Alexander Energy (AXL-T) and Renegade Petroleum (RPL-V) Feb 11, '14 have entered into an agreement that provides for the combination of Alexander and Renegade to create a premier light oil-focused high-growth company. The combined company will maintain a Saskatchewan-focused and concentrated asset base of high-netback, low-decline light oil assets which, along with a strong financial position and significant financial flexibility, will position the combined company to provide investors with consistent, per-share growth.
The combination of Alexander and Renegade will be effected by way of a plan of arrangement under the Business Corporations Act (Alberta), and will result in the combined company carrying on business under the name Spartan Energy Corp. and trading on the TSX Venture Exchange under the symbol SPE.
The transaction further advances Alexander's stated business plan of promoting aggressive growth through a targeted acquisition and consolidation strategy, complemented by development and exploration drilling. The combined company will have a high-quality asset base characterized by large oil in place, low declines and a significant inventory of development drilling opportunities with attractive capital efficiencies.
Spartan will be led by the existing management team and board of directors of Alexander. The Alexander management team is led by Richard McHardy as president and chief executive officer, Michelle Wiggins as vice-president, finance and chief financial officer, Fotis Kalantzis as vice-president, exploration, Eddie Wong as vice-president, engineering, Albert Stark as vice-president, operations, and Tom Boreen as vice-president, geology. The Alexander executive team has a solid record of creating value in high-growth, light oil and gas companies through an integrated strategy of acquiring, exploiting, and exploring attractive plays and opportunities.
Upon completion of the arrangement, the Spartan board of directors will comprise Don Archibald, Michael Stark (chairman), Grant Greenslade, Rick McHardy and Reg Greenslade. In addition, it is contemplated that Tom Budd, currently a member of the board of directors of Renegade, will be appointed to the board of directors of Spartan at closing. Sanjib Gill will act as corporate secretary.
Transaction summary
Pursuant to the arrangement agreement, Alexander has agreed to acquire all of the issued and outstanding common shares of Renegade on the basis of holders of Renegade shares receiving 2.25 common shares (0.5625 of a common share postcompletion of the Alexander 4:1 share consolidation) of Alexander for each Renegade share held. Based on Alexander's five-day weighted-average trading price of 69 cents, the implied price per Renegade share is $1.55, representing a 65-per-cent premium to the five-day weighted-average trading price of the Renegade shares of 94 cents.
Underlying its commitment to build an aggressive growth-oriented company, Alexander intends to cancel the existing monthly dividend paid by Renegade upon the closing of the arrangement.
"This transaction will establish a significant presence for Spartan in southeast Saskatchewan, and will position the company for continued growth and success. This is the second high-quality acquisition since the recapitalization of Alexander just two months ago, and a key strategic step in our growth toward becoming an oil-focused intermediate producer in the coming years," said Rick McHardy, president and chief executive officer of Alexander.
Andrew Greenslade, interim CEO of Renegade, added: "Alexander brings a proven management team with a record of value creation for shareholders. We are proud of the high-quality assets that our team has put together and is contributing to the transaction. The combined company represents an exciting opportunity for Renegade shareholders to retain their exposure to the upside inherent in these assets, and participate in a larger, more liquid, light oil-focused entity with a substantial platform for growth." |
