CALGARY, AB, November 9, 2021 / CNW / – Storm Resources Ltd. (“Storm“or the”Society“) (TSX: SRX) is pleased to announce that it has entered into a Definitive Arrangement Agreement (the”Arrangement agreement“) with Canadian Natural Resources Limited (the”Buyer“) (TSX, NYSE: CNQ) pursuant to which the purchaser has agreed to acquire all of the issued and outstanding common shares of Storm (“Storm actions“) for a cash consideration of $ 6.28 through Storm sharing (the “Purchase price“). The proposed transaction (the”Transaction“) must be completed by means of a plan of arrangement under the Business Corporations Act (Alberta) and should close in december 2021.
Attractive value for Storm shareholders. The purchase price implies an enterprise value for Storm of approximately $ 960 million including transaction expenses and decommissioning obligations. The resulting transaction metric is estimated to be 7.5 times the annualized cash flow in the first six months of 2021 or 6.1 times excluding losses on risk management contracts (hedging losses).
All cash bonuses at market trading prices. The purchase price represents the all-time highest share price for Storm as well as a 10% premium over Storm’s 10-day volume-weighted average price on the Toronto Stock Exchange ( the ” “TSX“) at the close of business on November 9, 2021.
THE ARRANGEMENT AGREEMENT AND APPROVALS
Pursuant to the transaction, the purchaser will acquire all of the issued and outstanding Storm shares in exchange for payment to shareholders of the purchase price for each Storm sharing tenuous.
Storm will seek the approval of the Transaction by its shareholders and option holders (together, the “Title holders“) at a special meeting which should be held at december 2021 (the “MeetingThe transaction is subject to the approval of the security holders at the meeting, including the approval of at least: (a) two-thirds of the votes cast by shareholders in person or represented by proxy at the meeting; (b) two – thirds of the votes cast by securityholders in person or represented by proxy at the meeting, voting together as a single class; and (c) if necessary, a majority of the votes cast by shareholders in person or represented by proxy at the meeting, after excluding votes cast by shareholders whose votes must be excluded in accordance with Multilateral Instrument 61-101 – Protection of holders of minority securities in special transactions.
The Transaction is subject to various closing conditions, including receipt of court approval, required approval of Storm securityholders at the meeting and certain regulatory approvals, including authorization under the Competition law (Canada). Upon closing of the transaction, the Storm shares will be delisted from the TSX.
The arrangement agreement contains the usual declarations and guarantees of each party and provisional operational commitments of Storm. The Arrangement Agreement also provides, among other things, for customary support and non-solicitation commitments by Storm, subject to a ânon-fiduciaryâ for unsolicited âsuperior proposalsâ in favor of Storm and a provision providing for the right to match any superior proposal in favor of the Buyer.
The Arrangement Agreement provides for costs for non-performance of $ 43.5 million, payable in the event that the Transaction is not completed or is terminated in certain circumstances, including if Storm concludes an agreement regarding a superior proposal or if the Board withdraws or modifies its recommendation regarding the Transaction.
Concurrent with the signing of the Arrangement Agreement, all of Storm’s directors and senior management entered into support agreements, agreeing to support the transaction and to vote a total of approximately 12.6% of the Storm shares. outstanding in favor of the transaction, subject to the provisions of such support agreements.
Further details regarding the transaction will be included in the information circular which will be mailed to securityholders in connection with the Meeting. A copy of the Arrangement Agreement and Information Circular will be filed on Storm’s SEDAR profile and will be available for viewing at www.sedar.com.
Based on the Fairness Opinion (as defined below) and through discussions with its financial and legal advisors, among other considerations, the Board unanimously: (i) determined that the Arrangement is fair, from a financial point of view, to the shareholders of Storm; (ii) resolved to recommend that security holders vote in favor of the transaction; and (iii) determined that the arrangement and entering into the Arrangement Agreement are in the best interests of the shareholders of Storm.
ABOUT THE STORM
Storm Resources Ltd. started its activities in august 2010, is headquartered in Calgary, Alberta and focuses on growing net asset value for shareholders through the development of a significant liquid-rich resource in the Montney formation in the northeast British Columbia.
Stifel FirstEnergy acted as Storm’s exclusive financial advisor in connection with the Transaction and provided an oral fairness opinion (the “Fairness Opinion“) that, subject to the examination of the final form of the documents affecting the Transaction, on the date of the Arrangement Agreement, the consideration to be received by the shareholders of Storm under the Transaction is fair, of a from a financial point of view, for Storm shareholders.
Stikeman Elliott LLP acted as legal counsel to Storm.
Dentons Canada LLP acted as legal counsel to the purchaser.
DEFINITIONS AND NOTICES
Cash: All amounts mentioned in this press release are expressed in Canadian dollars, unless otherwise indicated.
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 on the Company’s current internal expectations, estimates, projections, assumptions and beliefs. All information other than historical facts is forward-looking information. Words such as “plan”, “expect”, “intend”, “believe”, “anticipate”, “estimate”, “can”, “can”, “possible”, “propose” and other similar words which indicate events or may occur are intended to identify forward-looking information. More specifically and without limitation, this press release contains forward-looking information relating to the expected benefits of the Operation for Storm and its shareholders; the timing and expected receipt of required approvals from securityholders, courts, regulators, the exchange and other third parties for the transaction; the ability of Storm and the Buyer to meet the other conditions and complete the Transaction; and the expected timing of the Meeting and the closing of the Transaction. With respect to forward-looking statements regarding anticipated benefits and completion of the Transaction, the timing and early receipt of required third party approvals and the expected timeframe for completion of the Transaction, the Buyer and Storm have provided this information in based on certain assumptions. they believe to be reasonable at this time, including assumptions as to the time required to prepare and mail documents relating to special meetings, including the information circular; the parties’ ability to receive, in a timely manner, necessary approvals from securityholders, courts, regulators, stock exchanges and other third parties, including, but not limited to, receipt of applicable approvals in competition matters; and the ability of the parties to meet, in a timely manner, the other conditions upon 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. The completion of the Transaction is subject to a number of conditions which are typical of transactions of this nature. Failure to meet any of these conditions, the emergence of a Superior Proposal or the failure to obtain Securityholder approval may result in the termination of the Arrangement Agreement. The above list is not exhaustive. Additional information on these and other risks that could affect the completion of the Transaction will be set out in the Information Circular, which will be available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in preparing this information, although believed to be reasonable at the time of preparation, may prove to be imprecise and, as such, forward-looking statements should not be relied on unduly. Storm’s actual results, performance or achievements could differ materially from those expressed or implied by these forward-looking statements and, therefore, no assurance can be given that any of the events anticipated by the forward-looking statements will or will occur. happen, or if any of them do, what benefits Storm will derive from them. The forward-looking statements contained in this press release should not be interpreted as providing a comprehensive 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 statement, 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 âenterprise valueâ and âannualized cash flowâ which are not recognized under generally accepted accounting principles (âGAAPâ) and are considered to be 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 the use of such measures to compare companies may not be valid. Non-GAAP terms are used to compare transactions to prior periods and to peer group companies and are widely used by investors, analysts and others. âCompany valueâ is calculated as market capitalization plus debt, including insufficient working capital. Management believes that enterprise value provides a useful measure of the market value of Storm’s debt and equity. “Market capitalization” is calculated as the stock price multiplied by the number of shares outstanding. Management believes that market capitalization provides a useful measure of the market value of Storm shares. âAnnualized cash flowsâ are calculated on the basis of cash flows from operating activities for the last completed or referenced semester.
SOURCE Storm Resources Ltd.
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