OKLAHOMA CITY, Dec. 9, 2013 /CNW/ - Equal Energy Ltd. ("Equal" or the
"Company") (NYSE: EQU) (TSX: EQU) is pleased to announce that the
Company has entered into a definitive agreement ("Arrangement
Agreement") with Petroflow Energy Corporation and Petroflow Canada
Acquisition Corp. (collectively defined as "Petroflow") for the cash
purchase of all of the issued and outstanding common shares of Equal at
a price of US$5.43 per share, on a fully-diluted basis. The total
transaction value, including net debt and transaction costs, is
approximately US$230 million. The transaction received unanimous
approval by Equal's board of directors and will be completed by way of
a plan of arrangement under the Business Corporations Act (Alberta)
The US$5.43 per share offered represents a 56% premium to the US$3.49
closing price on March 22, 2013, the trading day prior to the Company's
announcement that it was pursuing a strategic alternatives process. The
consideration is also a 23% premium to the US$4.43 closing price on
November 18, 2013, the trading day prior to Equal's announcement that
the strategic alternatives process successfully resulted in exclusive
negotiations for a proposed transaction.
Equal's board of directors, with input from the Company's advisors and
management team, unanimously determined that the Arrangement with
Petroflow is in the best interest of the Company's shareholders. In
light of this determination, the Board has resolved to recommend that
its shareholders vote their shares in favor of the Arrangement. All
members of management of the Company and its board of directors have
indicated their intention to vote their shares in favor of the
The Arrangement must be approved by a vote of 66 2/3% of the votes cast
by shareholders at a special meeting.
As per the Arrangement Agreement and subject to certain fiduciary
exceptions, the Company has agreed that it will not solicit or initiate
discussions with respect to any other business combination or sale of
material assets. In the Arrangement Agreement, Equal also made
customary representations, warranties and covenants to Petroflow.
Pursuant to the Arrangement Agreement, a termination fee of US$2 million
will be payable by the Company in certain circumstances. These
circumstances include if the Company terminates the Arrangement
Agreement to enter into an agreement with a party other than Petroflow,
in response to a superior proposal, or if the board of directors of the
Company withdraws or modifies its recommendation in favor of the
Arrangement with Petroflow. Alternatively, a termination fee of US$2
million will be payable to the Company if Petroflow is unable to
complete the Arrangement.
Following the effective date of the Arrangement, Petroflow will make an
offer to purchase Equal's entire outstanding CAD $45 million of
convertible debentures within 30 days. In accordance with the terms of
the indenture, cash consideration equal to 101% of the face value, plus
accrued and unpaid interest, will be offered to holders of the
Global Hunter Securities acted as the primary financial advisor to Equal
in connection with the strategic alternatives process. Scotia Waterous
also provided certain advisory services to Equal. Stikeman Elliott LLP
and Dorsey & Whitney LLP acted as Canadian and US legal counsel,
respectively, to the Company.
GMP Securities LLC and Kinetic Advisors LLC acted as financial advisors
to Petroflow. Kirkland & Ellis LLP and McMillan LLP acted as US and
Canadian legal counsel, respectively, to Petroflow.
Additional information and where to find it:
A copy of the Arrangement Agreement will be filed on the SEDAR website (www.sedar.com).
Equal plans to file with the Securities and Exchange Commission (the
"SEC") and furnish to its shareholders a proxy statement in connection
with the proposed transaction, pursuant to which Petroflow will
purchase for cash all of the issued and outstanding common shares of
Equal. The proxy statement will contain important information about the
proposed merger and related matters. INVESTORS AND SHAREHOLDERS ARE
URGED TO READ THE PROXY STATEMENT CAREFULLY WHEN IT BECOMES AVAILABLE.
Equal and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the shareholders of
Equal in connection with the proposed transaction. Information
regarding the interests of these directors and executive officers in
the transaction described herein will be included in the proxy
statement described above. Additional information regarding these
directors and executive officers is also included in Equal's proxy
statement for its 2013 Annual and Special Meeting of Shareholders,
which was filed with the SEC on April 4, 2013. Investors and
shareholders will be able to obtain free copies of the forthcoming
proxy statement, past proxy statements and other documents filed with
the SEC by Equal through the website maintained by the SEC at www.sec.gov. In addition, investors and shareholders will be able to obtain free
copies of the proxy statement from Equal by telephone at (405)
242-6000, by mail at: Equal Energy Ltd., 4801 Gaillardia Pkwy, Suite
325, Oklahoma City, OK, Attn: Investor Relations or by going to Equal's
Investor Relations page on its corporate website at http://www.equalenergy.ca.
About Equal Energy:
Equal Energy is an oil and gas exploration and production company based
in Oklahoma City, Oklahoma. Our oil and gas assets are centered on the
Hunton liquids-rich natural gas property in Oklahoma. Our shares are
listed on the New York Stock Exchange and the Toronto Stock Exchange
under the symbol (EQU). Our convertible debentures are listed on the
Toronto Stock Exchange under the symbols EQU.DB.B.
Certain information in this press release constitutes forward-looking
statements under applicable securities law including statements
relating to the voting of shares by management and the board of
directors, the completion of the Arrangement, the offer for the
convertible debentures and the payment of a break-fee. Any statements
that are contained in this press release that are not statements of
historical fact may be deemed to be forward-looking statements.
Forward-looking statements are often identified by terms such as "may,"
"should," "anticipate," "expects," "seeks" and similar expressions.
Forward-looking statements necessarily involve known and unknown risks,
such as risks associated with oil and gas production; marketing and
transportation; loss of markets; volatility of commodity prices;
currency and interest rate fluctuations; imprecision of reserve and
future production estimates; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to realize
the anticipated benefits of dispositions; inability to access
sufficient capital from internal and external sources; changes in
legislation, including but not limited to income tax, environmental
laws and regulatory matters. Readers are cautioned that the foregoing
list of factors is not exhaustive.
Readers are cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information,
although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ
materially from those anticipated. Forward looking statements contained
in this press release are expressly qualified by this cautionary
Additional information on these and other factors that could affect
Equal's operations or financial results are included in Equal's reports
on file with Canadian and U.S. securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com), the SEC's website (www.sec.gov), Equal's website (www.equalenergy.ca) or by contacting Equal. Furthermore, the forward looking statements
contained in this press release are made as of the date of this press
release, and Equal does not undertake any obligation to update publicly
or to revise any of the included forward-looking statements, whether as
a result of new information, future events or otherwise, except as
expressly required by securities law.
SOURCE: Equal Energy Ltd.
For further information:
President and CEO
Senior Vice President Finance and CFO