Max Petroleum: For Sale – Company Commences Formal Sale Process
Max Petroleum today announces that it is launching a review of strategic options open to the Company with the intention of maximising value for shareholders.
The review of strategic options may include a corporate transaction such as a merger with, acquisition of or subscription for the Company’s securities by a third party, a sale of the business or a farm down or disposal of assets. Discussions in relation to a merger with a third party or a sale of the Company will take place within the context of a “formal sale process” in accordance with Note 2 on Rule 2.6 of the City Code on Takeovers and Mergers (the “Code”), such that the Board of Max Petroleum is able to have discussions with third parties interested in such a transaction on a confidential basis.
The formal sale process
The Company has appointed Blackstone Group International Partners LLP (“Blackstone”) as exclusive financial adviser to conduct the formal sale process. Parties with a potential interest in making an offer for, merging with or proposing other forms of corporate transaction with, Max Petroleum should contact Blackstone (contact details as set out below).
Any interested party will be required to enter into a non-disclosure agreement with the Company on reasonable terms satisfactory to the Board and on the same terms, in all material respects, as the other interested parties before being permitted to participate in the process. Following execution of an agreed non-disclosure agreement, the Company intends to provide interested parties with information materials on the Company. Following receipt of the materials, interested parties shall be invited to submit proposals to the Company.
The Board reserves the right to alter any aspect of the process as outlined above or to terminate it at any time and will make further announcements as appropriate. The Board reserves the right to reject any approach or terminate discussions with any interested party or participant at any time.
The Panel on Takeovers and Mergers (the “Takeover Panel”) has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement (subject to note 3 to Rule 2.2 of the Code) and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Code, for so long as it is participating in the formal sale process. Interested parties should note Rule 21.2 of the Code, which prohibits any form of inducement fee or other offer-related arrangement, and that the Company has not at this stage requested any dispensation from this prohibition under Note 2 of Rule 21.2 of the Code.
There can be no certainty that any offers will be made as a result of the formal sale process, that any sale or transaction will be concluded, nor as to the terms on which any offer might be made.
Accounting and finance update
In line with the Company’s announcement on 12 June 2014 of estimated proved and probable reserves of 9.5 million barrels of oil equivalent in proved and probable (“2P”) reserves as at 31 March 2014, as estimated by its Competent Person Ryder Scott Company, it expects there will be an impairment of the total value of the oil and gas and capitalised exploration assets of the Company, reported to be US$299.6 million as of 30 September 2013, when the Company’s financial results as of 31 March 2014 are announced in August 2014. A non-cash impairment charge of US$64.6 million against capitalized exploration costs allocated to its post-salt assets is expected to be made to reflect the limited exploration potential of its post-salt assets.
A possible additional non-cash impairment charge of up to US$113.0 million for the Company’s pre-salt assets is also being evaluated. No final decision has been made and this possible pre-salt impairment is dependent on the assessed likelihood of: i) financing a re-entry and completion of the Company’s pre-salt exploration well, NUR-1, which was suspended in 2012 and requires US$20-25 million of additional capital; and ii) of gaining regulatory approval for an extension of the exploration period of the Blocks A&E Licence to complete NUR-1 beyond March 2015, when the current approval expires.
The Company also advises that negotiations with Sberbank remain ongoing to reset the technical production and reserves covenants under the Sberbank US$90 million credit facility (as announced with the Company’s interim results on 30 December 2013) to reflect the current profile of reserves and production. The Company continues to meet its payment obligations under the facility.
Rule 2.10 Disclosure
In accordance with Rule 2.10 of the Code, Max Petroleum confirms that it currently has in issue 2,175,305,483 ordinary shares of 0.01 pence each. The International Securities Identification Number for the ordinary shares is GB00B0H1P667.