RNS No 1405b
SEAFIELD RESOURCCES PLC
31st July 1997
Part 1
DANA PETROLEUM PLC
Recommended Offer for Seafield Resources plc
SUMMARY
- The board of Dana is pleased to announce it has agreed the
terms of a recommended offer to be made for Seafield.
- The Offer will be made by UBS and Guinness Mahon on behalf
of Dana, on the basis of 10 new Dana Shares for every 3
Seafield Shares, and values each Seafield Share at 78.3p
and Seafield at approximately #54.5m based on Dana's
closing share price last night of 23.5p.
- A full cash alternative underwritten by UBS at 72p per
Seafield Share will be available.
- Undertakings to accept the Offer have been received by Dana
(including from Seafield Directors) in respect of
34,903,186 Seafield Shares, in aggregate, which represents
in excess of 50 per cent. of Seafield's current issued
share capital.
- There is a good fit between the two companies in terms of
production and earnings profiles. The Enlarged Group will
have an improved asset balance in terms of exploration
versus production, oil versus gas, and geographical
location, thereby providing a solid foundation for future
growth.
- The two companies already have common interests in licences
offshore Ghana and Australia and the Enlarged Group will
have greater control over the exploitation of these assets.
- The deal will create a new medium-sized independent British
exploration and production company with increased upside
and the technical and financial resources to deliver. The
Enlarged Group will be well placed to expand
internationally and to increase value for shareholders.
- Charles Smith, Chairman of Dana, commented: "This deal
represents a decisive step in line with Dana's strategy to
expand into carefully selected international areas where a
British-Russian group can attain mutual benefits".
John Raitt, Chairman of Seafield, commented:"I am confident
that Dana and Seafield together will provide a strong
platform with the complementary skills and assets needed to
generate success and shareholder value in the future".
This summary should only be read in conjunction with the
attached press announcement which includes further information
on the Offer.
ENQUIRIES
Tom Cross Dana Petroleum plc 0171 256 8900
John Craven
Lesley Watkins UBS Limited 0171 901 3333
David Blewden
Jagjit Mundi Guinness Mahon & Co. Limited 0171 623 9333
Charles Wyatt Walter Judd Public Relations 0171 236 4541
John Raitt Seafield Resources plc 0171 227 1700
Rob Gray Robert Fleming & Co. Limited 0171 638 5858
Simon Gorringe
Tony Mayes Hennerton Associates 0171 227 1700
UBS Limited, which is regulated by The Securities and Futures
Authority Limited, is acting as joint financial adviser to
Dana and no one else in connection with the matters described
herein and will not be responsible to any person other than
Dana for providing the protections afforded to its customers
nor for providing advice in relation to the Offer or any of
the matters referred to in this press release.
Guinness Mahon & Co. Limited, which is regulated by The
Securities and Futures Authority Limited, is acting as joint
financial adviser to Dana and no one else in connection with
the matters described herein and will not be responsible to
any person other than Dana for providing the protections
afforded to its customers nor for providing advice in relation
to the Offer or any of the matters referred to in this press
release.
Robert Fleming & Co. Limited, which is regulated by The
Securities and Futures Authority Limited, is acting as
financial adviser to Seafield and no one else in connection
with the matters described herein and will not be responsible
to any person other than Seafield for providing the
protections afforded to its customers nor for providing advice
in relation to the Offer or any of the matters referred to in
this press release.
The Offer is not being made directly or indirectly in, or by
use of the mails, of, or by any means or instrumentality of
interstate or foreign commerce of, or any facilities of
national securities exchange of, the United States nor Canada,
Australia or Japan. This includes, but is not limited to,
facsimile transmission, telex and telephone.
Accordingly, copies of this announcement and any related
offering documents are not being, and must not be, mailed or
otherwise distributed in or into the United States, Canada,
Australia or Japan and doing so may invalidate any purported
acceptance.
RECOMMENDED OFFER ON BEHALF OF DANA FOR SEAFIELD
Introduction
The boards of Dana and Seafield are pleased to announce the
terms of a recommended offer to be made by UBS and Guinness
Mahon, on behalf of Dana, to acquire the entire issued share
capital of Seafield. The Offer is on the basis of 10 new Dana
shares for every 3 Seafield Shares and values the issued share
capital of Seafield at approximately #54.5 million. A full
cash alternative is being provided by UBS.
