Lundin Oil AB to acquire Red Sea Oil Corporation pursuant to
a plan of arrangement
Lundin Oil AB ("Lundin Oil") and Red Sea Oil Corporation ("Red Sea") are pleased to
announce a definitive agreement for Lundin Oil to acquire all of the issued and
outstanding common shares of Red Sea not already owned by Lundin Oil and its
affiliates pursuant to the terms of a Plan of Arrangement. Lundin Oil currently owns
61% of the issued and outstanding common shares in Red Sea. Red Sea has a 60%
interest in and is the operator of Area NC177 in Libya, including the undeveloped En
Naga North and West oil field. Lundin Oil has a 40% interest in Area NC177.
Under the terms of the arrangement, Red Sea shareholders (other than Lundin Oil, its
affiliates and dissenting shareholders) will receive 0.47 Series B shares of Lundin Oil
for each common share of Red Sea. Based on the closing price for Lundin Oil Series
B shares on Monday February 28, 2000 the transaction values each Red Sea common
share at Cdn. $2.17.
Lundin Oil will issue approximately 17 million additional Series B
shares, which is equal to about 19.8% of Lundin Oil's currently outstanding shares.
The Board of Directors of Red Sea have stated their intention to vote in favour of the
transaction and have issued a recommendation that, in the absence of a better offer to
purchase all of the outstanding common shares of Red Sea, Red Sea shareholders
vote in favour of the transaction.
As a result of Lundin Oil's current ownership in Red Sea, the arrangement constitutes
a "related party transaction" in accordance with applicable Canadian securities
legislation. Accordingly, an independent committee of the Board of Directors of Red
Sea was formed in order to assess the fairness from a financial point of view of the
arrangement to the shareholders of Red Sea other than Lundin Oil and its affiliates. In
fulfilment of its mandate, the independent committee engaged T. Hoare Canaccord to
prepare a valuation of the Series B shares of Lundin Oil and the common shares of
Red Sea and a fairness opinion in order to assist the independent committee at
arriving at its conclusions. On February 28, 2000, T. Hoare Canaccord reported to the
independent committee that, based on its valuations of the Series B shares of Lundin
Oil and the common shares of Red Sea, an exchange ratio on the range of a 0.4 to 0.5
Series B shares of Lundin Oil for every one common share of Red Sea reflected the
relative value of Lundin Oil and Red Sea. Based upon its valuation and discussions
with the independent committee, T. Hoare Canaccord issued an opinion to the
independent committee that the proposed arrangement is fair from a financial point of
view to the shareholders of Red Sea other than Lundin Oil and its affiliates. At a Board
of Directors meeting of Red Sea held on February 28, 2000, the independent
committee issued its recommendation to the Board of Directors of Red Sea that the
proposed arrangement was in the best interests of Red Sea and fair to the Red Sea
shareholders other than Lundin Oil and its affiliates. As a result, the Board of Directors
issued its recommendation that shareholders of Red Sea vote in favour of the
transaction.
"The goal of the independent committee of the Board of Directors of Red Sea was to
ensure that Red Sea shareholders received full and fair value for their shares. Lundin
Oil's offer for Red Sea is a fair offer and gives the Red Sea shareholders an opportunity
to share in the upside of Area NC177 as well as Lundin Oil's various other oil
producing projects" stated John H. Craig, a director and chairman of the independent
committee of the directors of Red Sea. "Lundin Oil, with its significant technical,
financial and personnel resources, is in the best position to undertake the development
and commencement of commercial production from the En Naga North and West oil
field."
Completion of the arrangement is subject to approval by the Red Sea shareholders,
the Lundin Oil shareholders and the Ontario Superior Court of Justice. Pursuant to
applicable Canadian securities legislation, the arrangement is required to be approved
by two-thirds of the votes cast by all holders of Red Sea common shares and by a
majority of the votes cast by the minority shareholders of Red Sea. Full information
regarding the proposed arrangement and Lundin Oil will be included in the
management information circular to be mailed to Red Sea shareholders.
Lundin Oil Series B shares are quoted on the OM Stockholm Exchange and on the
NASDAQ Stock Market (in the form of global depositary shares) and the Red Sea
common shares are listed on the Canadian Venture Exchange.
For further information, please contact:
John Craig
Chairman of the Independent Committee
Red Sea Oil Corporation
+ 1 416 869 53 36
Magnus Nordin
Deputy Managing Director
Lundin Oil AB
+46 8 440-5450
Sophia Shane
Corporate Development, North America
+ 1 604-689-7842 |
