The boards of Amerisur Resources Plc ("Amerisur") and GeoPark Limited ("GeoPark") are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition pursuant to which GeoPark Colombia S.A.S. ("GeoPark Colombia"), a wholly owned subsidiary of GeoPark, will acquire the entire issued and to be issued ordinary share capital of Amerisur (the "Transaction"). The Transaction is to be effected by means of a scheme of arrangement under Part 26 of the 2006 Act which is expected to become Effective in December 2019 or January 2020 (although GeoPark Colombia reserves the right to effect the Transaction by way of a Takeover Offer with the consent of the Panel (where necessary) and in accordance with the Cooperation Agreement).
· The Transaction follows from a strategic review including a formal sales process announced by Amerisur on 19 July 2019 under the Takeover Code (the "FSP") to maximise value for shareholders. As part of the FSP, multiple interested parties received access to data through virtual and physical data rooms and management presentations in Bogota, following which the Amerisur Board received a number of proposals.
· Pursuant to the terms of the Transaction, each Amerisur Shareholder will be entitled to receive:
o for each Amerisur Share: 19.21 pence in cash
· The Transaction values the entire issued and to be issued share capital of Amerisur at approximately £242 million and represents a premium of:
o approximately 58.8 per cent. to the Closing Price per Amerisur Share of 12.1 pence on 18 July 2019 (being the last Business Day prior to the commencement of the Offer Period);
o approximately 55.0 per cent. to the volume weighted average share price for the one month period ending 18 July 2019 (being the last Business Day prior to the commencement of the Offer Period) of 12.4 pence per Amerisur Share; and
o approximately 53.6 per cent. to the volume weighted average share price for the three month period ending 18 July 2019 (being the last Business Day prior to the commencement of the Offer Period) of 12.5 pence per Amerisur Share.
2. Recommendation
· The Amerisur Directors, who have been so advised by BMO Capital Markets Limited ("BMO") as to the financial terms of the Transaction, consider the terms of the Transaction to be fair and reasonable. In providing its advice to the Amerisur Directors, BMO has taken into account the commercial assessments of the Amerisur Directors. BMO is providing independent financial advice to the Amerisur Directors for the purposes of Rule 3 of the Code.
· Accordingly, the Amerisur Directors intend unanimously to recommend that Amerisur Shareholders vote in favour of the resolutions relating to the Transaction at the Amerisur Shareholder Meetings (or in the event that the Transaction is implemented by Takeover Offer (with the consent of Amerisur), to accept or procure acceptance of such offer) as the Amerisur Directors have irrevocably undertaken to do in respect of their own beneficial holdings totalling 59,881,111 Amerisur Shares (representing approximately 4.9 per cent. of the existing issued ordinary share capital of Amerisur). Further details of these irrevocable undertakings are set out in Appendix 3 to the announcement.
3. Irrevocable Undertakings
· In addition to the above-mentioned irrevocable undertakings from the Amerisur Directors, GeoPark and GeoPark Colombia have also received irrevocable undertakings from Canaccord Genuity Limited and Michinoko Limited to vote, or procure the voting, to approve the Scheme at the Amerisur Court Meeting and vote, or procure the voting, in favour of the Special Resolution at the Amerisur General Meeting in respect of a total of 229,142,585 Amerisur Shares, representing approximately 18.9 per cent. of the existing issued ordinary share capital of Amerisur.
· Therefore, as at the date of this announcement, GeoPark and GeoPark Colombia have received irrevocable undertakings to vote, or procure the voting, to approve the Scheme at the Amerisur Court Meeting and vote, or procure the voting, in favour of the Special Resolution at the Amerisur General Meeting with respect to a total of 289,023,696 Amerisur Shares, representing approximately 23.8 per cent. of the existing issued ordinary share capital of Amerisur. Further details of the above-mentioned irrevocable undertakings are set out in Appendix 3 to this announcement.
4. Break Fee Payment
· Amerisur has agreed to pay to GeoPark a break fee payment in the amount of £2.42 million in cash if, following this announcement, an Independent Competing Transaction subsequently becomes or is declared unconditional in all respects or is completed or becomes effective, as agreed in the Cooperation Agreement (as defined in paragraph 13 below).