The Seafield Directors, who have been so advised by Flemings,
consider the terms of the Offer and the Cash Alternative to be
fair and reasonable and in the best interests of Seafield
Shareholders and unanimously recommend acceptance.
Irrevocable undertakings to accept the Offer have been
received from holders of 24,625,657 Seafield Shares in
aggregate, comprising the holdings of the Seafield Directors
and the holdings of National Power PLC, Limpopo Investments
Limited and David Keith, representing approximately 35.4 per
cent. of the issued share capital of Seafield. All of these
Seafield Shareholders have undertaken to elect to receive new
Dana Shares under the terms of the Offer. These undertakings
remain binding in the event that a higher competing offer is
received.
In addition, an undertaking to accept the Offer has been
received from a holder of 10,277,529 Seafield Shares,
representing approximately 14.8 per cent. of the issued share
capital of Seafield. This undertaking does not specify whether
or not an election for the Cash Alternative will be made and
does not remain binding in the case of a higher offer and
certain other circumstances.
Accordingly, undertakings in respect of 34,903,186 Seafield
Shares in aggregate have been received, representing in excess
of 50 per cent. of the current issued share capital of
Seafield.
The Offer
The Basic Terms of the Offer
On behalf of Dana, UBS and Guinness Mahon will offer to
acquire, on the terms and subject to the conditions set out in
Appendix I to this press announcement, all of the Seafield
Shares on the following basis:
10 new Dana Shares for every 3 Seafield Shares
and so in proportion for any other number of Seafield Shares
held. Fractions of new Dana Shares will not be allotted or
issued to persons accepting the Offer, but will be disregarded
and entitlements will be rounded down to the nearest whole
number of new Dana Shares.
On the basis of the middle market price of a Dana Share of
23.5p at the close of business on 30th July, 1997 (the last
business day prior to the announcement of the Offer), the
Offer values each Seafield Share at approximately 78.3p and
values the current issued share capital of Seafield at
approximately #54.5 million. The Offer represents a premium
of 16.0 per cent. over the middle market price of 67.5p per
Seafield Share at the close of business on 30th July, 1997
(the last business day prior to the date of the announcement
of the Offer) and a premium of 46.4 per cent. over the middle
market price of 53.5p per Seafield Share at the close of
business on 6th June, 1997 (the last business day prior to the
announcement by Seafield that it was in discussions which
might or might not lead to an offer).
The Offer extends to any Seafield Shares which may be
unconditionally allotted or issued while the Offer remains
open for acceptance as a result of the valid exercise of
options under the Seafield share option scheme.
Full acceptance of the Offer (assuming no exercise of options
under the Seafield share option scheme) would result in the
issue of approximately 232 million new Dana Shares,
representing approximately 28.5 per cent. of Dana's enlarged
issued share capital.
The Cash Alternative
Under the Cash Alternative, UBS is providing Seafield
Shareholders who validly accept the Offer with the opportunity
to elect to receive cash in respect of all or part of their
holdings of Seafield Shares on the following basis:
72p in cash for each Seafield Share
The Cash Alternative represents a premium of 6.7 per cent.
over the middle market price of 67.5p per Seafield Share at
the close of business on 30th July, 1997 (the last business
day prior to the date of the announcement of the Offer) and a
premium of 34.6 per cent. over the middle market price of
53.5p per Seafield Share at the close of business on 6th
June, 1997 (the last business day prior to the announcement by
Seafield that it was in discussions which might or might not
lead to an offer).
To the extent that there are valid elections for the Cash
Alternative, UBS will pay, or cause to be paid, cash to
satisfy such valid elections.
The Cash Alternative will remain open for acceptances until
3.00 p.m. on 21st August, 1997 and, if the Offer is then (or
is then capable of being declared) unconditional as to
acceptances, the Cash Alternative will close unless Dana, UBS
and Guinness Mahon agree to it being extended. If, at that
time, the Offer is not (and is not then capable of being
declared) unconditional as to acceptances and is extended
beyond that time, Dana, UBS and Guinness Mahon have reserved
the right to close or to extend the Cash Alternative. If the
Cash Alternative lapses or closes, Dana and UBS reserve the
right to re-introduce a cash alternative as long as the Offer
is then still conditional as to acceptances.
References to the time during which the Cash Alternative
remains open, or at which it closes, are references to the
time by which an acceptance complete in all respects must be
received by the receiving agent IRG plc in order for any
election for the Cash Alternative to be valid.
