MERGERS - ACQUISITIONS / Leopardus Resources & Zarara O&G To Merge
LEOPARDUS RESOURCES LIMITED - PROPOSED MERGER WITH ZARARA OIL AND GAS LTD
Date: 6/26/98 3:18:33 PM
Stock Symbol:
Symbol: V:LEP OTC: LPDUF
Leopardus Resources Limited ("Leopardus" or the "Company") has entered into
a Memorandum of Understanding ("MOU") with Zarara Oil and Gas Limited
("Zarara"), a Channel Islands company, for the proposed combination of
Leopardus and Zarara through a plan of arrangement (the "Plan") under section
252 of the Company Act (British Columbia) whereby Zarara will acquire all of
the shares of Leopardus that it does not already own in exchange for Zarara
shares, or shares of a wholly-owned Canadian subsidiary of Zarara ("CanSub"),
on a one for one basis. All outstanding Leopardus share purchase options and
warrants that have not expired prior to implementation of the Plan will be
exchanged for equivalent options and warrants of Zarara.
Zarara Oil and Gas Limited is controlled by certain senior officers and
directors of Leopardus (namely Shukri S.A. Yahya, Dennis Strauch, Dewitt
Shreve, Mohammed Abdulla Amer Al-Nahdi and Abdulmunim Sultan Said Binbrek)
and currently holds 15,457,290 shares of Leopardus, representing 51% of the
issued share capital of the Company. Zarara also owns 100% of Zarara
Petroleum Resources Limited ("ZPR"), an Isle of Man corporation with which
the Company has an agreement to acquire ZPR's rights to the Temane Permit
Area in the Republic of Mozambique. In addition, ZPR holds rights in relation
to two offshore blocks in Mozambique, Sofala and M-10, and has additional
properties under consideration. Zarara is currently traded on the OFEX market
in London, where it last traded at 27.5p (approximately C$0.67).
Prior to completion of the Plan, Zarara proposes to complete a private
placement of up to 1,500,000pounds of convertible loan notes ("Loan Notes").
The Loan Notes will be convertible, at the option of the holder at any time
prior to maturity, into shares of Zarara at a price of 22p (approximately
C$0.54) or, if lower, at a price 10% less than that offered in any future
placement or issue of the Company's shares, subject to a minimum of 20p. The
Loan Notes will bear interest at a rate of 6% per annum, payable
semi-annually on December 30, 1998 and at maturity, on June 30,1999,
whereupon the principal amount and any accrued interest will be due and
payable. The Loan Notes may be wholly or partially redeemed by the holder
(or, at the holders option, convertible) upon the occurrence of a takeover,
liquidation, receipt of funds from a private placement or other specified
transaction or certain other stated events.
In consideration of Leopardus agreeing to be bound by the Plan, certain
shareholders of Zarara have agreed to enter into a Deed of Arrangement
whereby they will covenant with Zarara to transfer and assign 8,301,656 of
their shares of Zarara to Leopardus shareholders on completion of the Plan.
The transfer of shares pursuant to the Deed of Arrangement is an integral
part of the Plan so as to achieve an aggregate share exchange ratio of one
Zarara share for each LEP share.
Zarara currently has 40,607,185 shares issued and outstanding. After giving
effect to the Plan and Deed of Arrangement (and prior to conversion of any of
the Loan Notes or exercise of any outstanding share purchase warrants or
options), the share capitalization of Zarara will be 47,154,624 shares of
which the current shareholders of Leopardus, exclusive of Zarara, will then
hold 14,849,095 shares, or 31.5%. The previously named senior officers and
directors of Leopardus, who collectively now hold 35,054,237 shares of
Zarara, will then hold 26,752,581 shares, or 56.7%, of Zarara following
implementation of the Plan and the transfer of 8,301,656 shares to the
Leopardus shareholders under the Deed of Arrangement.
Management of the Company is of the opinion that completion of the Plan with
Zarara will serve to simplify the corporate structure of the Company and thus
enable the combined company to achieve greater market acceptance and access
to capital in both North America and Europe. The independent committee of the
Board of Directors of Leopardus has retained Whalen Beliveau and Associates,
Inc. to provide a Fairness Opinion to the shareholders of Leopardus with
respect to this transaction.
Implementation of the Plan will be subject to:
(a) approval of the independent committee of the Board of Directors of LEP
and of the Board of Directors of Zarara;
(b) approval of the Leopardus shareholders;
(c) approval of the British Columbia Supreme Court;
(d) approval of the Vancouver Stock Exchange;
(e) acceptance for listing of Zarara shares on either the Vancouver Stock
Exchange or the AIM market in London; and
(f) acceptance for filing of the final Court Order by the British Columbia
Registrar of Companies.
The plan of arrangement will be effected by the following steps:
a) the Company, Zarara, the key shareholders of Zarara and CanSub will
enter into the Plan under the Company Act pursuant to a formal
arrangement agreement based on the terms of the MOU, and subject to
various terms and conditions, including receipt of all necessary
corporate and regulatory approvals, completion of certain due diligence
and other matters determined by the respective parties and their legal
counsel (the "Arrangement Agreement").
b) After execution of the Arrangement Agreement, the Company will apply to
the VSE for preliminary approval of the Plan, the Arrangement Agreement,
draft materials proposed to be sent to shareholders of the Company,
Zarara and other materials required by the VSE;
c) Upon receipt of VSE preliminary approval, the Company and Zarara will
apply to court for a preliminary order calling a shareholders' meeting
to approve the Plan.
d) The Company will hold a shareholders' meeting to approve the Plan..
e) The Company and Zarara will apply to court a second time for final
approval to the Plan.
f) Zarara will then apply to the VSE for approval for the listing of its
shares, subject to completion of the Arrangement and other matters
required by the VSE as a condition of listing.
g) Upon receipt of final VSE approval, a copy of the final court order,
together with relevant corporate documents will be filed with the
Registrar of Companies for British Columbia, whereupon the Plan will
become effective.
h) Upon the Plan becoming effective, the Company will become a wholly-owned
subsidiary of Zarara, and all present shareholders of the Company will
become shareholders of Zarara or, at their option, CanSub. The shares
of Zarara will then be listed on the VSE in lieu of the shares of the
Company. |
