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Friday 17 August, 2012

Petroceltic Intnl

RECOMMENDED MERGER OF MELROSE AND PETROCELTIC

RNS Number : 2337K
Petroceltic International PLC
17 August 2012
 



Not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

FOR IMMEDIATE RELEASE                                                                      17 August 2012

Recommended merger

of

Melrose Resources plc

and

Petroceltic International plc

Summary

·          The Boards of Petroceltic and Melrose are pleased to announce that they have reached agreement on the terms of a recommended merger of Melrose with Petroceltic

·          The Boards of Petroceltic and Melrose believe that the Merger will create a regionally focused North Africa, Mediterranean and Black Sea independent oil and gas company with a balanced and diversified portfolio comprising production, development and high impact exploration assets

·          Under the terms of the Merger, Melrose Shareholders will receive:

17.6 New Petroceltic Shares for every Melrose Share

·          In addition, a Special Dividend of 4.7pence per Melrose Share will be paid by Melrose to Melrose Shareholders who are on Melrose's register of members at the Reduction Record Time within 14 days of the Effective Date

·          Following the Merger becoming Effective, based on the Merger Ratio of 17.6 New Petroceltic Shares for every Melrose Share held:

·     existing Melrose Shareholders will hold 46 per cent. of the Enlarged Company; and

·     existing Petroceltic Shareholders will hold 54 per cent. of the Enlarged Company,

            (in each case on an undiluted basis)

·          The Merger values each Melrose Share at 143.9 pence and the entire issued share capital of Melrose at approximately £165.0 million and represents a premium of approximately 6.2 per cent. to Melrose's Closing Price of 135.5 pence on 16 August 2012, being the last Business Day prior to the announcement of the Merger

·          Together with the Special Dividend, the Merger values each Melrose Share at 148.6 pence and the entire issued share capital of Melrose at approximately £170.4 million and represents a premium of approximately 9.7 per cent. to Melrose's Closing Price of 135.5 pence on 16 August 2012, being the last Business Day prior to the announcement of the Merger

 

·          The Enlarged Group will have combined 2P reserves of 84 mmboe, 2C resources of 357 mmboe and unrisked prospective resources of 1,365 mmboe in the North Africa, Mediterranean and Black Sea regions, creating a regionally focused independent oil and gas company with significant scale

·          The Boards of Petroceltic and Melrose believe that the Merger will enhance the financial flexibility of the Enlarged Group, enabling it to pursue a balanced growth strategy which includes an active exploration drilling campaign and participation in the future development of Petroceltic's Ain Tsila gas development in Algeria

·          The Enlarged Group will be well capitalised with a new $300 million facility provided by HSBC available from the date the Merger becomes Effective for a period of 18 months to, amongst other things, refinance all current outstandings under Melrose's existing reserve based lending and subordinate facilities.  The Boards of Petroceltic and Melrose believe that the commitment of HSBC, an existing lender to Melrose, represents an important element of the long term funding strategy for the Enlarged Group

·          It is not the intention of the Enlarged Company to make distributions by way of dividend payments for the foreseeable future following the completion of the Merger. The Boards of Petroceltic and Melrose consider that it will be in the Enlarged Company shareholders' best interests to reinvest the profits of the Enlarged Group in its business growth opportunities, including the Algerian Ain Tsila gas development and the international exploration inventory.  The Board of the Enlarged Company will regularly review and possibly adjust the dividend policy as the Enlarged Group's asset portfolio and financial position evolve over forthcoming years

·          The Merger will bring together the complementary skill-sets and shared management culture of the experienced operational teams of Petroceltic and Melrose. The Petroceltic team has a proven track-record in delivering high-impact exploration and appraisal results in North Africa.  The Melrose team has delivered numerous onshore and offshore fields through  development into production on fast-tracked schedules

·              The Enlarged Company will be led by a management team comprising Brian O'Cathain of Petroceltic as Chief Executive Officer, David Thomas of Melrose as Chief Operating Officer and Tom Hickey of Petroceltic as Chief Financial Officer.  The Boards of Petroceltic and Melrose expect that Robert Adair of Melrose will become Non-Executive Chairman of the Enlarged Company and that Hugh McCutcheon will become the Non-Executive Deputy Chairman of the Enlarged Company.  The Board of the Enlarged Company will also include the management team and two Non-Executive Directors from Melrose, Alan Parsley and James Agnew and two other Non-Executive Directors from Petroceltic, Robert Arnott and Con Casey

·          Petroceltic has received hard irrevocable undertakings to vote (or to procure to be voted) in favour of the resolutions to approve the Merger at the Court Meeting and the Melrose General Meeting from Robert Adair and Skye (a company connected to Robert Adair), who together are interested in an aggregate of 58,431,929 Melrose Shares, representing approximately 50.95 per cent. of the issued share capital of Melrose, and from other Directors of Melrose, who together are interested in an aggregate of 1,514,159 Melrose Shares representing approximately 1.32 per cent. of the issued share capital of Melrose, being in aggregate a total of 59,946,088 Melrose Shares representing approximately 52.27 per cent. of the issued share capital of Melrose  

·          A Relationship Agreement has been agreed between Petroceltic, Robert Adair and Skye  conditional upon Admission of the Enlarged Company, the key terms of which are set out in Appendix IV of this announcement

·          If the Merger becomes Effective, and subject to (i) satisfying eligibility criteria; (ii) market and trading conditions; and (iii) obtaining any necessary approvals including approval of the Board of the Enlarged Company, the Enlarged Company intends to make an application for a premium listing on the Official List of the UK Listing Authority and to be admitted to trading on the London Stock Exchange as soon as reasonably practicable and, in any event, within 12 months following the Merger becoming Effective. It will also consider seeking a listing on the Official List of the Irish Stock Exchange and admission to trading on the main securities market of the Irish Stock Exchange as soon as reasonably practicable thereafter.  The Boards of Petroceltic and Melrose expect that a premium listing in London would broaden the range of investors and funds capable of investing in the Enlarged Company, and thereby contribute to the development of an active and liquid market in its shares.  However, there is no certainty that such application will be successful at the time envisaged, or at all. In the event that such application is unsuccessful, the Enlarged Company's shares will continue to trade on AIM and ESM

·          It is intended that the Merger will be implemented by means of a scheme of arrangement of Melrose under Part 26 of the UK Companies Act, pursuant to which Petroceltic will acquire the entire issued and to be issued ordinary share capital of Melrose

·          The Melrose Board, which has been so advised by Lambert Energy Advisory, N+1 Brewin and HSBC, considers the terms of the Merger to be fair and reasonable and intends to unanimously recommend that Melrose Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the Melrose General Meeting which are to be convened to approve the Merger.  In providing their advice to the Melrose Board, Lambert Energy Advisory, N+1 Brewin and HSBC have taken into account the commercial assessments of the Melrose Board. Lambert Energy Advisory is acting as financial adviser to Melrose for the purposes of providing independent advice to the Melrose Directors on the Merger under Rule 3 of the Code

·          The Merger represents a reverse takeover for Petroceltic under the AIM Rules and the ESM Rules, and as such will be conditional, amongst other things, on the admission to trading on AIM and ESM of Petroceltic, requiring the publication of an Admission Document, and the approval of Petroceltic Shareholders

·          The Merger is also conditional on approval by the Bulgarian Commission on Protection of Competition

·          The Petroceltic Directors believe that the Merger is in the best interests of Petroceltic and Petroceltic Shareholders as a whole and, accordingly intend to unanimously recommend that Petroceltic Shareholders approve the Petroceltic Resolutions at the Petroceltic General Meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings totalling 17,767,842 Petroceltic Shares, representing approximately 0.75 per cent. of the Petroceltic Shares

Commenting on the Merger, Robert Adair, Executive Chairman of Melrose said:

"The merger represents an exciting opportunity for all shareholders and will create an E&P company with a strong regional focus and the scale to compete successfully in this arena. The Enlarged Group will have a strong, highly experienced management team with a good blend of operating skills to maximise the value of these assets and pursue additional business development opportunities. The Melrose Board believes that the Merger will provide access to material resources in a leading gas development and an exposure to a more diverse exploration portfolio, enhancing the longer term outlook for the business."

Commenting on the Merger, Brian O'Cathain, Chief Executive of Petroceltic said:

"A combination with Melrose is a compelling opportunity to create a regionally focused company, balanced between production, development and exploration. The benefits extend beyond the improved risk profile to the combined entity's enhanced strategic and funding options allowing the potential value of the assets of both companies to be realised for their shareholders."

