88 Energy, XCD merger moving forward, XCD equity value $8.9M
On May 7, 88 Energy and XCD Energy issued a joint announcement saying that the members of XCD’s board of directors voted unanimously to recommend XCD security holders accept 88E’s improved takeover bid “in the absence of a superior proposal and subject to the independent expert concluding that the offer is fair and reasonable, or not fair but reasonable.”
The offer values the equity of XCD at approximately $8.9 million and delivers a premium to XCD shareholders and option holders, who will retain approximately a 20% ownership and participation in the future performance of the combined Perth-based companies, who are both focused on Alaska North Slope exploration.
The initial unsolicited non-cash offer for 100% of XCD’s shares involved each XCD shareholder receiving 1.67 88E shares for every XCD share and 0.5 of an 88E share for every XCD quoted option held.
The improved offer gives each XCD shareholder 2.4 new 88E shares for every XCD share and 0.7 of an 88E share for every XCD quoted option held.
All of the XCD directors “intend to accept, or procure the acceptance of” the offers, including XCD managing director Dougal Ferguson who intends to exercise his XCD performance rights ($10 million) in the “bid implementation agreement once vested,” and then accept the XCD shares “issued on exercise into the offers,” the companies said.
All the directors of XCD also plan to accept the offers for any of their own shares and listed options (including ones they control). Collectively the directors represent 3.4% of XCD shares in issue and 3.6 % of the listed options in issue.
Their commitments also carry the qualification that they will support acceptance of the 88E takeover bid “in the absence of a superior proposal and subject to the independent expert concluding that the offer is fair and reasonable or not fair but reasonable.”
88E said April 27 that it had several XCD shareholders committed to the terms of the takeover; specifically, they’d “entered into pre-bid acceptance agreements with 88 Energy in respect of 18.5% of shares on issue and 6.8% of listed options on issue.” That same claim was repeated in the joint May 7 announcement.
The combined North Slope portfolio of the two companies will include three key groups of leases at various stages of exploration: 88E’s Project Icewine and Yukon Gold leases and XCD’s Project Peregrine.
The companies expect the bidder’s statement from 88E and the target’s statement from XCD, containing further information about the takeover offer, to be posted to XCD shareholders and listed option holders in or around late-May, with the offers to open for acceptance around that same time.
- KAY CASHMAN