No election for the Cash Alternative will be valid unless both
a valid acceptance of the Offer and a valid election for the
Cash Alternative, duly completed in all respects and
accompanied, for any Seafield Shareholder whose Seafield
Shares are in certificated form, by all relevant share
certificate(s) and/or other document(s) of title, are duly
received by IRG plc by the time and date on which the Cash
Alternative closes.
The cash consideration which may be payable if Dana chooses to
exercise the provisions of Sections 428 to 430F of the UK
Companies Act 1985 will be financed from the existing
resources of Dana.
It is estimated that the maximum cash consideration if Dana
does exercise the provisions of Sections 428 to 430F of the
UK Companies Act 1985 would require the payment by Dana of
approximately #5.2 million. UBS and Guinness Mahon are
satisfied that Dana has available to it the necessary
financial resources to satisfy the maximum amount in full.
BACKGROUND TO AND REASONS FOR THE OFFER
It is the strategy of the Dana Board to seek opportunities to
widen Dana's portfolio of oil and gas interests, in part to
reduce its reliance on future revenues from operations in a
single country, but also to give the opportunity for Dana's
existing partners to co-venture with Dana in new international
areas. Such areas will be carefully selected to provide
mutual benefits to Dana and its major Russian partners and
would align the respective long-term business interests of
Dana with those partners.
The Dana Board has been continuing to look to acquire two
types of interest: first, producing oil or gas interests which
are currently operating with a positive cashflow; and second,
exploration opportunities which could potentially become
significant producing assets in the medium to long-term. The
acquisition of Petroceltic last year formed the first step for
both development strategies through a single transaction and
the acquisition of Seafield is a further significant step in
delivering this strategy.
Specifically, the Dana Directors believe that the acquisition
of Seafield will result in the following benefits to the
Enlarged Group:
- increased and complementary production and earnings
profiles, offering cashflow and tax synergies;
- an improved asset balance in terms of oil versus gas and
exploration versus production, providing a solid foundation
for future growth;
- complementary skills and experience of the two companies'
executive teams, with Seafield's bias towards exploration and
Dana's towards development;
- the opportunity to exploit additional assets at the
exploration and appraisal stage in the FSU and in selected
countries internationally, which may be awarded to the
Enlarged Group as a result of Dana's strong relationships with
major Russian oil and gas companies;
- controlled diversification and enhancement of Dana's asset
base, reducing its reliance on a single geographical area,
West Siberia;
- common interests in licences offshore Ghana and Australia,
offering the Enlarged Group greater control over the
exploitation of these assets; and
- the creation of a new medium-sized independent British
exploration and production company with increased technical
and financial resources, well placed to expand internationally
and to increase value for shareholders.
Financial effects of acceptance
The following table sets out, for illustrative purposes only,
and on the bases and assumptions set out in the notes below,
the financial effects of acceptance on capital value for an
accepting holder of 300 Seafield Shares if the Offer becomes
or is declared unconditional in all respects.
Cash
The Offer Alternative
# #
Increase in capital value
Cash received - 216
Market value of 1,000 Dana Shares received(1) 235 -
Market value of 300 Seafield Shares(2) 202.5 202.5
_____ _____
Increase in capital value 32.5 13.5
===== =====
Percentage increase 16.0% 6.7%
Notes:
1) The market value of new Dana Shares is based on the
closing middle market price of 23.5p per Dana Share derived
from the London Stock Exchange Daily Official List for 30th
July, 1997, being the last business day prior to the
announcement of the Offer
2) The market value of a Seafield Share is based on the
closing middle market price of 67.5p per Seafield Share
derived from the London Stock Exchange Daily Official List for
30th July, 1997 the last business day prior to the
announcement of the Offer.
3) As no dividend has been declared by Dana or Seafield in
respect of the last financial year no comparison of gross
income has been presented.
Information on Dana
Dana is an independent oil and gas exploration and production
company, listed on the London Stock Exchange and the Irish
Stock Exchange. The market capitalisation of Dana on 30th
July, 1997 was approximately #137 million. Dana is currently
incorporated in Ireland but intends to transfer its domicile
to the UK where its management is already based.
Dana is developing two oil fields in West Siberia through
joint ventures with established and influential Russian
partners, and has a 10 per cent. interest in Evikhon, a
Russian company with interests in two joint ventures with
major international oil companies. Dana also has gas royalty
income from two fields offshore Ireland and, in joint ventures
with Seafield, holds exploration assets offshore West Africa
and Western Australia.