It is expected that the Scheme Circular, containing further information about the Merger and notices of the Court Meeting and Melrose General Meeting, together with the Forms of Proxy, will be posted to Melrose Shareholders on or around 24 August 2012.  It is also expected that the Scheme will become effective on 10 October 2012, subject to the satisfaction of the Conditions and certain further terms set out in Appendix I to this announcement.

The Admission Document for the Enlarged Group, containing information about the Enlarged Group and the New Petroceltic Shares, will be posted to Melrose Shareholders with the Scheme Circular.

This summary should be read in conjunction with, and is subject to, the full text of the following announcement including the Appendices.  The Conditions and certain further terms of the Merger are set out in Appendix I to this announcement.  Appendix II contains details of the sources and bases of certain information contained in this announcement. Appendix III contains details of the irrevocable undertakings given to Petroceltic and Melrose.  Appendix IV contains the key terms of the Relationship Agreement.  Appendix V contains the definitions of certain terms used in this announcement.

 

Rule 2.10 disclosure

 

In accordance with Rule 2.10 of the Code, Melrose confirms that as of the date of this announcement it has 114,689,178 ordinary shares of 10 pence each in issue and admitted to trading on the London Stock Exchange with the ISIN GB0009354589.

 

In accordance with Rule 2.10 of the Code, Petroceltic confirms that as of the date of this announcement it has 2,369,605,049 ordinary shares of EUR 0.0125 each in issue and admitted to trading on the AIM market of the London Stock Exchange and the Enterprise Securities Market of the Irish Stock Exchange with the ISIN IE0003186172.

 

In accordance with Rule 2.10 of the Code, Petroceltic confirms that as of the date of this announcement it has the following warrants in respect of ordinary shares of EUR 0.0125 each in issue, which are transferrable but which are not admitted to trading on AIM, ESM or any other recognised exchange:

 

Number of Warrants

Date of Grant

Exercise Expiry Date

Exercise Price

15,000,000

20 October 2011

31 December 2015

4.52 pence per share

15,000,000

8 November 2011

31 December 2015

5.61 pence per share

2,842,294

1 December 2011

31 December 2015

6.86 pence per share

17,921,027

3 January 2012

31 December 2015

7.80 pence per share

8,306,481

10 February 2012

31 December 2015

8.24 pence per share

There will be a presentation for analysts at 9.30 am today (Friday 17 August 2012). Please contact Charlie Stewart at Pelham Bell Pottinger for details. Tel: +44(0)207 861 3148 or via email: [email protected]

Enquiries:

Petroceltic International plc                                                                          +353 (1) 421 8300

Brian O'Cathain

Tom Hickey

Peter Dunne

BofA Merrill Lynch (financial adviser to Petroceltic)                              +44 (0) 20 7628 1000

Ashwin Punde

Anya Weaving

Paul Frankfurt

Davy (Nominated adviser and ESM adviser to Petroceltic)                                                   

John Frain                                                                                                         +353 (1) 679 6363

Paul Burke                                                                                                       +353 (1) 679 7788

Pelham Bell Pottinger                                                                                 +44 (0)20 7861 3232

James Henderson

Rollo Crichton-Stuart

Murray Consultants                                                                                       +353 (1) 498 0300

Joe Murray

Joe Heron

 

Melrose Resources plc                                                                              +44 (0)131 221 3360

David Thomas

Diane Fraser

Alasdair Robinson

Lambert Energy Advisory
(financial and Rule 3 adviser to Melrose)                                                
+44 (0) 20 7491 4473

Philip Lambert

Onursal Soyer

Rod Batchelor

N+1 Brewin (financial adviser to Melrose)

Jamie Cumming                                                                                             +44 (0)141 314 0277

Nick Tulloch                                                                                                  +44 (0)131 529 0356

Derrick Lee                                                                                                  +44 (0)131 529 0277

HSBC (financial adviser to Melrose)                                                         +44 (0)20 7991 8888

Charles Packshaw

Abbas Merali

Pelham Bell Pottinger                                                                                 +44 (0)20 7861 3232

James Henderson

Rollo Crichton-Stuart

 

Further information

This announcement is not intended to and does not constitute, or form part of, any offer to sell or subscribe for or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Merger or otherwise, nor shall there be any sale, issuance or transfer of securities of Melrose and/or Petroceltic in any jurisdiction in contravention of applicable law. This announcement does not constitute a prospectus or a prospectus equivalent document.

Any vote in respect of the Merger should only be made on the basis of the information contained in the Scheme Circular, which will contain the full terms and conditions of the Merger (including details of how to vote), and the Admission Document.  Melrose Shareholders and Petroceltic Shareholders are advised to read the formal documentation in relation to the Merger carefully once it has been dispatched.

Please be aware that addresses, electronic addresses and certain other information provided by Melrose Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from Melrose may be provided to Petroceltic during the Offer Period as required under Section 4 of Appendix 4 of the Code.

Merrill Lynch International, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Petroceltic and no one else in connection with the Merger and this document and will not be responsible to anyone other than Petroceltic for providing the protections afforded to clients of Merrill Lynch International or for providing advice in relation to the Merger or this document or any matter referred to herein.

Davy, which is authorised and regulated in Ireland by the Central Bank of Ireland, is acting as nominated adviser and ESM adviser to Petroceltic under the AIM Rules and the ESM Rules respectively and no one else in connection with the Merger and this document and will not be responsible to anyone other than Petroceltic for providing the protections afforded to clients of Davy nor for providing advice in relation to the Merger or this document or any matter referred to herein.

Lambert Energy Advisory, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Melrose and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of Lambert Energy Advisory nor for providing advice in relation to the Merger or this document or any matter referred to herein.

N+1 Brewin, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Melrose and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of N+1 Brewin nor for providing advice in relation to the Merger or this document or any matter referred to herein.

HSBC, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Melrose and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of HSBC nor for providing advice in relation to the Merger or this document or any matter referred to herein.

Overseas jurisdictions

The availability of the New Petroceltic Shares in, and the release, publication or distribution of this announcement in or into, jurisdictions other than the United Kingdom and Ireland may be restricted by law and therefore persons into whose possession this announcement comes who are not resident in the United Kingdom or Ireland should inform themselves about, and observe, any applicable restrictions.  Melrose Shareholders who are in any doubt regarding such matters should consult an appropriate independent adviser in the relevant jurisdiction without delay.  Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Notes to US investors

Shareholders in the United States should note that the Merger relates to the shares of an English company and is proposed to be made by means of a scheme of arrangement provided for under, and governed by, English law.  Neither the proxy solicitation nor the tender offer rules under the US Securities Exchange Act of 1934, as amended, will apply to the Scheme.  Moreover the Scheme will be subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement, which differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules.  Financial information included in this announcement and the Scheme Circular and the Admission Document has been or will be prepared in accordance with accounting standards applicable in the UK and may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

Melrose is organised under the laws of England and Petroceltic is organised under the laws of Ireland. All of the officers and directors of Melrose and Petroceltic are residents of countries other than the United States.  It may not be possible to sue Melrose and Petroceltic in a non-US court for violations of US securities laws.  It may be difficult to compel Melrose, Petroceltic and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court.

Notes regarding New Petroceltic Shares

The New Petroceltic Shares to be issued pursuant to the Scheme have not been and will not be registered under the US Securities Act of 1933 (as amended) or under the relevant securities laws of any state or territory or other jurisdiction of the United States or the relevant securities laws of Japan and the relevant clearances have not been, and will not be, obtained from the securities commission of any province of Canada.  No prospectus in relation to the New Petroceltic Shares has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission.  Accordingly, the New Petroceltic Shares are not being, and may not be, offered, sold, resold, delivered or distributed, directly or indirectly in or into the United States, Canada, Australia or Japan or any other jurisdiction if to do so would constitute a violation of relevant laws of, or require registration thereof in, such jurisdiction (except pursuant to an exemption, if available, from any applicable registration requirements or otherwise in compliance with all applicable laws).

It is expected that the New Petroceltic Shares will be issued in reliance upon the exemption from the registration requirements of the US Securities Act of 1933 (as amended) provided by Section 3(a)(10) thereof.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of Melrose or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) Melrose and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th Business Day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th Business Day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of Melrose or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of Melrose or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of Melrose or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) Melrose and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of Melrose or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by Melrose and by any offeror and Dealing Disclosures must also be made by Melrose, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Forward-looking statements

This announcement contains certain forward-looking statements, including statements regarding Petroceltic's and Melrose's plans, objectives and expected performance.  Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and assumptions.  There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward looking statements, including, among others, the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the energy industry; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; war and terrorism.  These forward-looking statements speak only as at the date of this announcement.

