The Independent Northern Directors and the Independent ATI Directors are pleased to announce that they have reached agreement on the terms of a recommended acquisition by members of the Northern Group of the entire issued and to be issued share capital of ATI Oil not already owned by Northern. Under the terms of the Proposals, which will be subject to the Conditions.
Independent Scheme Shareholders will be entitled to receive 1 New Northern Share for every 8 ATI Shares held at the Scheme Record Time and so in proportion for any ATI Shares held. Fractions of New Northern Shares will not be issued to ATI Shareholders and any fractional entitlements to New Northern Shares will be disregarded.
It is intended that the acquisition will be implemented by way of a Court-sanctioned Scheme of Arrangement under Part 26 of the Companies Act 2006 and a capital reduction under section 135 of the Companies Act 1985. Based on Northern's Closing Price of 95.5 pence per Northern Share on 2 April 2009, being the last Business Day before the date of this announcement. The Proposals value the outstanding issued share capital of ATI at £11.3 million, or 11.9 pence per ATI Share.
The offer of 1 Northern Share for every 8 ATI Shares held represents a premium of 8.5 per cent. per Share to the closing price of each ATI Share of 11.0 pence per share on 2 April 2009, being the last Business Day before the date of this announcement.
Implementation of the Scheme will be conditional upon, amongst other things, the passing of a resolution by a majority in number of those Independent Scheme Shareholders present (either in person or by proxy) and voting at the Court Meeting representing at least three-fourths in value of all Scheme Shares held by such Independent Scheme Shareholders and the passing of resolutions at the General Meeting of ATI.
The Independent ATI Directors, who have been so advised by KBR, consider the terms of the Proposals to be fair and reasonable. Accordingly, the Independent ATI Directors intend unanimously to recommend that the Independent ATI Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting.
Northern believes that it is in the interests of its shareholders to bring Northern and ATI together. This will allow the enlarged group more direct control over its Italian licence interests. ATI's constrained financial position has created difficulties and complications for Northern in progressing the development of its Italian licence interests, including in attracting external partners to participate in these licences.
Northern has received irrevocable commitments in respect of 47,228,000 ATI Shares, representing 50.1 per cent. of the existing issued share capital of ATI, to vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting to implement the Proposals.
Members of the Northern Group control 34,908,000 ATI Shares, which are registered in the names of Northern, NP Oil & Gas Holdings Limited and Giltspur Nominees and represent as at the date of this announcement 37.0 per cent. of the existing issued share capital of ATI. As a result of their interests in the Proposals, members of the Northern Group are precluded from voting at the Court Meeting or on the resolutions to be proposed at the General Meeting and, therefore, the ATI Shares held or controlled by them will not count towards the majorities required to approve the Scheme or such resolutions.
The Independent ATI Directors will resign from the Board of ATI on the Effective Date.
It is expected that the Court Meeting and the General Meeting to approve the Scheme, sanction the Capital Reduction and deal with certain related matters will be held on 28 May 2009.
It is expected that the Circular setting out further details of the Proposals and the procedures to be followed in connection with the implementation of the Scheme will be posted on or about 28 April 2009 to Scheme Shareholders and that the Proposals will become effective on or about 24 June 2009, subject, inter alia, to the satisfaction or waiver of the conditions set out in Appendix I to this announcement.
Commenting on today's announcement, Richard Latham, Chairman of Northern, said: "Northern is delighted to have agreed this proposed deal with the independent directors of ATI. Given the current financial turmoil I believe the combination of Northern and ATI will strengthen our Italian position and is therefore in the interests of both companies' shareholders. Control of the entire commercial interests in the licences will enable Northern greater management flexibilities to progress licence activities or seek new partners to finance operations."
Commenting on today's announcement, Per Gunnar Loge, Chief Executive of ATI, said: ATI has believed fully in the business potential of the joint assets in Italy, however, it has been apparent for some time that the equity market has become very difficult for small oil exploration companies and that such new equity capital that could be available would be at a large discount to the current share price. In the opinion of the Board of ATI the deal with Northern offers a better opportunity for shareholders to maintain their interest in the profit potential of these assets at less risk and less devaluation from incoming new equity"
Commenting on today's announcement, Derek Musgrove, Managing Director of Northern and Chairman of ATI said: "My colleague, Chris Foss, and I sit on the boards of both companies. As a result, we have not taken part in the commercial deliberations leading up to the offer by Northern or the recommendation from ATI , but Chris and I are delighted with the news."
Investec is acting as financial adviser to Northern. KBR is acting as financial adviser to ATI.
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