Verenex Energy Inc. announces the status of its discussions with representatives of the Libyan National Oil Corporation (the "NOC") and the General People's Committee (the "GPC") of Libya in relation to obtaining NOC consent to a change of control of Verenex.
These discussions are the result of the acquisition agreement between Verenex and CNPC International Ltd. ("CNPCI") dated February 24, 2009 (the "CNPCI Agreement") under which CNPCI agreed to make an offer to purchase all of the outstanding Verenex Shares, on a fully-diluted basis, at a price of Cdn$10 per share. As previously disclosed, mailing of the offer is contingent on the NOC providing written consent.
NOC consent to a change of control of Verenex is required under the terms of an Exploration and Production Sharing Agreement (the "EPSA") entered into by a wholly-owned subsidiary of Verenex, its joint venture partner and the NOC; however, under the terms of the EPSA, such consent cannot be unreasonably withheld.
In discussions prior to the execution of the CNPCI Agreement, the NOC had indicated to Verenex that an approval bonus would be required to be paid to the NOC to obtain its consent to any sale transaction. Based on indications from the NOC, Verenex estimated this amount to be approximately Cdn$46.7 million, and the CNPCI Agreement was negotiated on this basis. The NOC had also indicated that, in consideration of the payment of such an approval bonus, it would expedite its approval process so as to occur within a three to four week period from the time its formal consent was requested.
Since the execution of the CNPCI Agreement on February 24, 2009, Verenex has actively sought the NOC's consent to the transaction. However, to date the mNOC has continually failed or refused to provide such consent. The Chairman of the NOC has repeatedly stated publicly (most recently on May 22, 2009) that the NOC intends to exercise a pre-emptive right to acquire Verenex on the same terms and conditions as offered under the CNPCI Agreement. In a letter to Verenex dated May 24, 2009, the Chairman of the NOC advised that the GPC was still reviewing the exercise of a pre-emptive right by the NOC and that Verenex would be informed by the NOC of the GPC's decision on the matter in due course.
On behalf of Verenex, the Government of Canada has expressed its concerns to the Government of Libya respecting the actions, and lack of action, by the NOC.
In light of the continuing efforts by Verenex to actively seek the NOC's consent to the CNPCI offer, Verenex has sent a letter to CNPCI extending the outside date under the CNPCI Agreement to August 24, 2009.