Publication of this announcement

A copy of this announcement will be available subject to certain restrictions relating to persons resident in the Restricted Jurisdictions on Petroceltic's website and Melrose's website at www.petroceltic.ie and www.melroseresources.com respectively.

The contents of Petroceltic's website and Melrose's website are not incorporated into and do not form part of this announcement.

Admission Document

The Admission Document for the Enlarged Group containing information about the Enlarged Group and the New Petroceltic Shares will be posted to Melrose Shareholders with the Scheme Circular.  The Admission Document will shortly be available on Petroceltic's website (www.petroceltic.ie) and will be posted to Petroceltic Shareholders in due course.


 

Not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

FOR IMMEDIATE RELEASE                                                                      17 August 2012

 

Recommended merger

of

Melrose Resources plc

and

Petroceltic International plc

intended to be effected by means of a Scheme of Arrangement

under Part 26 of the UK Companies Act

1.         Introduction

2.         Summary of terms

17.6 New Petroceltic Shares for every Melrose Share.

·     existing Melrose Shareholders will hold 46 per cent. of the Enlarged Company; and

·     existing Petroceltic Shareholders will hold 54 per cent. of the Enlarged Company,

Fractions of New Petroceltic Shares will not be allotted or issued to Melrose Shareholders, but the entitlements of Melrose Shareholders will be rounded up or down (with 0.5 being rounded up) to the nearest whole number of New Petroceltic Shares. 

3.         Background to and reasons for the Merger

Regionally focused North African, Mediterranean and Black Sea independent

Balanced and diversified portfolio

            Active drilling campaign

Greater financial flexibility

Complementary management teams

4.         Melrose recommendation regarding the Merger

5.         Petroceltic recommendation regarding the Petroceltic Resolutions at the Petroceltic General Meeting

The Merger represents a reverse takeover for Petroceltic under the AIM Rules and the ESM Rules, and as such will be conditional, amongst other things, on the admission to trading on AIM and ESM of Petroceltic, requiring the publication of an Admission Document, and the approval of Petroceltic Shareholders at the Petroceltic General Meeting.

6.         Melrose irrevocable undertakings to vote in favour of the Merger

Petroceltic has received hard irrevocable undertakings to vote (or procure to be voted) in favour of the resolutions to approve the Merger at the Court Meeting and the Melrose General Meeting from Robert Adair and Skye (a company connected to Robert Adair) who together are interested in an aggregate of 58,431,929 Melrose Shares, representing 50.95 per cent. of the issued share capital of Melrose and from other Directors of Melrose, who together are interested in an aggregate of 1,514,159 Melrose Shares representing 1.32 per cent of the issued share capital of Melrose, being in aggregate a total of 59,946,088 Melrose Shares representing 52.27 per cent. of the issued share capital of Melrose.

The irrevocable undertakings given by Robert Adair and Skye (a company connected to Robert Adair) and the Directors of Melrose will cease to apply and shall lapse if (i) the Merger is not implemented by the date which is nine months from the date of this announcement; or (ii) Petroceltic proposes any variation to the Merger unless the principal terms of the revised Merger (including the Merger Ratio, the amount of the Special Dividend payable to Melrose Shareholders and, if Petroceltic elects to implement the Merger by way of a takeover offer, an acceptance condition of not less than 75 per cent. unless a lower acceptance level is agreed to by Melrose with Panel consent) are no less favourable than the terms set out in this announcement; or (iii) the Merger lapses or is withdrawn without becoming effective or wholly unconditional.

Further details of these irrevocable undertakings are set out in Appendix III of this announcement.

7.         Management and employees

8.         Intention to move-up to the Official List

9.         Information on Petroceltic

Petroceltic is an upstream oil and gas exploration and development company incorporated in Ireland whose shares are quoted on AIM and ESM.  Petroceltic is headquartered in Dublin and its operations are focused on the Middle East and North Africa region and the Mediterranean basin.  Petroceltic's core areas are in Algeria, Italy and the Kurdistan Region of Iraq.

Petroceltic was awarded a PSC in September 2004 which came into force in April 2005, over a permit area situated in the Illizi Basin in South Eastern Algeria (the "Isarene PSC"). Petroceltic currently operates the Isarene PSC with a 56.625 per cent. participating interest, Sonatrach, the Algerian national oil and gas company, holds a 25 per cent. participating interest, and Enel holds an 18.375 per cent. participating interest, which it acquired from Petroceltic in 2012.  A declaration of commerciality was submitted to the competent authorities for approval for the Ain Tsila field in August 2012, approval is expected by the end of 2012 and the major construction and development phase is planned to commence in 2014 and first gas is expected in 2017.  Petroceltic has a regional office in Algiers.

Since 2004 Petroceltic has acquired a portfolio of interests in onshore permits in the western Po Valley area and offshore permits in the Central Adriatic and the Sicily Channel. 

In 2011 Petroceltic entered into two PSCs in respect of what the Petroceltic Board believes to be two highly prospective exploration blocks, Dinarta and Shakrok, in the central north of the Kurdistan Region of Iraq.  Petroceltic has a 20 per cent. paying interest (16 per cent. participating interest), Hess Middle East New Ventures Limited is operator with an 80 per cent. paying interest (64 per cent. participating interest) and the Kurdistan Regional Government hold the rights to a 20 per cent. carried interest.

10.       Information on Melrose

Melrose is an independent oil and gas exploration, development and production company founded in 1992 and headquartered in Edinburgh, United Kingdom. Melrose was floated on the main market of the London Stock Exchange in 1999.

Melrose has a portfolio of production, development and exploration assets with its primary assets in Egypt, Bulgaria and Romania. Melrose's core producing fields are located in Egypt and Bulgaria and Melrose produced an average of 34,300 boepd in 2011 and held proved plus probable reserves of 84.2 mmboe at year end 2011 both on a working interest basis.  In Egypt, Melrose holds 100 per cent. interests in three concession areas in the onshore Nile Delta, Egypt and a 40 per cent. interest in the Mesaha frontier exploration block in the south of the country.

            In Bulgaria, Melrose has a 100 per cent. interest in the Galata concession, offshore Bulgaria, in the shallow waters of the Black Sea.  Two gas fields, Kavarna and Kaliakra are on production within the concession and one new development, Kavarna East is being planned. The concession also has further exploration potential.

            Melrose also has exploration acreage offshore Romania with two exploration concessions, Muridava and Est. Cobalcescu, awarded in the Romanian 10th Licencing Round. Melrose operates both blocks with interests of 40 per cent. and 70 per cent. respectively, and is currently acquiring a major 3D seismic survey with a view to embarking on a six well drilling programme in 2013 and 2014.  Although the blocks have potential, the planned work programme is relatively capital intensive and therefore Melrose has plans to reduce its equity to 40 per cent on both blocks, whilst retaining ownership. Melrose is in advanced discussions with a company who wish to acquire a 30 per cent interest in the Est. Cobalcescu block which will optimise Melrose's holdings in each block.

            Melrose also holds a 66.67 per cent. operated interest in five onshore exploration licences in the South Mardin region of southern Turkey but no activity is planned on this acreage. 

            Melrose also held a 27.5 per cent non-operated interest in the Rhône Maritime exploration concession in the French Mediterranean Sea.  Melrose submitted a request to the French authorities to extend the licence term but the prescribed time for a response passed without contact being made.  Melrose has applied to the French authorities to assert its rights in connection with the Rhône Maritime exploration licence.   

11.       Melrose Share Plans

Participants in the Melrose Share Plans will be contacted regarding the effect of the Merger on their rights under the Melrose Share Plans and appropriate proposals will be made to such participants in accordance with the relevant plan rules.  Further details of the terms of such proposals will be provided in due course to participants in the Melrose Share Plans.