In April 1997 Dana completed a placing and open offer raising
#30 million to fund the acquisition of further interests in
its existing projects in West Siberia and the development of
its assets in West Siberia and exploration in West Africa and
Western Australia.
Information on Seafield
Seafield is a UK-based oil and gas exploration and production
company. The Seafield Group has interests on the UK
Continental Shelf, offshore Ireland, the Netherlands,
Indonesia, Western Australia, Ghana and onshore Syria.
Seafield is listed on the London Stock Exchange.
Seafield's current production is from the Victor gas field in
the North Sea and from the Kishma oil field in Syria. The
Victor field, in which Seafield has a five per cent. interest,
is operated by Conoco (UK) Ltd and the net production
attributable to Seafield's interest was 0.5 mmboe in the year
ended 31st December, 1996. Production at Kishma, in which
Seafield holds a 10 per cent. interest, commenced on 30th
June, 1997 with production of approximately 5,000 bopd. The
field is operated by Tullow Syria Oil plc.
Production from the Durward and Dauntless fields, in each of
which Seafield has a 10 per cent. interest, is scheduled to
commence shortly. The fields, which are located in the North
Sea, are operated by Amerada Hess Limited.
The Seafield Group has exploration interests in the Northern,
Central and Southern North Sea, Morecambe Bay and offshore the
Netherlands, West of Ireland, Indonesia, Western Australia and
Ghana. Seafield's interests in the exploration blocks range
from 3.25 per cent. to 45 per cent.
Financial Information on Seafield
The financial information on the Seafield Group set out below
has been extracted from the audited accounts for the three
years ended 31st December, 1996:
31st December
1994 1995 1996
#'000 #'000 #'000
Turnover 6,495 6,137 7,591
Profit before tax 1,901 1,872 3,063
Net assets 28,546 30,497 41,225
Current Trading and Prospects
The Dana Directors believe that following the acquisitions and
the fund raising completed in April 1997, Dana is well placed
to develop significant revenue streams from its existing
projects in West Siberia in the medium term. The recent
commencement of oil export sales by YoganOil provide the Dana
Directors with further confidence in Dana's existing strategy
in West Siberia of developing oil fields close to existing
infrastructure with influential local partners.
In relation to Evikhon the Dana Directors were pleased to note
that on 24 April, 1997 the Russian parliament approved the
Salym Joint Venture for inclusion in the second list of fields
eligible for development on production-sharing terms, which
they believe should pave the way for the full scale
development of the Salym fields.
Seafield has entered a new phase, with the onset of oil
production from its Kishma field interest in Syria and,
shortly, from the Durward and Dauntless fields offshore the
UK. The end of the Victor field plateau production period,
which was forecast for 1997, occurred at the beginning of July
with a consequent reduction in production rates. A well on
Netherlands Block B17a, to which Seafield farmed-in, resulted
in a small discovery which is the subject of a production
licence application by the block partners.
In its exploration activities, an unsuccessful well on the
Mortimer prospect in the UK Central North Sea was a
disappointment. Drilling is expected to commence near to the
Durward and Dauntless fields shortly.
In addition, following its successful application for a
petroleum agreement in Ghana, announced earlier this year,
Seafield has continued to build on its position in Indonesia
and expects a further acreage award shortly. The Seafield
Directors believe that such successes demonstrate Seafield's
continuing ability to access quality exploration
opportunities.
The Dana Directors believe that following the Offer the
Enlarged Group will be well placed to develop its existing
projects and to pursue further larger opportunities as they
arise. In particular, the Dana Directors believe that the
Enlarged Group will be well balanced between cashflow from
existing projects in the North Sea, Ireland and West Siberia
and the extensive exploration acreage that the Enlarged Group
will hold.
Proposed UK Registration
In the March Prospectus the Dana Directors stated that, since
the Company's head office in London and the majority of its
activities are based in the United Kingdom or West Siberia,
they believed it would be appropriate for the Company to be
domiciled in the United Kingdom. Since, following the
completion of the Offer, this will still hold true, the Dana
Directors are intending to propose a scheme of arrangement to
shareholders by the end of the first quarter of 1998 so that,
subject to Irish Court approval, the Enlarged Group's
operations will become controlled by a company registered
under the laws of England and Wales at the earliest
opportunity after completion of the Offer.
