Australia's Armour Energy Rejects WestSide's Takeover Offer

Australia’s Armour Energy Limited (Armour or the Company) released Wednesday its Target’s Statement in response to WestSide Corporation Limited’s (WestSide) conditional takeover Offer of $0.0861 (AUD 0.12) per share (Offer).

The Target’s Statement recommends Armour shareholders reject WestSide’s current inadequate Offer.

The Directors of Armour advise that the Independent Expert’s Report (IER) has concluded that the Offer is not fair and not reasonable, with a valuation for Armour in the range of $0.158 (AUD 0.22) to $0.2657 (AUD 0.37) per share. The IER was prepared by BDO Corporate Finance (Qld) Limited.

Armour Directors and certain shareholders, that own or control 29.51 percent of Armour shares, do not intend as at the date of the Target’s Statement to accept WestSide’s current Offer (however reserve the right to do so in the case of an increase in the Offer Price).

The reasons for the recommendation that shareholders reject the WestSide Offer are as follows:

• The Independent Expert has concluded that the Offer substantially undervalues Armour Energy and is not fair and not reasonable
• The Offer undervalues the potential upside contained in Armour’s diverse portfolio of assets including the proposed AEP Northern Territory Farm‐Out and the proposed Roma Shelf Assets acquisition
• The Offer is opportunistic, following a substantial and prolonged decline in oil prices; and
• The Offer is conditional and it is uncertain whether it will ever become unconditional. As a result of the entry into the agreements to give effect to the AEP Northern Territory Farm‐Out (which breached a condition of the Offer), it is not clear whether the Offer will ever become unconditional (irrespective of how Armour Shareholders vote on the AEP Northern Territory Farm‐Out at the upcoming extraordinary general meeting)

Following the release of the Target’s Statement, Armour Energy Executive Chairman, Nicholas Mather said:

“WestSide’s Offer is inadequate and does not reflect fair value for Armour shares. It is opportunistic and comes following the recent sharp and dramatic fall in global energy prices. It attributes no value to the proposed acquisition of the Roma Shelf Assets which have potential in the near‐term to produce oil and gas, and generate cashflow.

“The AEP Northern Territory Farm‐Out values Armour substantially higher, on a non‐control basis. The WestSide Offer values Armour Energy at approximately $26.3 million (AUD 36.6 million), whereas the proposed equity placement by AEP at $0.1436 (AUD 0.20) per share values Armour at approximately $43.7 million (AUD 60.9 million), a significant premium to the Offer and shareholders would retain control.

“Shareholders should note that even if they vote against the AEP transaction, it is not certain whether the WestSide Offer will proceed.

“Armour has a clear strategy which, as demonstrated through recent value enhancing transactions, is designed to maximise value for all shareholders.”

Armour Energy’s Directors encourage shareholders to read the Target’s Statement carefully including the Directors reasons for recommending that shareholders reject the WestSide Offer.