 

12.       Structure of the Merger

            (c)          the Scheme does not become Effective by 13 January 2013 or such later date (if any) as
            Petroceltic and Melrose may, with the consent of the Panel, agree and (if required) the Court may
            allow,

13.       De-listing and re-registration

14.       Settlement, listing and dealing of New Petroceltic Shares; Cancellation and re-admission of Petroceltic Shares

15.       Offer-related arrangements

15.1      Mutual Confidentiality Agreement

15.2      Co-operation Agreement

Under the Co-operation Agreement between Petroceltic and Melrose dated 16 August 2012, Petroceltic and Melrose have agreed to provide each other with such information and assistance as they may reasonably require for the purposes of obtaining regulatory clearances and in particular to enable Petroceltic to make the filing to be made to the Bulgarian Commission on Protection of Competition by no later than five Business Days after the date of this announcement  (provided that such assistance will not require Melrose or Petroceltic to maintain its recommendation of the Merger or to adjourn shareholder meetings or court hearings in connection with the Scheme or to make any change to the timetable for implementation of the Merger).  The Co-operation Agreement also sets out certain agreements reached between Petroceltic and Melrose in relation to the treatment of the Melrose Share Plans.  The Co-operation Agreement will terminate if the Scheme (or offer if the Merger is implemented by way of a contractual takeover offer) is withdrawn or lapses (subject to certain caveats), if Melrose withdraws its recommendation of the Scheme or if the Scheme does not complete before the date which is nine months from the first public announcement of the Merger by Melrose and/or Petroceltic or otherwise as agreed between Petroceltic and Melrose.

16.       Enlarged Company Dividend Policy

17.       Overseas shareholders

18.       Disclosure of interests in Petroceltic Shares and Melrose Shares

19.       Expected timetable

20.       Documents available on website

·      the irrevocable undertakings referred to in paragraph 5 above and summarised in Appendix III of this announcement;

·      the irrevocable undertakings referred to in paragraph 6 above and summarised in Appendix III of this announcement;

·      the Mutual Confidentiality Agreement; and

·      the Co-operation Agreement.

21.       General

The Conditions and certain further terms of the Merger are set out in Appendix I of this announcement.  Appendix II contains details of the sources and bases of certain information contained in the announcement. Appendix III contains details of the irrevocable undertakings given to Petroceltic and Melrose.  Appendix IV contains the key terms of the Relationship Agreement.  Appendix V contains the definitions of certain terms used in this announcement.

 

Rule 2.10 disclosure

 

In accordance with Rule 2.10 of the Code, Melrose confirms that as of the date of this announcement it has 114,689,178 ordinary shares of 10 pence each in issue and admitted to trading on the London Stock Exchange with the ISIN GB0009354589.

 

In accordance with Rule 2.10 of the Code, Petroceltic confirms that as of the date of this announcement it has 2,369,605,049 ordinary shares of EUR 0.0125 each in issue and admitted to trading on AIM and ESM with the ISIN IE0003186172.

 

In accordance with Rule 2.10 of the Code, Petroceltic confirms that as of the date of this announcement it has the following warrants in respect of ordinary shares of EUR 0.0125 each in issue, which are transferrable but which are not admitted to trading on AIM and ESM or any other recognised exchange:

 

Number of Warrants

Date of Grant

Exercise Expiry Date

Exercise Price

15,000,000

20 October 2011

31 December 2015

4.52 pence per share

15,000,000

8 November 2011

31 December 2015

5.61 pence per share

2,842,294

1 December 2011

31 December 2015

6.86 pence per share

17,921,027

3 January 2012

31 December 2015

7.80 pence per share

8,306,481

10 February 2012

31 December 2015

8.24 pence per share

 

           There will be a presentation for analysts at 9.30 am today (Friday 17 August 2012). 
           Please contact Charlie Stewart at Pelham Bell Pottinger for details. Tel: +44(0)207 861 3148
           or via email: [email protected]

Enquiries:

Petroceltic International plc                                                               +353 (1) 421 8300

Brian O'Cathain

Tom Hickey

Peter Dunne

BofA Merrill Lynch (financial adviser to Petroceltic)                   +44 (0) 20 7628 1000

Ashwin Punde

Anya Weaving

Paul Frankfurt

Davy (Nominated adviser and ESM adviser to Petroceltic)                                       

John Frain                                                                                             +353 (1) 679 6363

Paul Burke                                                                                            +353 (1) 679 7788

Pelham Bell Pottinger                                                                     +44 (0)20 7861 3232

James Henderson

Rollo Crichton-Stuart

Murray Consultants                                                                           +353 (1) 498 0300

Joe Murray

Joe Heron

 

Melrose Resources plc                                                                  +44 (0)131 221 3360

David Thomas

Diane Fraser

Alasdair Robinson

Lambert Energy Advisory                                                                                           
(financial and Rule 3 adviser to Melrose)                                     +44 (0) 20 7491 4473

Philip Lambert

Onursal Soyer

Rod Batchelor

N+1 Brewin (financial adviser to Melrose)

Jamie Cumming                                                                                 +44 (0)141 314 0277

Nick Tulloch                                                                                      +44 (0)131 529 0356

Derrick Lee                                                                                       +44 (0)131 529 0277

HSBC (financial adviser to Melrose)                                             +44 (0)20 7991 8888

Charles Packshaw

Abbas Merali

Pelham Bell Pottinger                                                                     +44 (0)20 7861 3232

James Henderson

Rollo Crichton-Stuart

Further information

Merrill Lynch International, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Petroceltic and no one else in connection with the Merger and this document and will not be responsible to anyone other than Petroceltic for providing the protections afforded to clients of Merrill Lynch International or for providing advice in relation to the Merger or this document or any matter referred to herein.

Davy, which is regulated in Ireland by the Central Bank of Ireland, is acting as nominated adviser and ESM Adviser to Petroceltic under the AIM Rules and the ESM Rules respectively and no one else in connection with the Merger and this document and will not be responsible to anyone other than Petroceltic for providing the protections afforded to clients of Davy nor for providing advice in relation to the Merger or this document or any matter referred to herein.

Lambert Energy Advisory, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Melrose and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of Lambert Energy Advisory nor for providing advice in relation to the Merger or this document or any matter referred to herein.

N+1 Brewin, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Melrose and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of N+1 Brewin nor for providing advice in relation to the Merger or this document or any matter referred to herein.

HSBC, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Melrose and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Melrose for providing the protections afforded to clients of HSBC nor for providing advice in relation to the Merger or this document or any matter referred to herein.

Overseas jurisdictions

Notes to US investors

Notes regarding New Petroceltic Shares

Disclosure requirements of the Code

Forward-looking statements

Publication of this announcement

The contents of Petroceltic's website and Melrose's website are not incorporated into and do not form part of this announcement.

Admission Document

The Admission Document for the Enlarged Group containing information about the Enlarged Group and the New Petroceltic Shares will be posted to Melrose Shareholders with the Scheme Circular.  The Admission Document will shortly be available on Petroceltic's website (www.petroceltic.ie) and will be posted to Petroceltic Shareholders in due course.

 

 




APPENDIX I

CONDITIONS AND CERTAIN FURTHER TERMS OF THE MERGER

 

Part 1 Conditions of the Merger

1.         The Merger will be conditional upon:

(c)        the Scheme becoming unconditional and becoming Effective by no later than 13 January 2013
            or such later date (if any) as Petroceltic and Melrose may, with the consent of the Panel, agree and (if
            required) the Court may allow.

2.         The Scheme will be conditional on:

(a)        its approval by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders who are on the register of members of Melrose at the Scheme Voting Record Time, present and voting, whether in person or by proxy, at the Court Meeting (or any adjournment thereof);
(b)        the special resolution required to approve and implement the Scheme (including without limitation, to amend Melrose's articles of association) being duly passed by the requisite majority at the Melrose General Meeting (or at any adjournment thereof);
(c)        the sanction (with or without modification (but subject to such modification being on terms reasonably acceptable to Petroceltic and Melrose)) of the Scheme and the confirmation of the Reduction of Capital by the Court; and
(d)        delivery of an office copy of the Court Orders and the Statement of Capital to the Registrar of Companies; and if so ordered by the Court in order to take effect, the registration of the Court Order effecting the Reduction of Capital and the Statement of Capital by the Registrar of Companies.

