Acquisition
November 21 2003 - 1:00AM
UK Regulatory
RNS Number:3311S
Hunting PLC
21 November 2003
21 November 2003
Hunting PLC
Proposed acquisition of all the shares in Gibson
not already owned by Hunting Group
Hunting, the oil and gas services group, today announces:
* Hunting has agreed, subject to Shareholder approval, to purchase all
the shares in Gibson not already owned by Hunting Group from
ChevronTexaco's subsidiary TOHI for a total cash consideration of
CAN$100 million (approximately #45.2 million);
* Gibson is one of the largest independent providers of marketing and
transportation services to the Canadian oil and gas industry for
liquid energy products. In the year ended 31 December 2002, Gibson
had turnover of #638 million and profit before tax of #12.0 million.
Hunting owns 64% of the share capital of Gibson and ChevronTexaco owns
36%;
* the Acquisition is conditional, inter alia, upon the approval of
Shareholders by the passing of a resolution at the Extraordinary
General Meeting. This is due to its size and because ChevronTexaco,
as a result of TOHI's shareholding in Gibson, is deemed to be a
related party of Hunting for the purposes of the Listing Rules.
Following receipt of a tax certificate from the Minister of National
Revenue in Canada, which will determine the timing and structure of
the transaction, a circular including a notice of an extraordinary
general meeting to approve the Acquisition will be posted to
Shareholders;
* the Board expects that the Acquisition will materially enhance
earnings per Ordinary Share in the first full financial year following
Completion; and
* the outlook for the year ending 31 December 2003 remains in line with
the Board's expectations, although the eventual result for the year
will depend on commodity prices, production volumes and rig activity
during the remainder of the year.
Dennis Proctor, Chief Executive of Hunting, commented: "Owning the whole of
Gibson is expected to be materially earnings enhancing in 2004 and will simplify
Hunting Group's corporate structure."
This summary should be read in conjunction with, and subject to, the full text
of this announcement. Defined terms used in this summary have the same meaning
as those in the Appendix.
Enquiries
Hunting PLC
Dennis Proctor, Chief Executive (Houston) 001 281 442 7382
Dennis Clark, Finance Director (London) 020 7321 0123
Close Brothers Corporate Finance Limited 020 7655 3100
Andrew Cunningham, Director
John Nener, Assistant Director
Hoare Govett Limited 020 7678 8000
Andrew Osborne
Andrew Foster
Hogarth Partnership Limited 020 7357 9477
Andrew Jaques
John Olsen
Close Brothers Corporate Finance Limited, which is regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively as financial
adviser to Hunting PLC and for no one else in relation to the matters described
in this announcement and will not be responsible to anyone other than Hunting
PLC for providing the protections afforded to clients of Close Brothers
Corporate Finance Limited or for providing advice in relation to the matters
described in this announcement or on any matter referred to herein.
Hoare Govett Limited, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively as stockbroker for Hunting PLC and for
no one else in relation to the matters described in this announcement and will
not be responsible to anyone other than Hunting PLC for providing the
protections afforded to clients of Hoare Govett Limited or for providing advice
in relation to the matters described in this announcement or on any matter
referred to herein.
Hunting PLC
Proposed acquisition of all the shares in Gibson
not already owned by Hunting Group
1. Introduction
Hunting today announces that it has entered into an agreement to acquire,
through its indirect wholly-owned subsidiary GEHL, all the shares in Gibson not
already owned by Hunting Group for a consideration of CAN$100 million
(approximately #45.2 million). The consideration is payable in cash at
Completion.
The Acquisition is conditional, inter alia, upon the approval of Shareholders by
the passing of a resolution at the Extraordinary General Meeting. This is due
to its size and because ChevronTexaco, as a result of TOHI's shareholding in
Gibson, is deemed to be a related party of Hunting for the purposes of the
Listing Rules. In addition, Completion pursuant to the Share Acquisition
Agreement is conditional upon the issue of an appropriate tax certificate by the
Minister of National Revenue in Canada in favour of TOHI. Hunting and TOHI have
agreed that, if this tax certificate is not issued and its receipt is not waived
as a condition by TOHI, the Share Acquisition Agreement will be terminated and
the Share Cancellation Agreement will be entered into. Under the Share
Cancellation Agreement, Gibson will purchase for cancellation all the shares in
Gibson owned by TOHI for a consideration of CAN$100 million.
It is expected that Completion will take place following the decision by the
Minister of National Revenue in Canada and the subsequent approval by
Shareholders. The decision by the Minister of National Revenue in Canada will
determine the structure through which the Acquisition will be implemented.
Following Completion, under either structure, Gibson will be a wholly-owned
subsidiary of Hunting.
2. Information on Gibson
Gibson Energy began operations in 1953 providing marketing and transportation
services for crude oil produced at the wellhead, which was then sent to
refineries and processed into finished products such as gasoline and lube oils.
Hunting, through a subsidiary, owns 64 per cent. of Gibson's share capital and
ChevronTexaco through TOHI owns 36 per cent.
