DNO to make cash offer for all shares of Faroe Petroleum
DNO ASA, the Norwegian oil and gas operator, has announced the terms of an offer to be made by DNO ASA for the whole of the issued and to be issued share capital of Faroe Petroleum plc (other than the Faroe Shares already held by DNO, representing 28.22 percent of Faroe’s issued share capital).
The offer will be 152 pence in cash for each Faroe Share, valuing Faroe’s existing issued and to be issued share capital at approximately £607.9m.
Of the Offer value of approximately £443.8m on a fully diluted basis, £402.6m is attributable to the current issued share capital of Faroe (other than those Faroe Shares already held by DNO and the Faroe Employment Benefit Trust) and the balance £41.2m is attributable to DNO’s understanding of the number of outstanding share options and awards granted by Faroe to its directors, management and employees, representing approximately 7 percent dilution of Faroe’s current issued share capital.
The Offer Price represents a premium of 44.8 percent to Faroe’s share price of 105 pence at the close of business on April 3, 2018, the last business day before DNO announced its first acquisition of shares in Faroe and a premium of 20.8 percent to Faroe’s share price of 125.8 pence at the close of business on November 23, 2018, the last business day before this announcement.
Commenting on the Offer, Bijan Mossavar-Rahmani, Executive Chairman of DNO, said: “We are pleased now to engage directly with the Faroe shareholders with a proposed all-cash voluntary offer of 152 pence per share which represents a premium of 44.8 percent to the closing price of 105 pence on the day before DNO announced its first acquisition of Faroe shares last April, and a premium of 20.8 percent to the closing price of 125.8 pence last Friday. In the period between our first acquisition, triggering significant bid speculation, and this offer, the price of Brent crude has dropped 13 percent and oil and equity markets have entered a period of great uncertainty.
“For those shareholders who wish to exit, DNO is therefore offering a considerable premium. For those who wish to remain, there is no assurance of Faroe achieving its full value potential in a volatile commodity and financial markets environment as a relatively small scale, financially constrained UK-AIM listed company whose share price performance has remained stubbornly disappointing, with the very notable exception of short-term spikes following the sale of a particular large block of shares by one investor to another (most recently to DNO) and the attendant speculation about an impending takeover premium with each such transaction.
“We firmly believe that Faroe’s assets, the substantial part of which are Norwegian, are better placed in the bosom of DNO, Norway’s oldest independent oil and gas company, currently operating gross production of 125,000 barrels per day which compares with the 7,500 barrels of oil equivalent a day of gross production operated by Faroe. DNO’s proven and probable reserves were nearly four times those of Faroe’s as reported at 31 December 2017.
“Whether the offer achieves DNO’s minimum acquisition target or the acquisition of all of Faroe’s shares, we attach great importance to retaining the skills, knowledge and expertise of Faroe’s operational management and employees. We intend to retain Faroe’s Aberdeen head office and each of the other offices.”
For more information visit www.dno.no
27th November 2018