3.         The Merger is also conditional on the following Conditions having been satisfied or, where applicable, waived and accordingly the necessary actions to make the Scheme Effective will not be taken unless such Conditions, have been so satisfied or waived:

(a)        the London Stock Exchange and the Irish Stock Exchange having acknowledged to Petroceltic or its agent (and such acknowledgment not having been withdrawn) that the Enlarged Share Capital will be admitted to trading on AIM and ESM respectively;
(b)        the passing at the Petroceltic General Meeting (or at any adjournment thereof) of the Petroceltic Ordinary Resolutions;
(c)        the Bulgarian Commission on Protection of Competition ("CPC") either unconditionally approving the Merger (or approving it subject to such conditions as Petroceltic may accept (acting reasonably)) or indicating in a form satisfactory to Petroceltic (acting reasonably) that the Merger does not qualify as a notifiable concentration, in each case by adopting an enforceable decision which has not been appealed within 14 days from its publication in the electronic register of the CPC;
(d)        no government or governmental, quasi‑governmental, supranational, statutory, administrative or regulatory body, authority, court, trade agency, association, institution, environmental body or any other person or body in any jurisdiction (each a "Relevant Authority") having decided to take, instituted, implemented or threatened any action, proceedings, suit, investigation, enquiry or reference, or made, proposed or enacted any statute, regulation, order or decision or taken any other steps and there not continuing to be outstanding any statute, regulation, order or decision, which would or might reasonably be expected to:

(i)      make the Merger or the acquisition of any Melrose Shares, or control of Melrose by Petroceltic void, illegal or unenforceable or otherwise materially restrict, restrain, prohibit, delay or interfere with the implementation thereof, or impose material additional conditions or obligations with respect thereto, or require material amendment thereof or otherwise challenge or interfere therewith;

(ii)     require or prevent the divestiture by any member of the Melrose Group or any company of which 20 per cent. or more of the voting capital is held by any member of the Melrose Group or any partnership, joint venture, firm or company in which any member of the Melrose Group may be interested (the "wider Melrose Group") or by any member of the Petroceltic Group or any associated undertaking or any company of which 20 per cent. or more of the voting capital is held by Petroceltic Group or any partnership, joint venture, firm or company in which any member of the Petroceltic Group may be interested (the "wider Petroceltic Group") of all or a material portion of their respective businesses, assets or property or impose any material limitation on the ability of any of them to conduct their respective businesses or own any of their material assets or property;

(iii)     impose any limitation on or result in a delay in the ability of any member of the wider Melrose Group or the wider Petroceltic Group to acquire or to hold or to exercise effectively any rights of ownership of shares or loans or securities convertible into shares in any member of the wider Melrose Group or of the wider Petroceltic Group held or owned by it or to exercise management control over any member of the wider Melrose Group or of the wider Petroceltic Group to an extent which is material in the context of the Melrose Group taken as a whole or, as the case may be, the Petroceltic Group taken as a whole;

(iv)    require any member of the wider Petroceltic Group or the wider Melrose Group to acquire or offer to acquire any shares or other securities in any member of the wider Melrose Group where such acquisition would be material in the context of the Melrose Group taken as a whole; or

(v)     otherwise materially and adversely affect the assets, business, profits or prospects of any member of the wider Petroceltic Group or of any member of the wider Melrose Group;

and all applicable waiting and other time periods during which any such Relevant Authority could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference having expired, lapsed or been terminated;

(e)        other than in respect of Conditions 3(a) to (c), all necessary notifications and filings having been made, all applicable waiting periods (including any extensions thereof) under any applicable legislation or regulations of any jurisdiction having expired, lapsed or been terminated, in each case in respect of the Merger and the acquisition of any Melrose Shares, or of control of Melrose, by Petroceltic, and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals ("Authorisations") necessary or reasonably appropriate in any jurisdiction for, or in respect of, the Merger and the proposed acquisition of any Melrose Shares, or of control of Melrose, by Petroceltic and to carry on the business of any member of the wider Petroceltic Group or of the wider Melrose Group having been obtained, in terms and in a form satisfactory to Petroceltic, from all appropriate Relevant Authorities and from any persons or bodies with whom any member of the wider Petroceltic Group or the wider Melrose Group has entered into contractual arrangements and all such Authorisations remaining in full force and effect at the time at which the Merger becomes Effective and Petroceltic having no knowledge of an intention or proposal to revoke, suspend or modify or not to renew any of the same and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;
(f)        except as Disclosed by Melrose prior to the date hereof, there being no provision of any arrangement, agreement, licence, permit or other instrument to which any member of the wider Melrose Group is a party or by or to which any such member or any of their assets is or may be bound, entitled or be subject to and which, in consequence of the Merger or the acquisition or proposed acquisition of any Melrose Shares, or control of Melrose, by Petroceltic or otherwise, would or might reasonably be expected, to an extent which is material in the context of the Melrose Group taken as a whole, to result in:

(i)         any monies borrowed by, or other indebtedness actual or contingent of, any such member of the wider Melrose Group being or becoming repayable or being capable of being declared immediately or prior to its or their stated maturity or the ability of any such member to borrow monies or incur any indebtedness being inhibited or becoming capable of being withdrawn;

(ii)        the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member or any such security (whenever arising or having arisen) being enforced or becoming enforceable;

(iii)       any such arrangement, agreement, licence or instrument being terminated or adversely modified or any action being taken of an adverse nature or any obligation or liability arising thereunder;

(iv)       any assets of any such member being disposed of or charged, or right arising under which any such asset could be required to be disposed of or charged, other than in the ordinary course of business;

(v)        the interest or business of any such member of the wider Melrose Group in or with any firm or body or person, or any agreements or arrangements relating to such interest or business, being terminated or adversely modified or affected;

(vi)       any such member ceasing to be able to carry on business under any name under which it presently does so;

(vii)      the creation of liabilities (actual or contingent) by any such member; or

(viii)     the financial or trading position of any such member being prejudiced or adversely affected,

and no event having occurred which, under any provision of any arrangement, agreement, licence or other instrument to which any member of the wider Melrose Group is a party, or to which any such member or any of its assets may be bound, entitled or subject, could result in any of the events or circumstances as are referred to in paragraphs (i) to (viii) of this Condition 3(f) occurring and which in any case is material in the context of the wider Melrose Group taken as a whole;

(g)        except as Disclosed by Melrose prior to the date hereof, no member of the wider Melrose Group having, since 31 December 2011:

(i)         issued, agreed to issue or proposed the issue of additional shares or securities of any class, or securities convertible into, or exchangeable for or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities (save as between Melrose and wholly‑owned subsidiaries of Melrose and save for options granted, and for any Melrose Shares allotted upon exercise of options granted under the Melrose Share Plans before the date hereof), or redeemed, purchased or reduced any part of its share capital;

(ii)        sold or transferred or agreed to sell or transfer any Treasury Shares;

(iii)       recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution other than to Melrose  or a wholly-owned subsidiary of Melrose other than the Special Dividend;

(iv)       agreed, authorised, proposed or announced its intention to propose any merger or demerger or acquisition or disposal of assets or shares which are material in the context of the Melrose Group taken as a whole (other than in the ordinary course of trading) or to any material change in its share or loan capital;

(v)        issued, authorised or proposed the issue of any debentures or incurred any indebtedness or contingent liability which is material in the context of the Melrose Group taken as a whole;

(vi)       acquired or disposed of or transferred, mortgaged or encumbered any asset or any right, title or interest in any asset (other than in the ordinary course of trading) in a manner which is material in the context of the Melrose Group taken as a whole;

(vii)      entered into or varied or announced its intention to enter into or vary any contract, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is of a long‑term or unusual nature or magnitude or involves or could involve an obligation of such a nature or magnitude, and in any case which is material in the context of the Melrose Group taken as a whole;

(viii)     entered into or proposed or announced its intention to enter into any reconstruction, amalgamation, transaction or arrangement (otherwise than in the ordinary course of business) which is material in the context of the Melrose Group taken as a whole;

(ix)       taken any action nor having had any steps taken or legal proceedings started or threatened against it for its winding‑up or dissolution or for it to enter into any arrangement or composition for the benefit of its creditors, or for the appointment of a receiver, administrator, trustee or similar officer if it or any of its assets (or any analogous proceedings or appointment in any overseas jurisdiction) which in any case is material in the context of the wider Melrose Group taken as a whole;

(x)        been unable, or admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(xi)       entered into or varied or made any offer to enter into or varies the terms of any service agreement or arrangement with any of the directors of Melrose (save as agreed by Petroceltic);

(xii)      waived, compromised or settled any claim which is material in the context of the wider Melrose Group; or

(xiii)     entered into or made an offer (which remains open for acceptance) to enter into any agreement, arrangement or commitment or passed any resolution with respect to any of the transactions or events referred to in this paragraph (g);

(h)        since 31 December 2011, except as Disclosed by Melrose prior to the date hereof:

(i)         there having been no adverse change in the business, assets, financial or trading position or profits or prospects of any member of the wider Melrose Group which in any case is material in the context of the wider Melrose Group taken as a whole;

