Granite Oil Corp. Agrees to Sale to International Petroleum Corporation For $0.95 Cash Per Share
CALGARY, Alberta, Jan. 20, 2020 (GLOBE NEWSWIRE) — GRANITE OIL CORP. (“Granite” or the “Company”) (TSX: GXO)(OTCQX:GXOCF) is pleased to announce that it has entered into an arrangement agreement (the “Agreement”) with International Petroleum Corporation (TSX, Nasdaq Stockholm: IPCO) (“IPC”), pursuant to which IPC will acquire all of the issued and outstanding common shares of Granite (the “Shares”) for cash consideration of $0.95 per Share (the “Transaction”). The Transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) (the “Arrangement”). The Transaction values Granite at approximately $79.7 million, including the assumption by IPC of Granite’s net debt and transaction costs. The cash consideration offered to Granite shareholders represents a 61% premium to the closing price of the Shares on January 17, 2020 and a 77% premium over the 30-day volume weighted average trading price of the Shares on the TSX up to and including January 17, 2020.
The board of directors of Granite (the “Board“) formed a committee of independent directors (the ”Special Committee“) on December 4, 2019 to, among other things, review and evaluate the terms of the unsolicited proposal from IPC, review and consider alternatives to the Transaction, and to negotiate the terms and conditions of the Transaction and to make a recommendation to the Board in respect of the Transaction and other related matters.
Cormark Securities Inc. and National Bank Financial Inc. acted as co-financial advisors to Granite and have each provide its verbal opinion that, as of the date hereof and subject to review of final documentation, the consideration to be received by Granite shareholders pursuant to the Transaction is fair, from a financial point of view, to Granite shareholders (the “Fairness Opinions”).
Following an extensive review and analysis of the Transaction and the consideration of other available alternatives, the Fairness Opinions and the recommendations of the Special Committee, the Board, after consulting with its financial and legal advisors, unanimously approved the Transaction and determined to recommend to Granite shareholders to vote in favour of the Arrangement at a meeting of Granite shareholders scheduled to take place on or about March 5, 2020 (the “Meeting”).
The Arrangement is subject to a number of customary conditions including, but not limited to, the approval of at least 66 2/3% of the votes cast in person or by proxy at the Meeting and a majority of the votes cast by disinterested shareholders pursuant to the requirements of applicable securities laws, as well as customary court and regulatory approvals. Closing of the Transaction is also subject to the satisfaction of a number of conditions customary for transactions of this nature.
The Agreement permits Granite to respond to unsolicited acquisition proposals under certain circumstances which include where such acquisition proposal constitutes or could reasonably constitute or lead to a “superior proposal” (as defined in the Agreement). IPC has the right to match any superior proposal. Granite has agreed to pay a termination fee of $1.2 million in certain circumstances where the Agreement is terminated, including termination in response to a superior proposal. Granite and IPC have also agreed to a reciprocal expense reimbursement fee of $800,000 payable to the other if the Transaction is not completed in certain circumstances, and where a termination fee is not otherwise payable. The Agreement contains customary deal protection provisions which, among other matters, restrict Granite from soliciting or initiating any discussions in respect of alternative acquisition proposals related to the Granite or the assets of Granite.
All of the directors and officers of Granite as well as certain entities related to GMT Capital Corp. Granite’s largest shareholder, together representing approximately 25% of the total Shares outstanding, have entered into support agreements with IPC pursuant to which they have confirmed their intentions to vote their Shares in favour of the Arrangement, subject to certain termination provisions in the event the Agreement is terminated.
An information circular in connection with the Transaction is expected to mailed to Granite shareholders on or about February 10, 2020 with closing of the Transaction expected to occur on or about March 5, 2020 or as soon as practicable thereafter.
Concurrently, in a separate press release, Granite is announcing the summary results of the independent reserves report prepared by Sproule Associates Limited with an effective date of December 31, 2019.
A copy of the Agreement will be filed on Granite’s SEDAR profile and will be available for viewing at www.sedar.com.
Cormark Securities Inc. and National Bank Financial Inc. acted as co-financial advisors to the Special Committee and DLA Piper (Canada) LLP is acting as legal counsel to Granite in respect of the Transaction.
For further information, please contact Michael Kabanuk, President & CEO, by telephone at (587) 349-9123, or Devon Griffiths, COO, by telephone at (587) 349-9120.
Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Canadian securities laws. These forward-looking statements contain statements of intent, belief or current expectations of Granite. Forward-looking information is often, but not always identified by the use of words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “forecast”, “target”, “project”, “may”, “will”, “should”, “could”, “estimate”, “predict” or similar words suggesting future outcomes or language suggesting an outlook.
The forward-looking statements included in this press release, including statements regarding the Transaction, the receipt of necessary approvals, the shareholder vote, and the anticipated timing for mailing the information circular, holding the Special Meeting of Shareholders of Granite and completing the Transaction, are not guarantees of future results and involve risks and uncertainties that may cause actual results to differ materially from the potential results discussed in the forward-looking statements. In respect of the forward-looking statements and information concerning the completion of the Transaction and the anticipated timing for completion of the Transaction, Granite has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail Special Meeting materials, the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, shareholder, TSX and other third party approvals and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Transaction. These dates may change for a number of reasons, including unforeseen delays in preparing meeting material; inability to secure necessary shareholder, regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Transaction. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release concerning these times.
Risks and uncertainties that may cause such differences include but are not limited to: the risk that the Transaction may not be completed on a timely basis, if at all; the conditions to the consummation of the Transaction may not be satisfied; the risk that the Transaction may involve unexpected costs, liabilities or delays; the risk that, prior to the completion of the Transaction, Granite’s business may experience significant disruptions, including loss of employees, due to transaction-related uncertainty or other factors; the possibility that legal proceedings may be instituted against Granite and/or others relating to the Transaction and the outcome of such proceedings; the possible occurrence of an event, change or other circumstance that could result in termination of the Transaction; risks regarding the failure of IPC to obtain the necessary financing to complete the Transaction; risks related to the diversion of management’s attention from Granite’s ongoing business operations; risks relating to the failure to obtain necessary shareholder and court approval; risks related to obtaining the requisite consents to the Transaction; other risks inherent in the oil and gas industry. Failure to obtain the requisite approvals, or the failure of the parties to otherwise satisfy the conditions to or complete the Transaction, may result in the Transaction not being completed on the proposed terms, or at all. In addition, if the Transaction is not completed, and Granite continues as an independent entity, the announcement of the Transaction and the dedication of substantial resources of Granite to the completion of the Transaction could have a material adverse impact on Granite’s share price, its current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and on the current and future operations, financial condition and prospects of Granite. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Granite’s operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).
The forward-looking statements in this press release are made as of the date it was issued and Granite 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 required by applicable law. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that outcomes implied by forward-looking statements will not be achieved. Granite cautions readers not to place undue reliance on these statements.