Savanna Announces Increase to Purchase Price for Acquisition of Savanna by Western Energy Services Corp. and Reiterates Rejection of the Total Offer
Savanna Energy Services Corp. ("Savanna") (TSX:SVY) is pleased to announce that Western Energy Services Corp. ("Western") (TSX:WRG) has increased the consideration payable pursuant to its previously announced acquisition of common shares of Savanna (the "Savanna Shares") to include the payment of $0.21 in cash per Savanna Share in addition to the 0.85 of a common share of Western (the "Western Shares") payable for each outstanding Savanna Share (the "Revised Western Offer"). In connection with the Revised Western Offer, Savanna and Western have entered into an amending agreement (the "Amending Agreement") dated March 14, 2017 which revises certain terms of the original arrangement agreement between Savanna and Western dated March 8, 2017 (the "Arrangement Agreement"). The acquisition of Savanna Shares will be completed pursuant to a court approved plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").
The Revised Western Offer represents a premium to the Total Offer (as defined below) of 14.8% based on the volume weighted average trading price of the Western Shares and the common shares of Total Energy Services Inc. ("Total") on the Toronto Stock Exchange (the "TSX") for the ten day period ended March 14, 2017.
Pursuant to the Revised Western Offer, the new consideration reflects a price of $2.30 per Savanna Share based on the volume weighted average trading price of Western Shares on the TSX for the ten day period ended March 14, 2017 of $2.46. This represents a premium of 14.3% over Savanna's volume weighted average trading price on the TSX for the same period of $2.01.
The consideration payable pursuant to the Total Offer reflects a price of $2.00 per Savanna Share based on the volume weighted average trading price of common shares of Total on the TSX for the ten day period ended March 14, 2017 of $13.85. This represents a 0.5% discount over Savanna's volume weighted average trading price on the TSX for the same period of $2.01.
Chris Strong, President and Chief Executive Officer of Savanna, stated: "This amendment with Western adds the certainty of cash value to what was already an excellent transaction for Savanna shareholders. The original transaction with Western was financially, strategically and operationally superior to the hostile offer from Total, and provided our shareholders a significantly greater ownership interest in what would be the second largest drilling contractor and second largest service rig contractor in Canada. The Revised Western Offer, which includes a firm $0.21 in cash per Savanna Share, equivalent to a 10.1% increase in purchase price, is clearly superior to Total's hostile offer. We look forward to completing this transaction."
The Amending Agreement also provides for an increase in the reciprocal non-completion fee by $5 million to $20 million. The other material terms and conditions of the Arrangement Agreement are not being amended.
The completion of the Arrangement is subject to customary conditions for a transaction of this nature, which include court and regulatory approvals (including the TSX), the approval of 66 2/3% of the votes cast by Savanna shareholders represented in person or by proxy at a meeting of Savanna shareholders to be called to consider the Arrangement and a majority of the votes cast by Savanna shareholders after excluding the votes cast by those persons whose votes may not be included under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and the approval of a majority of the votes cast by Western shareholders represented in person or by proxy at a meeting of Western shareholders to be called to approve the issuance of Western Shares pursuant to the Arrangement in accordance with the rules of the TSX.
A copy of the Amending Agreement will be filed on Savanna's SEDAR profile and will be available for viewing at www.sedar.com.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Based upon verbal fairness opinions from Peters & Co. Limited and Cormark Securities Inc. and the recommendation of the Special Committee of the board of directors of Savanna (the "Savanna Board"), and after consulting with its financial and legal advisors, among other things, the Savanna Board has unanimously approved the Arrangement and unanimously determined that the Arrangement is fair to the Savanna shareholders and is in the best interests of Savanna and its shareholders. The Savanna Board unanimously recommends that Savanna shareholders vote in favour of the Arrangement.
All of the directors and officers of Savanna and certain other shareholders, holding an aggregate of 13.1% of the issued and outstanding Savanna Shares, have entered into voting support agreements with Western pursuant to which they have agreed to, among other things, support the Arrangement and vote their Savanna Shares in favour of the Arrangement, subject to the terms of the voting support agreements.
Shareholders are encouraged to review Savanna's news releases dated March 9, 2017 and March 13, 2017 for a summary of the benefits of the Arrangement to Savanna shareholders.
REJECTION OF TOTAL OFFER
The Savanna Board, on the recommendation of the Special Committee of the Savanna Board, has unanimously determined that Savanna shareholders should continue to reject the offer from Total to purchase all of the Savanna Shares on the basis of 0.13 common shares of Total and $0.20 in cash for each Savanna Share.
Peters & Co. Limited is acting as financial advisor to Savanna in respect of the Arrangement and has provided the Savanna Board with its verbal opinion that, subject to certain customary assumptions, qualifications and limitations, the consideration to be received by holders of Savanna Shares pursuant to the terms of the Arrangement is fair, from a financial point of view, to the holders of Savanna Shares.
Cormark Securities Inc. has provided the Savanna Board with its verbal opinion that, subject to certain customary assumptions, qualifications and limitations, the consideration to be received by holders of Savanna Shares pursuant to the terms of the Arrangement is fair, from a financial point of view, to the holders of Savanna Shares.
Savanna is a leading contract drilling and oilfield services company operating in North America and Australia providing a broad range of drilling, well servicing and related services with a focus on fit for purpose technologies and industry-leading Aboriginal relationships.
SOURCE: Savanna Energy Services Corp.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.