(ii)        no litigation, arbitration proceedings, prosecution or other legal proceedings having been instituted, announced or threatened by or against or remaining outstanding against any member of the wider Melrose Group and no enquiry or investigation by or complaint or reference to any Relevant Authority against or in respect of any member of the wider Melrose Group having been threatened, announced or instituted or remaining outstanding, which in any such case could reasonably be expected to have a material effect on the wider Melrose Group taken as a whole or in the context of the Merger; and

(iii)       no contingent or other liability having arisen or been incurred which might reasonably be expected to adversely affect any member of the Melrose  Group in a manner which is material in the context of the wider Melrose Group;

(i)         Petroceltic not having discovered that, save as Disclosed by Melrose prior to the date hereof:

(i)         the financial, business or other information concerning the wider Melrose Group which has been disclosed at any time by or on behalf of any member of the wider Melrose Group whether publicly (by the delivery of an announcement to a Regulatory Information Service) or to Petroceltic or its professional advisers, either contains a material misrepresentation of fact or omits to state a fact necessary to make the information contained therein not materially misleading which in any case is material in the context of the wider Melrose Group taken as a whole; or

(ii)        any member of the wider Melrose Group is subject to any liability, contingent or otherwise, which is not disclosed in the annual report and accounts of Melrose for the financial year ended 31 December 2011 or in the interim report for the six months to 30 June 2012 and which is material in the context of the Melrose Group taken as a whole;

(iii)       any past or present member of the wider Melrose Group has not complied in any material respect with all applicable legislation or regulations of any jurisdiction or any notice or requirement of any Relevant Authority with regard to the storage, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health which non-compliance would be likely to give rise to any liability (whether actual or contingent) on the part of any member of the wider Melrose Group which in any case is material in the context of the wider Melrose Group taken as a whole;

(iv)       there has been a disposal, spillage, emission, discharge or leak of waste or hazardous substance or any substance likely to impair the environment or harm human health on, or from, any land or other asset now or previously owned, occupied or made use of by any past or present member of the wider Melrose Group, or in which any such member may now or previously have had an interest, which would be likely to give rise to any liability (whether actual or contingent) on the part of any member of the wider Melrose Group which in any case is material in the context of the wider Melrose Group taken as a whole;

(v)        there is or is reasonably likely to be any obligation or liability (whether actual or contingent) to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the wider Melrose Group or in which any such member may now or previously have had an interest under any environmental legislation or regulation or notice, circular or order of any Relevant Authority in any jurisdiction which in any case is material in the context of the wider Melrose Group taken as a whole.

Part 2 Certain further terms of the Merger

1.         Petroceltic reserves the right to elect to implement the Merger by way of a takeover offer (as defined in section 974 of the UK Companies Act).  In such event, such offer will (unless otherwise determined by Petroceltic and subject to the consent of the Panel) be implemented on the same terms and conditions subject to appropriate amendments to reflect the change in method of effecting the Merger, which may include changing the consideration structure under the terms of the Merger and (without limitation and subject to the consent of the Panel) an acceptance condition set at 90 per cent. (or such lesser percentage, being more than 50 per cent., as Petroceltic may decide but which shall not be less than 75 per cent. unless agreed by Melrose with the consent of the Panel) of the voting rights then exercisable at a general meeting of Melrose, including, for this purpose, any such voting rights attaching to Melrose Shares that are unconditionally allotted or issued, and to any Treasury Shares which are unconditionally transferred or sold by Melrose, before the takeover offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise.

2.         If Petroceltic is required by the Panel to make an offer for Melrose Shares under the provisions of Rule 9 of the Code, Petroceltic may make such alterations to any of the above conditions as are necessary to comply with the provisions of that Rule.

3.         The Scheme and the Merger and any dispute or claim arising out of, or in connection with, them (whether contractual or non-contractual in nature) will be governed by English law and will be subject to the jurisdiction of the Courts of England.

4.         Save to the extent cancelled pursuant to the Scheme, the Melrose Shares will be acquired under the Merger fully paid and free from all liens, charges and encumbrances, rights of pre‑emption and any other third party rights of any nature whatsoever and together with all rights attaching thereto, including the right to receive and retain all dividends and other distributions declared, paid or made after the date hereof other than the Special Dividend.  If any dividend other than the Special Dividend or other distribution or return of capital is proposed, declared, made, paid or becomes payable by Melrose in respect of a Melrose Share on or after the date of this announcement and prior to the Merger becoming effective, Petroceltic reserves the right to reduce the value of the consideration payable for each Melrose Share under the Merger by up to the amount per Melrose Share of such dividend, distribution or return of capital except where the Melrose Share is or will be acquired pursuant to the Merger on a basis which entitles Petroceltic to receive the dividend and/or distribution and/or return of capital and to retain it.   Petroceltic also reserves the right with Panel consent to reduce the value of the consideration payable for each Melrose Share under the Merger and/or to adjust the Merger Ratio.

5.         The availability of the New Petroceltic Shares to persons not resident in the United Kingdom or Ireland may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom or Ireland should inform themselves about and observe any applicable requirements.

6.         The New Petroceltic Shares to be issued under the Scheme will be issued credited as fully paid and will rank pari passu with the issued ordinary shares in Petroceltic, including the right to receive in full all dividends and other distributions, if any, declared, made or paid after the date hereof.

7.         Fractions of New Petroceltic Shares will not be allotted or issued to Scheme Shareholders, but the entitlements of Scheme Shareholders will be rounded up or down (with 0.5 being  rounded up) to the nearest whole       number of New Petroceltic Shares. 

 



APPENDIX II

SOURCES AND BASES

1.   The market prices of the Petroceltic Shares and Melrose Shares are the closing middle market quotations as derived from the Daily Official List.

 

2.   As at the close of business on 16 August 2012 (being the last practicable date prior to the date of this announcement) there were 2,369,605,049 Petroceltic Shares in issue. The International Securities Identification Number for Petroceltic Shares is ISIN IE0003186172.

 

3.   As at the close of business on 16 August 2012 (being the last practicable date prior to the date of this announcement) there were 114,689,178 Melrose Shares in issue. The International Securities Identification Number for Melrose Shares is ISIN GB0009354589.

 

4.   The value of 143.9 pence per Melrose Share implied by the terms of the Merger is calculated based on the exchange ratio of 17.6 New Petroceltic Shares for each Melrose Share held multiplied by the closing price per Petroceltic Share of 8.175 pence on 16 August   2012 (being the last practicable date prior to the date of this announcement).

 

5.   The value of 148.6 pence per Melrose Share implied by the terms of the Merger together with the Special Dividend is calculated based on:

 

5.1.               the exchange ratio of 17.6 New Petroceltic Shares for each Melrose Share held multiplied by the closing price per Petroceltic Share of 8.175 pence on 16 August 2012 (being the last practicable date prior to the date of this announcement); and

 

5.2.               the Special Dividend of 4.7 pence for each Melrose Share.

 

6.    Unless otherwise stated, the reserves and resources information on Petroceltic is extracted             (without material adjustment) from the Competent Person's Reports as set out in Appendices I     to IV (inclusive) in the Admission Document.

7.    Unless otherwise stated, the reserves and resources information on Melrose is extracted (without material adjustment) from the Competent Person's Reports as set out as set out in Appendices I to IV (inclusive) the Admission Document.

 

 

 

 



APPENDIX III

IRREVOCABLE UNDERTAKINGS

 

The following holders, controllers or beneficial owners of Melrose Shares have given irrevocable

undertakings to vote (or procure to be voted) in favour of the Scheme at the Court Meeting and the

resolution to be proposed at the Melrose General Meeting to give effect to the Scheme:

 

Part A

 

Name

Number of Melrose Shares

% of Melrose Shares in issue

Robert Adair and Skye (a company connected to Robert Adair)

58,431,929

50.95

 

The undertakings listed in this Part A will remain binding if a higher competing offer for Melrose is made.

 

The undertakings listed in this Part A will cease to apply and shall lapse if (i) the Merger is not implemented by the date which is nine months from the date of this announcement; or (ii) Petroceltic proposes any variation to the Merger unless the principal terms of the revised Merger (including the Merger Ratio, the amount of the Special Dividend payable to Melrose Shareholders and, if Petroceltic elects to implement the Merger by way of takeover offer, an acceptance condition of not less than 75 per cent unless a lower acceptance condition is agreed to by Melrose with Panel consent) are no less favourable than the terms set out in this announcement; or (iii) the Merger lapses or is withdrawn without having become wholly unconditional, save in circumstances where within three days of the Merger having lapsed or been withdrawn Petroceltic announces a new offer for Melrose on terms no less favourable to Melrose Shareholders than the principal terms of the Merger.

