CALGARY, AB, Nov. 9, 2021 /CNW/ - Storm Resources Ltd.
("Storm" or the "Company") (TSX: SRX) is pleased to
announce that it has entered into a definitive arrangement
agreement (the "Arrangement Agreement") with Canadian
Natural Resources Limited (the "Purchaser") (TSX, NYSE: CNQ)
pursuant to which the Purchaser has agreed to acquire all of the
issued and outstanding common shares of Storm ("Storm
Shares") for cash consideration of $6.28 per Storm
Share (the "Purchase Price"). The proposed
transaction (the "Transaction") is to be completed by way of
a plan of arrangement under the Business Corporations Act
(Alberta) and is expected to close
in December 2021.
STRATEGIC RATIONALE
- Attractive Value for Storm Shareholders. The Purchase
Price implies an enterprise value for Storm of approximately
$960 million including transaction
related expenses and decommissioning obligations. The resulting
transaction metric is estimated to be 7.5 times annualized funds
flow in the first six months of 2021 or 6.1 times excluding loss on
risk management contracts (hedging losses).
- All Cash Premium to Market Trading Prices. The Purchase
Price represents an all-time high share price for Storm as well as
a premium of 10% to Storm's 10 day volume weighted average trading
price on the Toronto Stock Exchange (the "TSX") as of the
close of markets on November 9,
2021.
THE ARRANGEMENT AGREEMENT AND APPROVALS
Under the Transaction, the Purchaser will acquire all of the
issued and outstanding Storm Shares in exchange for the payment to
shareholders of the Purchase Price for each Storm Share held.
Storm will seek approval of the Transaction by its shareholders
and holders of options (together, the "Securityholders") at
a special meeting expected to be held in December 2021 (the "Meeting"). The
Transaction is subject to approval by Securityholders at the
Meeting, including the approval of at least: (a) two-thirds of the
votes cast by the shareholders in person or represented by proxy at
the Meeting; (b) two-thirds of the votes cast by the
Securityholders in person or represented by proxy at the Meeting,
voting together as a single class; and (c) if required, a majority
of the votes cast by shareholders in person or represented by proxy
at the Meeting, after excluding the votes cast by those
shareholders whose votes are required to be excluded in accordance
with Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions.
The Transaction is subject to various closing conditions,
including receipt of court approval, the required Storm
Securityholder approval at the Meeting and certain regulatory
approvals, including clearance under the Competition Act
(Canada). Upon closing of the
Transaction, the Storm Shares will be de-listed from the TSX.
The Arrangement Agreement contains customary representations and
warranties of each party and interim operational covenants by
Storm. The Arrangement Agreement also provides for, among other
things, customary support and non-solicitation covenants by Storm,
subject to a "fiduciary out" for unsolicited "superior proposals"
in favour of Storm and a provision for the right to match any
superior proposals in favour of the Purchaser.
The Arrangement Agreement provides for a non-completion fee of
$43.5 million, payable in the event
that the Transaction is not completed or is terminated in certain
circumstances, including if Storm enters into an agreement with
respect to a superior proposal or if the Board withdraws or
modifies its recommendation with respect to the Transaction.
Contemporaneous with the execution of the Arrangement Agreement,
all of the directors and executive officers of Storm have entered
into support agreements, agreeing to support the Transaction and
vote an aggregate of approximately 12.6% of the outstanding Storm
Shares in favour of the Transaction, subject to the provisions of
such support agreements.
Further details with respect to the Transaction will be included
in the information circular to be mailed to the Securityholders in
connection with the Meeting. A copy of the Arrangement Agreement
and the information circular will be filed on Storm's SEDAR profile
and will be available for viewing at www.sedar.com.
RECOMMENDATION OF THE BOARD
Based on the Fairness Opinion (as defined below) and through
discussions with its financial and legal advisors, among other
considerations, the Board has unanimously: (i) determined that the
Arrangement is fair, from a financial point of view, to Storm
shareholders; (ii) resolved to recommend that the Securityholders
vote in favour of the Transaction; and (iii) determined that the
Arrangement and the entering into of the Arrangement Agreement are
in the best interests of Storm shareholders.
