Lion Energy Enters Arrangement Agreement With Africa Oil Providing for Business Combination
April 04 2011 - 8:00AM
Marketwired Canada
(TSX VENTURE:LEO) - Lion Energy Corp. ("Lion" or "the Company") is pleased to
announce that, further to its March 8, 2011 news release, it has entered into an
arrangement agreement with Africa Oil Corp. (TSX VENTURE:AOI) ("Africa Oil"), a
publicly traded oil and gas company listed on the TSX Venture Exchange, pursuant
to which Africa Oil has agreed to acquire all of the issued and outstanding
shares of Lion.
Pursuant to the arrangement agreement, Africa Oil will acquire, by way of a plan
of arrangement, all of the issued and outstanding shares of Lion in
consideration for 0.20 Africa Oil shares for each common share of Lion. Any
options or warrants to purchase common shares of Lion that are outstanding on
completion of the acquisition will be replaced or amended to entitle the holder
to acquire common shares of Africa Oil, with the number of shares to be acquired
and the exercise price each adjusted to reflect the ratio of 0.20 shares of
Africa Oil for each 1.0 share of Lion.
Lion is a joint venture partner of Africa Oil in Kenya and Puntland (Somalia).
Working interests on the Blocks in which Africa Oil and Lion are joint venture
partners are as follows:
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Block Lion Africa Oil Others
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Block 9 (Kenya) 33.3% 66.7%
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Block 10BB (Kenya) 10% 40% 50%
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Dharoor Valley (Puntland) 15% 45% 40%
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Nugaal Valley (Puntland) 15% 45% (i) 40%
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(i) Subject to Africa Oil fulfilling its sole funding obligation to Range
Resources Ltd.
The Transaction will need to be approved by 66 2/3% of the Lion shareholders at
a meeting expected to be held on June 8, 2011 and, assuming shareholder
approval, the transaction is expected to close shortly thereafter. The
Transaction is also subject to receipt of the approval of majority of the
minority shareholders of Lion. Lockup agreements have been signed with Lion
shareholders, including the Board of Directors, representing 29.23% of the
issued and outstanding shares. The Transaction is subject to certain conditions
precedent including TSX Venture Exchange, shareholder, court and Kenyan and
Puntland Government approvals and any requisite third-party consents and right
of first refusal waivers.
John Nelson, Lions President and Chief Executive Officer, commented, "The
acquisition by Africa Oil provides Lion shareholders with a stronger portfolio
of oil prone exploration blocks in East Africa, significant working interests in
all blocks, technical expertise and sufficient capital to fully fund the robust
exploration program and drilling campaign over the next year or more. Combining
with Africa Oil at this stage allows Lion shareholders to fully benefit from any
future success generated thru companies with proven track records such as Africa
Oil as part of the Lundin Group and joint venture partner, Tullow Oil.
The following table summarizes the net working interests for Africa Oil
following the completion of the proposed Transaction in the various production
sharing contracts/agreements, based on working interest ownership:
Country Block/Area Net Working Interest %
Puntland, Somalia Dharoor Valley 60%
Puntland, Somalia Nugaal Valley 60%
Kenya Block 10A 30%
Kenya Block 9 100.0%
Kenya Block 10BB 50%
Kenya Block 12A 50%
Kenya Block 13T 50%
Kenya Block 10BA 50%
Ethiopia Blocks 2/6 55%
Ethiopia Blocks 7/8 55%
Ethiopia Adigala 50%
Ethiopia South Omo 30%
Mali Block 7 25%
Mali Block 11 25%
Note:
Net Working Interests are subject to back-in rights or carried working
interests, if any, of the
respective governments or national oil companies of the host governments and
AOC fulfilling its sole funding obligation during the exploration period in
Nugaal.
Additional Transaction Details
The Arrangement will be effected pursuant to the provisions of the Business
Corporations Act (British Columbia). The completion of the Transaction is
subject to the satisfaction of a number of conditions, including the receipt of
requisite shareholder, court and regulatory approvals.
Under the terms of the Arrangement Agreement, Lion has agreed that it will not
solicit or initiate any inquiries or discussions regarding any other business
combination or sale of assets. Lion has granted Africa Oil the right to match
any superior proposals. The Arrangement Agreement also provides for the payment
by Lion of a non-completion fee of $900,000 to Africa Oil under certain
circumstances. Complete details of the terms of the Transaction are set out in
the Arrangement Agreement and plan of arrangement, which will be filed by Lion
on SEDAR and will be available for viewing under Lion's profile on
www.sedar.com.
The Board of Directors of Lion has unanimously approved the Arrangement
Agreement, determined that the consideration to be received by Lion shareholders
pursuant to the Arrangement is fair to holders of Lion Shares, is in the best
interests of Lion and the holders of Lion Shares and unanimously resolved to
recommend that holders of Lion Shares vote in favour of the Arrangement.
Closing of the Arrangement expected to be held shortly following the
shareholders' meeting presently scheduled for June 8, 2011, provided that all
shareholder, court and regulatory approvals are obtained.
Haywood Securities Inc.. is acting as exclusive financial advisor to Lion in
connection with the Arrangement and has provided Lion's Board of Directors with
its verbal opinion that, as of the date of such opinion, the consideration to be
received by the Lion Shareholders pursuant to the Arrangement is fair, from a
financial point of view, to the Lion Shareholders.
As indicated above, completion of the proposed Transaction is subject to a
number of conditions, including shareholder approval. There can be no assurance
that the Transaction will be completed as proposed or at all.
On behalf of the Board,
LION ENERGY CORP.
John R. Nelson, President and Chief Executive Officer
Forward-Looking Statements: Certain information provided in this press release
constitutes forward-looking statements. The words "anticipate", "expect",
"project", "estimate", "forecast" and similar expressions are intended to
identify such forward-looking statements. Specifically, this press release
contains forward-looking statements relating to the Transaction. The reader is
cautioned that assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be incorrect.
Actual results will vary from the information provided herein as a result of
numerous known and unknown risks and uncertainties and other factors. You can
find a discussion of those risks and uncertainties in our Canadian securities
filings. Such factors include, but are not limited to: the failure to obtain
necessary Lion shareholder approval with respect to the Transaction, the failure
to obtain necessary regulatory approvals or satisfy the conditions to closing
the Transaction, general economic, market and business conditions; fluctuations
in oil prices; the results of exploration and development drilling;
recompletions and related activities; timing and rig availability, the
uncertainty of reserve estimates; changes in environmental and other
regulations; risks associated with oil and gas operations; and other factors,
many of which are beyond the control of Lion. Except as may be required by
applicable securities laws, Lion assumes no obligation to publicly update or
revise any forward-looking statements made herein or otherwise, whether as a
result of new information, future events or otherwise.
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