 

A substantial majority of the Melrose Shares in which Robert Adair and Skye are interested are subject to charges in favour of third parties. In each case where such consent is required, the beneficiary of the charge has consented to Robert Adair and Skye providing the irrevocable undertaking described herein.  However, in the event that any beneficiary of the charges granted by Robert Adair or Skye enforces its security interest in such Melrose Shares, the irrevocable undertaking shall not be binding on the party enforcing such security interest.

 

Part B

 

Name

Number of Melrose Shares

% of Melrose Shares in issue

David Archer

504,830

0.44

Anthony Richmond-Watson

777,769

0.68

David Thomas

150,000

0.13

William Wyatt

81,560

0.07

 

 

 

TOTAL

1,514,159

1.32%

 

The undertakings listed in this Part B will remain binding if a higher competing offer for Melrose is

made.

 

The undertakings listed in this Part B will cease to be binding if (i) the Merger is not implemented by the date which is nine months from the date of this announcement; (ii) Petroceltic proposes any variation to the Merger unless the principal terms of the revised Merger (including the Merger Ratio, the amount of the Special Dividend payable to Melrose Shareholders and, if Petroceltic elects to implement the Merger by way of a takeover offer, an acceptance condition of not less than 75 per cent unless a lower acceptance condition is agreed by Melrose with Panel consent) are no less favourable than the terms set out in this announcement; or (iii) the Merger lapses or is withdrawn without having become wholly unconditional or effective, save in circumstances where within three days of the Merger having lapsed or been withdrawn Petroceltic announces a new offer for Melrose on terms no less favourable to Melrose Shareholders than those set out in this announcement.

 

Part C

 

The following holders, controllers and beneficial owners of Petroceltic Share have given irrevocable undertakings to vote in favour of the Petroceltic Resolutions at the Petroceltic General Meeting:

 

Name

Number of Petroceltic Shares

% of Petroceltic Shares in issue

Brian O'Cathain

3,776,820

0.16%

Tom Hickey

5,882,856

0.25%

Andrew Bostock

3,000,000

0.13%

Con Casey

4,008,166

0.17%

Hugh McCutcheon

1,100,000

0.05%

 

 

 

TOTAL

17,767,842

0.75 %

 

 

The undertakings listed in this Part C will cease to be binding if (i) the Merger is not implemented by the date which is nine months from the date of this announcement or (ii) Melrose announces that it has withdrawn its recommendation to Melrose Shareholders to vote in favour of the resolutions proposed at the scheme meetings in respect of the Merger.

 

 

 



APPENDIX IV

KEY TERMS OF RELATIONSHIP AGREEMENT

Robert Adair, Skye and Petroceltic have entered into a Relationship Agreement which is conditional on Admission and which will govern the relationship between Robert Adair, Skye and Petroceltic following completion of the Merger.

Pursuant to the terms of the Relationship Agreement, whilst Robert Adair is a director he shall be entitled to receive fees and expenses for the performance of his duties as a director in accordance with Petroceltic's normal remuneration policies for non-executive directors.

Robert Adair and Skye have undertaken to use all reasonable endeavours to procure that no member of the Enlarged Group is prevented from carrying on its business independently of Robert Adair, Skye and their associates, that all arrangements between any member of the Enlarged Group and Robert Adair, Skye or their associates are conducted on arm's-length terms and that they shall abstain from voting on related party transactions which they are required by relevant market rules to abstain from voting on.

Robert Adair and Skye have undertaken to vote in favour of all ordinary course resolutions proposed at Petroceltic's AGMs for a period of 24 months from Admission and to vote in favour of any capital raising recommended by Petroceltic's advisers and by the board of Petroceltic.  Robert Adair and Skye have also undertaken not to (and to procure that their associates do not), amongst other things, exercise their rights as shareholders to requisition shareholder meetings of Petroceltic, remove any director of Petroceltic, bring or support a derivative action against any director of Petroceltic or oppose any duly authorised action or recommendation of the board of Petroceltic.

Robert Adair and Skye have agreed to a partial lock-up over a period of up to 18 months from Admission.  Under the terms of the lock-up, 10 per cent. of Robert Adair and Skye's aggregate holding will be free of any restrictions, 90 per cent. of Robert Adair and Skye's aggregate holding will be subject to a restriction on disposal for 12 months from Admission and thereafter 45 per cent. of Robert Adair and Skye's aggregate holding will be subject to a restriction on disposal for  a further 6 months.  The lock-up is subject to certain customary exceptions including disposals pursuant to a court order, acceptance of a takeover offer or participation in a scheme of arrangement, creation and enforcement of security interests and disposals to connected persons who enter into a deed of adherence in respect of the Relationship Agreement.  Robert Adair and Skye have further agreed to orderly marketing provisions which will govern any disposal of shares by Robert Adair or Skye.

Robert Adair and Skye have also agreed to a standstill agreement for a period of 3 years after Admission, pursuant to which they have agreed not to acquire or offer to acquire (and to take all reasonable steps to procure that none of their associates or concert parties will acquire or offer to acquire) any securities in Petroceltic which would result in their percentage holding in Petroceltic increasing by more than 2 per cent., or make an offer (as defined in Irish takeover rules) for all or any part of the share capital of Petroceltic.

The Relationship Agreement shall terminate on the earlier of (i) the Petroceltic Shares ceasing to be admitted to either ESM and AIM, or the official lists maintained by the Irish Stock Exchange and the FSA and to trading on the main securities markets of the Irish Stock Exchange and the London Stock Exchange; or (ii) Robert Adair, Skye and their associates ceasing to be entitled to exercise or control the exercise of 10 per cent. or more of the voting rights in Petroceltic.



APPENDIX V

DEFINITIONS

The following definitions apply throughout this document unless the context requires otherwise:

"Admission"

the admission of the Enlarged Share Capital to trading on AIM and ESM

"Admission Document"

the admission document to be published by Petroceltic in connection with the Merger and sent to Melrose Shareholders at the same time as the Scheme Circular containing  information on, amongst other things, Petroceltic, Melrose, the Enlarged Group and the New Petroceltic Shares

"AIM"

the AIM market operated by the London Stock Exchange

"Australia"

the Commonwealth of Australia, its states, territories and possessions

"boepd"

barrel of oil equivalent per day

"BofA Merrill Lynch" or "Merrill Lynch International"

Merrill Lynch International, a company registered in England and Wales with registered number 02312079 and whose registered office is at 2 King Edward Street, London EC1A 1HQ

"Business Day"

any day (not being a Saturday or Sunday or public holiday) on which banks are open for general banking business in the City of London

"Canada"

Canada, its provinces and territories and all areas subject to its jurisdiction and any political sub-division thereof

"Closing Price"

the middle market price of a Melrose Share at the close of business on the day to which such price relates, as derived from the Daily Official List of the London Stock Exchange for that day

"Code"

the City Code on Takeovers and Mergers

"Conditions"

the terms and conditions to the implementation of the Merger and the Scheme set out in Appendix I to this announcement and to be set out in the Scheme Circular

"Court"

Her Majesty's High Court of Justice in England and Wales

"Court Meeting"

the meeting of Scheme Shareholders convened by order of the Court under Part 26 of the UK Companies Act, notice of which will be set out in the Scheme Circular, to consider and if thought fit approve the Scheme (with or without amendment) and any adjournment thereof

"Court Order(s)"

Scheme Court Order and the Reduction Court Order

"CREST"

the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear UK & Ireland Ltd in accordance with the Uncertificated Securities Regulations 2001

"Daily Official List"

the Daily Official List published by the London Stock Exchange

"Davy"

J&E Davy, trading as Davy including its affiliate Davy Corporate Finance and other affiliates, or any of its subsidiary undertakings

"Dealing Disclosure"

an announcement pursuant to Rule 8 of the Code containing details of dealings in interests in relevant securities of a party to an offer

"Disclosed"

(i) fairly disclosed via a Regulatory Information Service prior to the date hereof by or on behalf of Melrose; or (ii) fairly disclosed in writing  prior to the date hereof by or on behalf of Melrose to Petroceltic, or its financial, accounting or legal advisers (specifically as Petroceltic's advisers in relation to the Merger)

"Effective"

 

 

 

 

in the context of the Merger:

(i)  if the Merger is implemented by way of Scheme, the Scheme having become effective pursuant to its terms; or

(ii) if the Merger is implemented by way of an Offer, such Offer having been declared or becoming unconditional in all respects in accordance with its terms