Gibson Energy is one of the largest independent providers of marketing and
transportation services to the Canadian oil and gas industry for liquid energy
products including crude oil, diluent, liquid petroleum gas, propane, asphalt
and natural gas. Gibson Energy has five core businesses: marketing; propane and
natural gas liquid operations; pipeline and terminal services; truck
transportation; and Moose Jaw Asphalt.
In the year ended 31 December 2002, Gibson Energy had turnover of #638 million
(2001: #587 million) with profit before tax of #12.0 million (2001: #18.7
million). At 31 December 2002, Gibson Energy had 519 employees and net assets
of #69.5 million (2001: #77.4 million). In the six months to 30 June 2003,
Gibson Energy achieved turnover of #484 million (2002: #274 million) and profit
before tax of #6.1 million (2002: #5.0 million). At 30 June 2003, Gibson had
net assets of #83.9 million (2002: #73.1 million).
3. Background to and reasons for the Acquisition
Gibson represents a substantial part of the business of Hunting, contributing
(on a consolidated basis in the year ended 31 December 2002) over two-thirds of
Hunting Group's turnover and nearly half of its operating profits. The Board
believes that owning all the share capital of Gibson will allow Hunting greater
financial and operational flexibility to maximise Shareholder value. It will
also simplify Hunting Group's corporate structure.
The Board expects that the Acquisition will materially enhance earnings per
Ordinary Share in the first full financial year following Completion. In
addition, the Board considers that Gibson's value to the Company justifies the
price paid for the Acquisition.
4. Principal terms and conditions of the Acquisition
Hunting has, through GEHL, conditionally agreed to purchase all the shares in
Gibson owned by ChevronTexaco's subsidiary TOHI. The aggregate consideration of
CAN$100 million (approximately #45.2 million) for the Acquisition is payable in
cash on Completion. Following Completion, Gibson will be a wholly-owned
subsidiary of Hunting.
Completion pursuant to the Share Acquisition Agreement is conditional, inter
alia, upon Hunting obtaining the approval of its Shareholders by the passing of
the Resolution and upon the issue of an appropriate tax certificate from the
Minister of National Revenue in Canada in favour of TOHI. Hunting has
guaranteed the obligations of GEHL under the Share Acquisition Agreement.
TOHI, Gibson and Hunting have also entered into a letter agreement pursuant to
which they have agreed that, if TOHI does not receive the appropriate tax
certificate and its receipt is not waived as a condition by TOHI, the Share
Acquisition Agreement will be terminated and TOHI, Gibson and Hunting will enter
into the Share Cancellation Agreement. Under the Share Cancellation Agreement,
Gibson will purchase for cancellation those shares that GEHL would have
otherwise acquired from TOHI under the Share Acquisition Agreement. The terms
and conditions of the Share Cancellation Agreement are substantially the same as
those contained in the Share Acquisition Agreement except for certain provisions
relating to the purchase for cancellation of the acquired shares. Completion
pursuant to the Share Cancellation Agreement is not conditional upon receipt of
any tax rulings. The share cancellation will result in Gibson becoming a
wholly-owned subsidiary of Hunting.
The impact on Hunting will be materially the same irrespective of whether the
Acquisition is implemented pursuant to the Share Acquisition Agreement or the
Share Cancellation Agreement. The Board expects that, in either case, the
Acquisition will materially enhance earnings for Shareholders in the first full
financial year following Completion.
5. Financing for the Acquisition
The Acquisition will be funded from Hunting's existing debt facilities including
a bank facility of #30 million arranged for the purpose of financing the
Acquisition.
6. Financial effects of the Acquisition
Hunting currently consolidates the financial results of Gibson Energy as a
subsidiary and attributes TOHI's share of profit on ordinary activities after
tax and net assets in Gibson Energy as an equity minority interest. This equity
minority interest represented #27.6 million of Hunting's net assets as at 30
June 2003 (30 June 2002: #24.6 million, 31 December 2002: #22.6 million) and a
charge of #3.1 million to Hunting Group's consolidated retained profits in the
year ended 31 December 2002 (2001: #4.6 million).
Hunting's net debt is expected to increase by approximately #46 million as a
result of the Acquisition.
7. Current trading and prospects
In the Company's announcement of its interim results published on 28 August
2003, it was stated that the Board expected rig activity and production volumes
in North America to improve further in the second half of the year with strong
commodity prices.
Hunting Energy focuses on the North Sea and deepwater Gulf of Mexico sectors and
conditions in these markets have remained challenging. North Sea activity has
been affected by the exit of the major producers and the slow transition to
independent producers. In the Gulf of Mexico, independent operators have
focused on low cost gas wells, typically onshore or in shallower water. While
Hunting Energy is therefore behind where we expected it to be at this point,
October showed an improvement in performance.
Although Gibson Energy has continued to face challenging conditions,
particularly in its truck transportation, natural gas liquid operations and
Moose Jaw Asphalt businesses, overall it is trading at a similar level to the
corresponding period last year. However, the Board believes that Gibson Energy
will deliver a full year result broadly in line with its expectations.
