Twelve Seas Investment Company (Twelve Seas) (TWLV), a company formed for the purpose of entering into a business combination, and a United Arab Emirates (UAE) company in the oil storage and services business, announced they have executed today a business combination agreement (“BC Agreement”).
Pursuant to the BC Agreement, Twelve Seas will engage in a merger involving a newly formed Cayman Islands holding company and the combined company (referred to herein together as Twelve Seas) will acquire 100% of the issued and outstanding shares of the UAE company in a transaction valued at approximately $1 billion (the “Transaction”). In the Transaction, the UAE company will become a wholly-owned subsidiary of Twelve Seas, and the post-transaction business of the combined company will be that of the UAE company.
Twelve Seas expects the Transaction to close at the end of the second quarter 2019 or early third quarter of 2019, subject to certain closing conditions. One significant closing condition requires that Twelve Seas will have net cash proceeds at closing (after payment of expenses and redemptions from Twelve Seas’ trust account), including any proceeds of any new equity financings (“Closing Proceeds”), in excess of $125 million.
In addition, the Transaction closing is subject to the approval of the shareholders of Twelve Seas and the shareholders of the UAE company, as well as certain other third parties.
Pursuant to the BC Agreement, the shareholders of the UAE company will sell 100% of its equity interests to Twelve Seas in exchange for total consideration of 100.0 million Twelve Seas ordinary shares, provided that at the election of the UAE company, up to 40% of the Closing Proceeds may be paid as cash consideration instead of Twelve Seas shares. All cash remaining in Twelve Seas at the closing of the Transaction is expected to be used for the UAE company’s growth.
If no Twelve Seas shareholders elect to redeem their shares, and there is no election by the UAE company for cash consideration in lieu of shares, then current shareholders of the UAE company will hold approximately 78% of the issued and outstanding shares, and current shareholders of Twelve Seas will hold approximately 22% of the issued and outstanding shares. A total of 20.0 million of the 100.0 million ordinary shares being issued to the UAE company shareholders will be placed into escrow and subject to release upon the UAE company satisfying certain milestones.
The UAE company, Brooge Petroleum and Gas Investment Company (“BPGIC”), was founded in 2013 to capitalize on an anticipated need for oil storage capacity at the Port of Fujairah, in the UAE, which was anticipated to become an important oil hub. Today, the Port of Fujairah is one of the most attractive storage hubs and a key strategic trading node globally.
Twelve Seas’ management believes that BPGlC’s award winning state-of-the-art terminals offer the industry’s most advanced technologies, ensuring the highest level of service to clients. BPGIC is developing terminals in phases and aims to have a total capacity of 1 million m^3 following the scheduled completion of the second phase of construction by late Q2 or early Q3 in 2020.
Following the closing of the Transaction, BPGIC will continue to be led by its current management team with Mr. Nicolaas Paardenkooper as Chief Executive Officer, Miss. Lina Saheb, as Chief Strategy Officer, and Faisal El Selim as Chief Marketing Officer. BPGIC will remain headquartered in Fujairah, UAE.
Mr. Bryant Edwards, COO and Director of Twelve Seas, said, “This transaction represents an exciting opportunity for foreign public investors, and specifically those that invest in Nasdaq company stocks, to invest directly into the dynamic and growing oil and gas infrastructure sector within the UAE.
Today’s announcement comes less than two months after the investment by the global investment firms of KKR and Blackrock, who purchased cash flow streams derived from national pipelines in the UAE. Through BPGIC’s NASDAQ listing, investors can have a direct ownership interest in an exciting company with exposure to the same growing oil and gas infrastructure in the UAE.”
Mr. Nicolaas Paardenkooper, CEO of BPGIC commented, “We are excited to enter into this agreement with Twelve Seas as it provides us with the ability to enter the US capital markets and provide this unique opportunity to investors globally.
The US capital markets are the largest in the world and include sophisticated investors with large investments in similar public companies within our industry. We look forward to the opportunity to demonstrate our industry leading operations in the emerging global hub for oil at the Port of Fujairah in the UAE. This transaction enables BPGIC to continue its exciting growth and accelerate future opportunities.”
Key Transaction Terms and Details
Pursuant to the BC Agreement, Twelve Seas will merge with a newly formed Cayman Islands merger subsidiary of Brooge Holdings Limited, a newly formed Cayman Islands holding company (“Pubco”), pursuant to which the Twelve Seas securityholders will receive substantially identical securities of Pubco in the merger and Twelve Seas will become a wholly-owned subsidiary of Pubco, and simultaneously Pubco will acquire 100% of the issued and outstanding shares of BPGIC.
It is expected that 100% of the transaction consideration will be newly issued ordinary shares of Pubco, except to the extent BPGIC exercises its right to elect for BPGIC shareholders to receive up to 40% of the Closing Proceeds in cash, in lieu of shares. All remaining Closing Proceeds are expected to be used for BPGIC’s internal growth.
Upon closing of the transaction, BPGIC shareholders will receive approximately 100.0 million in shares as consideration (unless BPGIC makes the cash consideration election), with 20.0 million thereof placed into escrow and subject to achievement of certain milestones to be mutually agreed to.