"Effective Date"

the date on which the Merger becomes Effective

"Enlarged Company"

"Enlarged Group"

Petroceltic following the Effective Date

Petroceltic Group (including the Melrose Group) following the Effective Date

"Enlarged Share Capital"

the Existing Petroceltic Shares together with the New Petroceltic Shares

"ESM"

the Enterprise Securities Market operated by the Irish Stock Exchange

"Existing Petroceltic Shares"

the 2,369,605,049 Petroceltic Shares in issue prior to the Merger

"FSA"

the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of FSMA

"FSMA"

the Financial Services and Markets Act 2000

"HSBC"

 

 

 

"Ireland"

HSBC Bank plc, financial adviser to Melrose, public company registered in England and Wales with number 14259 and whose registered office is at 8 Canada Square, London E14 5HQ

Ireland means the island of Ireland excluding Northern Ireland

"Irish Stock Exchange"

The Irish Stock Exchange Limited, together with any successors thereto

"Lambert Energy Advisory"

Lambert Energy Advisory Limited a company registered in England and Wales with number 3838151 and whose registered office is at 17 Hill Street, London W1J 5LJ

"Listing Rules"

the listing rules issued by the UK Listing Authority pursuant to Part VI of the Financial Services and Markets Act 2000

"London Stock Exchange"

London Stock Exchange plc

"Melrose"

Melrose Resources plc of Exchange Tower, 19 Canning Street, Edinburgh, EH3 8EG, a company incorporated in England and Wales with registered number 3210072

"Melrose Directors" or "Melrose Board"

the board of directors of Melrose and "Melrose Director" means any of them

"Melrose General Meeting"

the general meeting of the Melrose Shareholders (and any adjournment thereof) to be convened for the purposes of considering and, if thought fit, approving the special resolution  in connection with the Scheme, notice of which will be set out in the Scheme Circular

"Melrose Group"

Melrose and its subsidiary undertakings from time to time and "member of the Melrose Group" shall be construed accordingly

"Melrose Ordinary Shares"

ordinary shares of 10 pence each in the capital of Melrose

"Melrose Shareholders"

holders of Melrose Shares

"Melrose Share Plans"

the Melrose Approved Share Option Scheme, the Melrose Performance Share Plan and the Melrose Phantom Share Option Scheme

"Melrose Shares"

(i) prior to the Reduction Record Time, Melrose Ordinary Shares and (ii) after the Reduction Record Time, the shares in the capital of Melrose as issued under the terms of the Scheme

"Merger"

the proposed acquisition of the entire issued and to be issued share capital of Melrose by Petroceltic to be effected by means of the Scheme or (should Petroceltic so elect in accordance with the Conditions) by way of a takeover offer (as that term is defined in section 974 of the UK Companies Act under the Code)

"Merger Ratio"

the ratio of 17.6  Petroceltic Shares to 1 Melrose Share

"mmboe"

million barrels of oil equivalent

"New Petroceltic Shares"

the Petroceltic Shares proposed to be issued and credited as fully paid pursuant to the Scheme

"N+1 Brewin"

 

a company registered in England and Wales with registered number OC364131 and whose registered office is at 150 Aldersgate Street, London EC1A 4AB

"Offer Period"

the period commencing on 17 August 2012, being the date of issue of this announcement

"Official List"

the official list maintained by the UK Listing Authority pursuant to Part VI of the Financial Services and Markets Act 2000, and/or the official list of the Irish Stock Exchange as the context so requires

"Opening Position Disclosure"

an announcement pursuant to Rule 8 of the Code containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to an offer

"Panel" or "Takeover Panel"

the Panel on Takeovers and Mergers

"Petroceltic"

Petroceltic International PLC, a public limited liability company incorporated in Ireland with registered number 101176 and having its registered address at 75 St Stephen's Green, Dublin 2

"Petroceltic Directors" or "Petroceltic Board"

the board of directors of Petroceltic and "Petroceltic Director" means any of them

"Petroceltic General Meeting"

the extraordinary general meeting of Petroceltic Shareholders convened in connection with the Petroceltic Resolutions, notice of which will be set out in the Admission Document

"Petroceltic Group"

Petroceltic and its subsidiary undertakings from time to time and "member of the Petroceltic Group" shall be construed accordingly

"Petroceltic Ordinary Resolutions"

the ordinary resolutions to be proposed at the Petroceltic General Meeting for the purpose of approving and implementing the Merger, authorising an increase in the authorised share capital of Petroceltic, and authorising the Petroceltic Directors to issue and allot the New Petroceltic Shares

"Petroceltic Resolutions"

the Petroceltic Ordinary Resolutions and the Petroceltic Special Resolution

"Petroceltic Shareholders"

the holders of Petroceltic Shares

"Petroceltic Shares"

the ordinary shares of euro 0.0125 each in the capital of Petroceltic

"Petroceltic Special Resolution"

the special resolution to be proposed at the Petroceltic General Meeting to provide the Petroceltic Directors with authority to allot shares otherwise than in accordance with statutory pre-emption rights in limited circumstances

"PSC"

a production sharing contract signed between a host government and an oil and gas exploration company, regulating how much of the oil and gas produced from a production concession each will receive

"Reduction Court Order"

the order of the Court confirming the Reduction of Capital under section 648 of the UK Companies Act

"Reduction of Capital"

the proposed reduction of the share capital of Melrose pursuant to the Scheme

"Reduction of Capital Hearing"

the hearing by the Court to confirm the Reduction of Capital

"Reduction Record Time"

6.00pm on the Business Day immediately preceding the date on which the Reduction Court Order is made

"Registrar of Companies"

the Registrar of Companies in England and Wales, within the meaning of the UK Companies Act

"Regulatory Information Service"

a Regulatory Information Service that is approved by the Financial Services Authority and is on the list maintained by the Financial Services Authority in LR App 3 to the Listing Rules

"Restricted Jurisdiction"

any jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Petroceltic or Melrose regards as unduly onerous

"Scheme" or "Scheme of Arrangement"

the scheme of arrangement under Part 26 of the UK Companies Act proposed to be made between Melrose and the Scheme Shareholders to be set out in the Scheme Circular, with or subject to any modification, addition or condition thereto approved or imposed by the Court and agreed to by Melrose and Petroceltic

"Scheme Circular"

the document to be sent to Melrose Shareholders setting out, amongst other things, the Scheme and notices convening the Court Meeting and the Melrose General Meeting

"Scheme Court Hearing"

the hearing of the Court to sanction the Scheme and confirm the Reduction of Capital

"Scheme Court Order"

the order of the Court sanctioning the Scheme under Part 26 of the UK Companies Act

"Scheme Shareholders"

registered holders of Scheme Shares

"Scheme Shares"

Melrose Ordinary Shares:

(i)     in issue at the date of the Scheme Circular;

(ii)    (if any) issued after the date of the Scheme Circular and prior to the Scheme Voting Record Time; and

(iii)   (if any) issued on or after the Scheme Voting Record Time and before the Reduction Record Time, on terms that the original or any subsequent holders thereof are, or shall have agreed in writing to be, bound by the Scheme

in each case, excluding Melrose Ordinary Shares (if any) registered in the name of or beneficially owned by any member of the Petroceltic Group

"Scheme Voting Record Time"

6.00 pm on the day which is two days before the date of the Court Meeting or, if the Court Meeting is adjourned, 6.00 pm on the day which is two days before the date set for the adjourned Court Meeting

"Skye"

Skye Investments Limited,  a company in which Robert Adair has a controlling interest

"Special Dividend"

the special interim dividend of 4.7 pence for each Melrose Share payable by Melrose to Melrose Shareholders who are on Melrose's register of members at the Reduction Record Time within 14 days of the Effective Date, payable subject to, and with effect from, the Effective Date

"Statement of Capital"

the statement of capital approved by the Court showing the information required by the section 649 of the UK Companies Act with respect to Melrose's share capital as altered by the Reduction of Capital

"subsidiary" and "subsidiary undertaking"

have the meanings given to them in the UK Companies Act

"Treasury Shares"

shares held as treasury shares as defined in section 724(5) of the UK Companies Act

"UK" or "United Kingdom"

the United Kingdom of Great Britain and Northern Ireland

"UK Companies Act"

the UK Companies Act 2006, and shall be construed as a reference to it as it may from time to time be amended, modified or re-enacted

"UK Listing Authority"

the Financial Services Authority as the competent authority under Part VI of the Financial Services and Markets Act 2000

"United States" or "US"

the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia, and all other areas subject to its jurisdiction

 

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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