 40,506,500 Ordinary Shares of SEK0.05 each. The
40,506,476 Convertible Shares of SEK0.05 each in Sodra
listed on the AIM market are effectively convertible into
the right to subscribe for B Shares in Lundin in November
2001. Upon exercise of the conversion right, for every 12
Convertible Shares, the holder will receive a warrant to
subscribe for 1 new Lundin B Share at the nominal value of
SEK0.50.
2. Convertible Shares in Sodra are also listed on the New
Market of the Stockholm Stock Exchange. Lundin B Shares are
currently quoted on the Stockholm Stock Exchange, Toronto
Stock Exchange and the Nasdaq National market.
END
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