Tenkay Resources Inc., our US oil and natural gas exploration company, has
continued to benefit from higher than expected oil and gas prices and has
maintained its exploration success rate. Trading at EA Gibson Shipbrokers
Limited is also higher than in the corresponding period last year.
Overall, the outlook for the Enlarged Group for the year ending 31 December 2003
remains in line with the Board's expectations. However, in particular, the
results for Hunting Energy and Gibson Energy will depend on commodity prices,
production volumes and rig activity during the remainder of the financial year.
With its strategic market positions and reduced overhead structure, the Board
believes that Hunting Group is well placed to take advantage of any further
improvement in market conditions in 2004.
8. Related party transaction
ChevronTexaco is a related party of Hunting for the purposes of the Listing
Rules by virtue of TOHI's 36 per cent. shareholding in Gibson. Neither
ChevronTexaco, nor any of its associates, currently own any ordinary shares in
Hunting.
9. Circular and Extraordinary General Meeting
The Acquisition is conditional, inter alia, upon the approval of Shareholders by
the passing of the Resolution. Following the decision from the Minister of
National Revenue in Canada as to whether it will issue the appropriate tax
certificate, a circular will be posted to Shareholders including a notice of the
Extraordinary General Meeting at which the Resolution will be proposed.
Enquiries
Hunting PLC
Dennis Proctor, Chief Executive (Houston) 001 281 442 7382
Dennis Clark, Finance Director (London) 020 7321 0123
Close Brothers Corporate Finance Limited 020 7655 3100
Andrew Cunningham, Director
John Nener, Assistant Director
Hoare Govett Limited 020 7678 8000
Andrew Osborne
Andrew Foster
Hogarth Partnership Limited 020 7357 9477
Andrew Jaques
John Olsen
Close Brothers Corporate Finance Limited, which is regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively as financial
adviser to Hunting PLC and for no one else in relation to the matters described
in this announcement and will not be responsible to anyone other than Hunting
PLC for providing the protections afforded to clients of Close Brothers
Corporate Finance Limited or for providing advice in relation to the matters
described in this announcement or on any matter referred to herein.
Hoare Govett Limited, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively as stockbroker for Hunting PLC and for
no one else in relation to the matters described in this announcement and will
not be responsible to anyone other than Hunting PLC for providing the
protections afforded to clients of Hoare Govett Limited or for providing advice
in relation to the matters described in this announcement or on any matter
referred to herein.
APPENDIX
Definitions
In this announcement the following words and expressions shall, except where the
context requires otherwise, have the following meanings:
"Acquisition" the proposed acquisition of the minority stake in Gibson owned by
TOHI, an indirect wholly-owned subsidiary of ChevronTexaco, under the
terms of either the Share Acquisition Agreement or the Share
Cancellation Agreement
"Board" or "Directors" the directors of the Company
"CAN$" Canadian dollar
"ChevronTexaco" ChevronTexaco Corporation
"Completion" completion of the Acquisition
"Enlarged Group" Hunting and its subsidiaries, as enlarged by the Acquisition
"Extraordinary General Meeting" the Extraordinary General Meeting of Hunting to be convened to approve
the Acquisition
"GEHL" Gibson Energy Holdings Ltd., an indirect wholly-owned subsidiary of
Hunting which has been incorporated in order to implement the
Acquisition pursuant to the Share Acquisition Agreement
"Gibson" Gibson Holdings Ltd.
"Gibson Energy" Gibson and its subsidiaries
"Hunting" or "Company" Hunting PLC
"Hunting Energy" the energy services division of Hunting Group
"Hunting Group" Hunting and its subsidiaries excluding the minority interest in Gibson
not already owned by an indirect wholly-owned subsidiary of Hunting
"Listing Rules" the listing rules made by the UK Listing Authority under the Financial
Services and Markets Act 2000 and contained in the UK Listing
Authority's publication of the same name
"Ordinary Shares" ordinary shares of 25 pence each in the capital of the Company
"Resolution" the resolution to approve the Acquisition, to be proposed at the
Extraordinary General Meeting
"Share Acquisition Agreement" the conditional agreement, dated 20 November 2003, between TOHI, GEHL
and Hunting relating to the Acquisition
"Share Cancellation Agreement" the conditional agreement relating to the Acquisition which will be
entered into if the appropriate tax certificate is not issued by the
Minister of National Revenue in Canada and in consequence thereof the
Share Acquisition Agreement is terminated in accordance with its terms
"Shareholders" holders of Ordinary Shares
"TOHI" Texaco Overseas Holdings Inc., an indirect wholly-owned subsidiary of
ChevronTexaco
"UK Listing Authority" the Financial Services Authority acting in its capacity as the
competent authority under the Financial Services and Markets Act 2000
"UK" the United Kingdom of Great Britain and Northern Ireland
"US" or "USA" the United States of America
Unless otherwise stated an exchange rate of CAN$2.21:#1 has been applied where appropriate throughout this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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