Pieridae and Ikkuma to Complete a Business Combination

Source: www.gulfoilandgas.com 8/26/2018, Location: North America

Pieridae Energy and Ikkuma Resources have entered into a definitive agreement dated August 23, 2018 providing for the acquisition by Pieridae of all of the issued and outstanding shares of Ikkuma to be effected by way of a plan of arrangement under section 193 of the Business Corporations Act (Alberta).

The completion of the Arrangement will provide Pieridae with ownership of an extensive area of producing and gas-prone reserve and resource properties situated primarily in the central Alberta Foothills area. The Arrangement Agreement also provides for the transfer, prior to the effective date of the Arrangement, by Ikkuma of certain interests in Cardium light oil-focused Alberta Foothills properties to a newly formed private corporation ('ExploreCo'), contingent on customary regulatory approvals by the Alberta Energy Regulator (the 'AER').

On completion of the Arrangement, each shareholder of Ikkuma will receive, for each common share of Ikkuma, 0.1926 of a common share of Pieridae and 0.1 of a share of ExploreCo (with Ikkuma shareholders holding 100% of ExploreCo upon completion of the Arrangement), subject to AER approval of the transfer of the Crude Oil Properties. If such AER approval is not received by December 31, 2018, no shares of ExploreCo will be distributed to shareholders of Ikkuma and those shareholders will not receive any further consideration. The exchange ratio values the shares of Ikkuma at $0.86 per share (excluding the value of ExploreCo shares), representing a premium of 188% to the closing price of $0.30 per share as of August 23, 2018 of Ikkuma common shares on the TSX Venture Exchange.

The acquisition of Ikkuma is an important step in the execution of Pieridae’s strategic plans for the acquisition of natural gas reserves and resources in its integrated business model. Pursuant to the Arrangement Pieridae will acquire the Natural Gas Properties at metrics significantly below the cost of similar reserves and resources in other parts of North America, which is expected to provide one of its long term competitive advantages for delivering liquefied natural gas to European and other markets. The cost of acquisition represents less than 0.015% of the total cost of Pieridae’s proposed Goldboro LNG project and represents a significant step towards reaching the Final Investment Decision in 2018. Ikkuma is expected to provide a basis for further consolidation of long-life natural gas assets in Alberta and British Columbia that are complementary to the feedstock needs of Pieridae.

The acquisition of Ikkuma advances Pieridae’s strategic position in North America as a fully integrated LNG enterprise, from upstream development of natural gas reserves and resources to the production of liquefied natural gas for sale to its existing customers in Europe. As part of the acquisition Pieridae will retain the experienced and well regarded team of Ikkuma to lead the development of its natural gas properties both in Western and Eastern Canada. It is expected that the Natural Gas Properties which are primarily conventional in nature will be developed without the use of hydraulic fracturing.

Alfred Sorensen, CEO of Pieridae stated:

'The purchase of Ikkuma begins the final steps to reaching the Final Investment Decision which along with our other partners will ensure that Canada has the opportunity to export its resources to international markets.”

Tim de Freitas, CEO of Ikkuma, stated:

'The Ikkuma team is excited to see capital deployed to the prolific conventional natural gas pools in the Alberta and BC Foothills and to supply gas through a fully integrated Canadian LNG Company.'

Both Pieridae and Ikkuma believe that the Goldboro LNG facility, combined with the natural gas properties of Ikkuma, contributes to the evolution and growth of Canada’s only majority Canadian owned integrated LNG enterprise.

The Boards of Directors of each of Ikkuma and Pieridae have unanimously approved the Arrangement Agreement, and the Ikkuma Board of Directors, on the recommendation of a committee of independent directors, has unanimously determined that the Arrangement is in the best interests of Ikkuma, determined that the Arrangement is fair, from a financial point of view, to the Ikkuma shareholders and recommends that Ikkuma shareholders vote in favour of the Arrangement. In addition, all of the directors and officers of Ikkuma and certain shareholders of Ikkuma, including Alberta Investment Management Corporation, holding, in aggregate, 19% of the issued and outstanding common shares of Ikkuma have entered into support agreements with Pieridae pursuant to which they have agreed, among other things, to vote all Ikkuma common shares beneficially owned or controlled by them in favour of the Arrangement. KES 7 Capital Inc. is acting as financial advisor to Ikkuma and has provided the Board of Directors of Ikkuma with a fairness opinion regarding the Arrangement. Pieridae was represented by Laurentian Bank Securities Inc.

The Arrangement and related transactions, as described above, constitute an arm’s length transaction (within the meaning of applicable as defined in the policies of the TSX Venture Exchange, and none of the directors, officers or insiders of Ikkuma have any interest in Pieridae or are insiders of Pieridae.

Ikkuma’s shareholders will be asked to vote on the transaction at a special shareholders’ meeting. An information circular regarding the Arrangement is expected to be mailed to shareholders in September for a special meeting of the holders of Ikkuma common shares to take place in October 2018.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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