ABOUT STORM
Storm Resources Ltd. began operations in August 2010, is headquartered in Calgary, Alberta and is focused on growing net
asset value for shareholders through the development of a large,
liquids-rich resource in the Montney formation in northeast British Columbia.
ADVISORS
Stifel FirstEnergy acted as exclusive financial advisor to Storm
in connection with the Transaction and has provided a verbal
fairness opinion (the "Fairness Opinion") that, subject to
review of the final form of documents affecting the Transaction, as
at the date of the Arrangement Agreement, the consideration to be
received by Storm shareholders pursuant to the Transaction is fair,
from a financial point of view, to Storm shareholders.
Stikeman Elliott LLP acted as legal counsel to Storm.
Dentons Canada LLP acted as legal counsel to the Purchaser.
DEFINITIONS AND ADVISORIES
Currency: All amounts referred to in this press release
are stated in Canadian dollars unless otherwise specified.
Forward-Looking Information: This press release contains
certain forward-looking information within the meaning of Canadian
securities laws. Forward-looking information relates to future
events or future performance and is based upon the Company's
current internal expectations, estimates, projections, assumptions
and beliefs. All information other than historical fact is
forward-looking information. Words such as "plan", "expect",
"intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words that indicate
events or conditions may occur are intended to identify
forward-looking information. More particularly and without
limitation, this press release contains forward looking information
relating to the anticipated benefits of the Transaction to Storm
and its shareholders; the timing and anticipated receipt of
required Securityholder, court, regulatory, stock exchange and
other third party approvals for the Transaction; the ability of
Storm and the Purchaser to satisfy the other conditions to, and to
complete, the Transaction; and the anticipated timing of the
holding of the Meeting and the closing of the Transaction. In
respect of the forward-looking statements concerning the
anticipated benefits and completion of the Transaction, the timing
and anticipated receipt of required third party approvals and the
anticipated timing for completion of the Transaction, the Purchaser
and Storm have provided such in reliance on certain assumptions
that they believe are reasonable at this time, including
assumptions as to the time required to prepare and mail special
meeting materials, including the information circular; the ability
of the parties to receive, in a timely manner, the necessary
Securityholder, court, regulatory, stock exchange and other third
party approvals, including but not limited to the receipt of
applicable competition approvals; and the ability of the parties to
satisfy, in a timely manner, the other conditions to the closing of
the Transaction. By their nature, forward-looking statements are
subject to numerous risks and uncertainties, some of which are
beyond Storm's control. Completion of the Transaction is subject to
a number of conditions which are typical for transactions of this
nature. Failure to satisfy any of these conditions, the emergence
of a superior proposal or the failure to obtain approval of
Securityholders may result in the termination of the Arrangement
Agreement. The foregoing list is not exhaustive. Additional
information on these and other risks that could affect completion
of the Transaction will be set forth in the information circular,
which will be available on SEDAR at www.sedar.com. Readers are
cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. The actual
results, performance or achievement of Storm could differ
materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be
given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
benefits that Storm will derive therefrom. The forward-looking
statements in this press release should not be interpreted as
providing a full assessment or reflection of the unprecedented
impacts of the COVID-19 pandemic and the resulting indirect global
and regional economic impacts. Storm disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable securities laws.
Non-GAAP Measures. This press release refers to the terms
"enterprise value" and "annualized funds flow" which are not
recognized under Generally Accepted Accounting Principles ("GAAP")
and are regarded as non-GAAP measures. These non-GAAP measures may
not be comparable to the calculation of similar amounts for other
entities and readers are cautioned that use of such measures to
compare enterprises may not be valid. Non-GAAP terms are used to
benchmark operations against prior periods and peer group companies
and are widely used by investors, analysts and other parties.
"Enterprise value" is calculated as market capitalization plus debt
including working capital deficiency. Management believes that
enterprise value provides a useful measure of the market value of
Storm's debt and equity. "Market capitalization" is calculated as
share price multiplied by the number of shares outstanding.
Management believes that market capitalization provides a useful
measure of the market value of Storm's equity. "Annualized funds
flow" is calculated based on funds flow from operating activities
for the most recently completed, or referenced, half-year.
SOURCE Storm Resources Ltd.