Verenex and Libyan Investment Authority enter into definitive arrangement
agreement
CALGARY, Nov. 5 /CNW/ - Verenex Energy Inc. ("Verenex") (VNX - TSX)
announced today it has entered into a definitive arrangement agreement (the
"Agreement") with the Libyan Investment Authority (the "LIA") pursuant to
which the LIA, through a subsidiary, has agreed to acquire all of the Verenex
shares issued and outstanding upon completion of the transaction at a price
per share in cash equal to $7.09 plus an additional amount per share (the
"Working Capital Amount" and, together with the $7.09 offer price, the "Cash
Purchase Consideration") to be determined by the Board of Directors of
Verenex and the LIA at the time of completion of the transaction based on the
aggregate amount, if any, of positive net working capital in Verenex at such
time (determined on a pro-forma basis in accordance with the provisions of
the Agreement). It is a condition to the completion of the transaction that
such pro-forma closing working capital amount not be negative. Based on
preliminary estimates agreed to by the LIA, Verenex expects the Working
Capital Amount to be a nominal amount of approximately $0.15 per share,
assuming completion of the transaction in mid-December. The final
determination of the Working Capital Amount is subject to a number of
factors, primarily the period of time for completion of the transaction, the
rate of ongoing expenditures (primarily general and administrative expenses)
and closing costs.
Holders of Verenex in-the-money options and performance warrants who have
properly elected in a manner acceptable to Verenex will surrender such
options and performance warrants under the arrangement in exchange for a cash
payment equal to the in-the-money amounts thereof determined with reference
to the per share Cash Purchase Consideration being paid for the Verenex
Shares.
An irrevocable letter of credit in the amount of $350 million, the
aggregate purchase consideration payable by the LIA to acquire Verenex, has
been deposited in escrow on behalf of the LIA as security for the
availability of the aggregate purchase funds upon satisfaction or waiver of
the conditions set out in the Agreement.
The transaction will be completed by way of plan of arrangement (the
"Arrangement"), to be submitted to the holders of Verenex securities (Verenex
shares, options and performance warrants) for approval at a meeting scheduled
for December 11, 2009. In addition to the working capital condition mentioned
above, the Arrangement is conditional upon, among other things,
securityholder approval of 75% of the votes cast at the meeting, court and
regulatory approvals and certain other customary conditions for an agreement
of this nature. The parties have provided for a higher than normal voting
approval threshold in lieu of granting dissent rights to shareholders. The
LIA has represented in the Agreement that the Arrangement has received all
necessary Libyan government approvals. The Agreement will be filed on SEDAR
at www.sedar.com.
FirstEnergy Capital Corp. has provided the independent committee of the
Verenex Board of Directors (the "Independent Committee") with its verbal
opinion that, subject to review of final documentation, the consideration to
be received by the shareholders of Verenex pursuant to the Arrangement is
fair, from a financial point of view, to the Verenex shareholders.
The Arrangement is the result of a thorough process overseen by the
Verenex Board of Directors to assess the strategic alternatives available to
Verenex. After consulting with its financial and legal advisors and receiving
the recommendation of the Independent Committee and the opinion from
FirstEnergy Capital Corp. as to the fairness, from a financial point of view,
of the consideration to be received by Verenex shareholders under the
Arrangement, the Verenex Board of Directors has determined that the
Arrangement represents the best alternative reasonably available to Verenex
and its securityholders. In light of such available alternatives, the Verenex
Board has determined the Arrangement is fair to the holders of Verenex
securities and is in the best interests of Verenex and the holders of Verenex
securities and has recommended securityholders approve the Arrangement.
Subject to obtaining requisite court approval, Verenex expects to mail an
information circular to securityholders on or about November 17, 2009, which
circular will contain full details with respect to the proposed Arrangement.
All of the members of the Verenex Board, its executive officers and its
major shareholder, Vermilion Resources Ltd. (representing in aggregate
approximately 45.2% of the common shares on a fully diluted basis), have
entered into voting support agreements pursuant to which they have agreed to
vote their securities in favour of the Arrangement.
The LIA is a sovereign wealth fund established in 2006 by the General
People's Committee of Libya to manage Libya's surplus oil revenues.
Verenex is a Canada-based, international oil and gas exploration and
production company with a world-class discovered resource base and
exploration portfolio in the Ghadames Basin in Libya.
Forward-Looking Information and Statements
This press release contains forward-looking statements respecting the
signing of an agreement for an arrangement of Verenex. These statements are
based on current expectations and are subject to a number of risks and
uncertainties, including obtaining all requisite court and regulatory
approvals and other risks as discussed in the press release, that could
materially affect timing for the completion of the proposed transaction and
the final Working Capital Amount. Due to the risks, uncertainties and
assumptions inherent in forward-looking statements, prospective investors in
the securities of Verenex should not place undue reliance on these
forward-looking statements.
For further information: Jim McFarland, President & CEO, Verenex Energy Inc.,
Telephone: (403) 536-8009; or Ken Hillier, Chief Financial Officer, Verenex
Energy Inc., Telephone: (403) 536-8005, www.verenexenergy.com