5. Financing
· The cash consideration payable by GeoPark Colombia pursuant to the terms of the Transaction will be funded by a new facilities agreement entered into by GeoPark Colombia as borrower and Itaú and Citibank N.A. as lenders in an aggregate amount of $315 million.
· In accordance with Rule 2.7(d) of the Code, N.M. Rothschild & Sons Limited ("Rothschild & Co"), as sole financial adviser to GeoPark, is satisfied that sufficient resources are available to GeoPark Colombia to satisfy in full the cash consideration payable to Amerisur Shareholders pursuant to the terms of the Transaction.
6. Timetable and Conditions
· Subject to, among other things, the satisfaction or (where applicable) the waiver of the Conditions, the Scheme is expected to become Effective in December 2019 or January 2020.
· The Transaction is conditional on, among other things: (i) receiving the required approvals from ANH and SIC; (ii) the approval of the Scheme Shareholders at the Amerisur Court Meeting and the passing of the Special Resolution(s) relating to the Transaction at the Amerisur General Meeting; and (iii) the sanction of the Court.
· The Transaction will be put to Amerisur Shareholders at the Amerisur Court Meeting and at the Amerisur General Meeting which are currently expected to be held in December 2019 or January 2020. In order to become Effective, the Scheme must be approved by a majority in number of the Amerisur Shareholders voting at the Amerisur Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Amerisur Shares voted. In addition, a special resolution, to deal with certain matters ancillary to the Scheme, must be passed by Amerisur Shareholders representing at least 75 per cent. of the votes cast at the Amerisur General Meeting.
· Further details of the Transaction and the expected timetable will be contained in the Scheme Document that will be posted to Amerisur Shareholders along with the notice of Amerisur Court Meeting and Amerisur General Meeting and the Forms of Proxy as soon as practicable. The Scheme Document will also contain an updated reserves valuation reported on in accordance with Rule 29 of the Takeover Code.
Commenting on the Transaction, Giles Clarke, Chairman of Amerisur, said:
"The FSP has been a very thorough exercise with multiple parties provided with access to data rooms and management presentations held in Bogota. The cash offer from GeoPark Colombia of 19.21 pence per share represents a premium of almost 60% to Amerisur's share price prior to the FSP and is an attractive proposition for Amerisur and its shareholders, particularly when compared to recent public markets acquisitions in the sector. The market for Amerisur has been fully tested and the Board is unanimously recommending this condition light offer to shareholders."
Commenting on the Transaction, John Wardle, Chief Executive Officer of Amerisur, said:
"Today underlines the success Amerisur has achieved in building an attractive E&P business in Colombia. The strategic portfolio of assets is an excellent fit for GeoPark, which, as a leading independent Latin American E&P, is well positioned to maximise the potential. The transaction presents a significant opportunity for our stakeholders in Colombia and, given GeoPark's existing presence, will ensure the continuity of our partnerships in country. I would like to personally thank our dedicated colleagues for their hard work and commitment over the past twelve years."
Commenting on the Transaction, James Park, CEO of GeoPark, said:
"A consistent pillar of GeoPark's long term value proposition has been and will continue to be inorganic growth, including M&A and block acquisitions. We congratulate the Amerisur team for building a strong growing business which represents an excellent technical, economic and strategic fit with GeoPark's risk-balanced portfolio of cashflow-generating assets with significant upside potential across Latin America. Amerisur's asset base in Putumayo will provide GeoPark with access to an underexplored high potential basin, as part of our larger Marañon-Oriente-Putumayo strategy in the region and with an operating export pipeline. Additionally, with the incorporation of the CPO-5 block, operated by our strategic partner ONGC, and adjacent to our prized Llanos 34 block and nearby recently awarded exploratory blocks, GeoPark would now have a contiguous land position of more than one million gross acres in one of the most productive areas of the Llanos basin in Colombia, containing multiple development and exploratory opportunities. GeoPark's most effective value creation tool has been its successful track record of finding oil and gas - and this new high-impact acreage represents an exciting and expanded growth fairway for us"