Seafield's management and employees
Following the Offer becoming unconditional in all respects, it
is intended that John Raitt, the Chairman of Seafield, and the
non-executive directors of Seafield will resign from the
Seafield Board. Roger Witts, the finance director, Hilary
Worboys, the legal and commercial director, and Chris Pullen
and Lloyd Forsey, who are the senior exploration managers of
Seafield will remain as senior employees of the Enlarged Group
on their current terms. Dana has confirmed that the existing
rights, including pension rights, of all other employees of
Seafield will be fully safeguarded.
John Raitt has agreed to a compensation payment of #145,000 in
connection with the early termination of his service contract,
which will become payable on the Offer becoming unconditional
in all respects.
John Chiene, Colin Webster and Graham Brown have agreed to a
payment of #8,750 each as compensation for the early
termination of their respective appointments, which will
become payable on the Offer becoming unconditional in all
respects.
Undertakings to accept the Offer
National Power PLC, Limpopo Investments Limited and David
Keith have given irrevocable undertakings to accept the Offer
in respect of their shareholdings of 24,265,851 Seafield
Shares, representing 34.9 per cent. of Seafield's issued share
capital. They have each undertaken to elect to receive new
Dana Shares under the terms of the Offer.
The Seafield Directors intend to accept, or procure acceptance
of, the Offer in respect of their direct Seafield
Shareholdings, amounting in aggregate to 359,806 Seafield
Shares, representing 0.5 per cent. of Seafield's issued share
capital. The Seafield Directors have signed irrevocable
undertakings to this effect and have undertaken to elect to
receive new Dana Shares under the terms of the Offer.
All of these undertakings remain binding in the event that a
higher competing offer is received.
In addition an undertaking to accept the offer has been
received from a holder of 10,277,529 Seafield Shares,
representing approximately 14.8 per cent. of the issued share
capital of Seafield. This undertaking does not specify
whether or not an election for the Cash Alternative will be
made and does not remain binding in the case of a higher offer
and certain other circumstances.
Accordingly, undertakings in respect of 34,903,186 Seafield
Shares in aggregate have been received, representing in excess
of 50 per cent. of the current issued share capital of
Seafield.
Seafield share option scheme
The Offer extends to any Seafield Shares issued or
unconditionally allotted while the Offer remains open for
acceptance, including Seafield Shares issued pursuant to the
exercise of share options granted under the Seafield share
option scheme. If the Offer becomes or is declared wholly
unconditional, appropriate proposals will be made, in due
course, to the holders of Seafield options not exercised while
the Offer remains open for acceptance.
Further terms and conditions of the Offer
Seafield Shares will be acquired under the Offer fully paid
and free from all liens, equities, charges, encumbrances and
other interests and together with all rights now or hereafter
attaching thereto, including the right to receive and retain
all dividends and other distributions declared, made or paid
hereafter.
The Offer is conditional, inter alia, on:
i) the Underwriting Agreement having become unconditional in
all respects save for the Offer not having become
unconditional and not having been terminated in accordance
with its terms;
ii) the passing of a special resolution by Dana Shareholders
to authorise the implementation of the Offer; and
iii) the admission of the new Dana Shares to the Official List
and the Irish Official List;
An Extraordinary General Meeting of Dana is to be convened for
22nd August, 1997 at which this special resolution will be
proposed.
Acceptances of the Offer must be received by no later than
3.00 p.m. on 21st August, 1997. If the Offer becomes or is
declared unconditional as to acceptances, the Offer will
remain open for acceptance for not less than 14 days after the
date on which it would otherwise have expired.
The new Dana Shares will be issued credited as fully paid and
will rank pari passu in all respects with the existing Dana
Shares. Application has been made for the new Dana Shares to
be admitted to the Official List and to the Irish Official
List.
Further conditions of the Offer are set out in Appendix I to
this press announcement.
Posting of the Documents
The formal Offer Document, setting out details of the Offer,
the Listing Particulars and the Form of Acceptance will be
posted to Seafield Shareholders (other than restricted
overseas shareholders) later today. In addition the Offer
Document, the Listing Particulars, the Circular and a Form of
Proxy for the Extraordinary General Meeting will be posted to
Dana Shareholders later today.
Copies of the documents will be available at the offices of
UBS Limited, 100 Liverpool Street, London, EC2M 4RH and
Guinness Mahon & Co. Limited, 32 St. Mary at Hill, London,
EC3P 3AJ.
MORE TO FOLLOW
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