Canadian Superior and Challenger Energy have entered into an arrangement agreement providing for the acquisition by Canadian Superior of Challenger. Canadian Superior will acquire all of the outstanding common shares of Challenger (the "Challenger Shares") in exchange for the issuance of 0.51 of a common share of Canadian Superior ("Canadian Superior Shares") for each outstanding Challenger Share.
Based on the 20 day volume weighted average trading price of the Canadian Superior Shares, the exchange ratio equals a price of C$.4345 per Challenger Share and represents a 36% premium to Challenger's closing trading price on June 18, 2009 and a 15% premium to the 20 day volume weighted average trading price of the Challenger Shares. The total transaction value, including the assumption of approximately C$54.4 million in Challenger's net debt, is approximately C$77.8 million.
Characteristics of the Pro Forma Company
Canadian Superior has previously announced that, as part of its restructuring pursuant to the Companies' Creditors Arrangement Act ("CCAA"), it has reached an agreement with Centrica plc. ("Centrica"), under which Centrica will acquire from Canadian Superior a 45 per cent interest in Block 5(c), located offshore Trinidad, for US$142.5 million in cash. The Centrica agreement is subject to the satisfaction of certain conditions including pre-emption rights from existing field partners and to the approval by the Court of Queen's Bench of Alberta, and by the Ministry of Energy and Energy Industries of the Government of Trinidad and Tobago.
It is Canadian Superior's objective to exit CCAA with the following assets in place; a twenty five per cent interest in Block 5(c) and its MG exploration block, both in Trinidad, all of its Western Canadian producing properties, its interest in the 7th of November block offshore Libya and Tunisia, its Liberty Natural Gas LNG project in New Jersey, and its offshore Nova Scotia exploration acreage. In addition the Company will reconstitute its Board of Directors, make additions to senior management, and also intends to have in place a new undrawn credit facility, with sufficient funding to execute its anticipated 18-month capital program.
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