REG - Tullow Oil PLC Capricorn Energy PLC Tullow Oil PLC - FP Tullow Oil PLC - NP - Tullow Oil to merge with Capricorn Energy
01/06/2022 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220601:nRSA5384Na&default-theme=true
RNS Number : 5384N Tullow Oil PLC 01 June 2022
Tullow Oil PLC - Recommended All-Share Combination of Tullow Oil PLC and
Capricorn Energy PLC
Part I
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.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW TULLOW SHARES EXCEPT ON THE BASIS OF THE
INFORMATION IN THE SCHEME DOCUMENT, THE PROSPECTUS AND THE CIRCULAR WHICH ARE
PROPOSED TO BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
FOR IMMEDIATE
RELEASE
1 June 2022
RECOMMENDED ALL-SHARE COMBINATION
of
TULLOW OIL PLC AND CAPRICORN ENERGY PLC
to be effected by means of a Scheme of Arrangement of Capricorn Energy PLC
under Part 26 of the Companies Act 2006
· Merger of equals creating a leading African energy company with a
material and diversified asset base and a portfolio of investment
opportunities delivering visible production growth.
· Capricorn Shareholders to receive 3.8068 New Tullow Shares for
each Capricorn Share held, with Capricorn Shareholders to own 47% and Tullow
Shareholders to own 53% of the Combined Group on Completion.
· Delivers a Combined Group with robust cash generation and a
resilient balance sheet, realising pre-tax net cash cost synergies of $50
million per annum.
· Establishes the basis for a sustainable shareholder returns
programme, with a base annual dividend of $60 million.
· Commitment to reducing emissions from within its operating
assets, targeting net zero Scope 1 and Scope 2 emissions by 2030, and
continuing a proven track record of safe, low-cost operations.
· Positions the Combined Group to play a leading role in the
African energy sector.
Summary
The boards of directors of Tullow Oil PLC ("Tullow") and Capricorn Energy PLC
("Capricorn") are pleased to announce that they have reached agreement on the
terms of a recommended all-share combination of Tullow and Capricorn (the
"Combination") to create the Combined Group.
It is intended that the Combination will be implemented by means of a
Court-sanctioned scheme of arrangement under Part 26 of the Companies Act,
where Tullow will acquire all of the issued and to be issued Capricorn Shares.
Under the terms of the Combination, each Capricorn Shareholder will be
entitled to receive:
for each Capricorn
Share: 3.8068 New Tullow Shares
On completion of the Combination, Capricorn Shareholders will hold
approximately 47 per cent. of the Combined Group and Tullow Shareholders will
hold approximately 53 per cent. of the Combined Group (based on the fully
diluted share capital of Capricorn and the fully diluted share capital of
Tullow, in each case as at the date of this Announcement).
Compelling strategic and financial rationale
The Boards of Tullow and Capricorn believe the Combination has compelling
strategic, operational and financial rationale, with the ability to deliver
substantial benefits to shareholders, host nations and other stakeholders. The
Combination represents a unique opportunity to create a leading African energy
company, listed in London, with the financial flexibility and human resource
capability to access and accelerate near-term organic growth, add new reserves
and resources cost-effectively, generate significant future returns for
shareholders, and pursue further consolidation. The Combined Group is
committed to building a sustainable future through responsible oil and gas
development, in close partnership and collaboration with joint venture
partners and host governments.
The Boards of Tullow and Capricorn believe this Combination:
(a) Creates a leading African energy company with a material and diversified
asset base and a portfolio of investment opportunities delivering visible
production growth.
· The Combined Group provides shareholders with a diversified
pan-African upstream portfolio underpinned by low-cost producing assets, with
a deep portfolio of incremental high return investment opportunities in Ghana,
Egypt, Gabon and Côte d'Ivoire.
· Capricorn's Egypt portfolio provides significant opportunity to
deliver self-funded growth production via infill drilling and low-cost
exploration to sustain the resource base over time, whilst championing
electrification and decarbonisation initiatives.
· The major resource development project in Kenya provides
additional growth and value creation optionality.
· The substantial prospective resource base in Guyana and
Mauritania provides material potential upside with limited capital exposure.
· Pro forma reserves and resources of 343mmboe and 696mmboe with
2021A production of 96kboe/d positions the Combined Group as one of the
largest, listed independent African focused energy companies today.
(b) Delivers a Combined Group with robust cash generation and a resilient
balance sheet and realises meaningful cost synergies.
· The Combined Group will have a resilient balance sheet, with pro
forma 2021A leverage of 1.5x and $1.8bn of liquidity. Expected leverage of
<1x at year end 2022 with rapid future deleveraging anticipated.
· The Combined Group is expected to realise pre-tax net cash cost
savings of $50 million on an annual run-rate basis by the second anniversary
of the completion of the Combination through the reduction of duplicate costs
across Board, Corporate and Group operational and technical functions and
administrative functions including consolidation of office space and
rationalisation of IT spend.
(c) Establishes a sustainable capital return programme for shareholders
underpinned by robust cash generation.
· Stable, low-cost production delivering forecast cumulative
pre-financing free cash flows of $2.4 billion over the 2022-2025 period at a
flat nominal Brent price of $75/bbl.
· Visible and robust cash generation, cost savings, a strengthened
balance sheet and disciplined capital allocation create a platform for
sustainable shareholder returns through a fixed plus variable returns
framework:
o Base annual dividend of $60 million, with additional returns driven by a
disciplined, value-driven capital allocation framework.
o Tullow currently has no distributable reserves and is therefore currently
unable to pay dividends or make other distributions to shareholders. The
Tullow Board intends to address this issue by taking such steps, which may
include a capital restructuring of the Tullow Group or (as the case may be)
the Combined Group and/or the upstreaming of dividends/distributions from
other members of the Tullow Group or (as the case may be) the Combined Group,
as may be required to achieve the dividend policy outlined above.
(d) Creates a stronger, more resilient business with a deep commitment to
environmental stewardship, social investment, development of local content and
our national workforces.
· The Combined Group is committed to achieving net zero Scope 1 and
2 emissions by 2030. This is planned to be achieved through comprehensive
emissions reduction programmes underway in Ghana, Gabon, Côte d'Ivoire and
Egypt and by offsetting hard to abate emissions through company-run
nature-based solutions.
· The Combined Group will be an important supplier of gas in Egypt
and in Ghana - supporting the industrial development in these countries.
(e) Positions the Combined Group to play a leading role in the African
energy sector.
(f) Commits to environmental, social and corporate governance standards,
established stakeholder relationships, alongside a proven track record of
safe, low-cost operations and a strong balance sheet.
The Combined Group
The board of directors and management of the Combined Group will comprise a
mixture of individuals from Tullow and Capricorn, drawing upon the best
expertise and talent of both companies to deliver value for the Combined
Group's shareholders and partners. Upon completion of the Combination, it is
intended that:
· Phuthuma Nhleko, currently Chair of Tullow, will become Chair of
the board of the Combined Group;
· Nicoletta Giadrossi, currently Chair of Capricorn, will become
Senior Independent Director of the Combined Group;
· Rahul Dhir, CEO of Tullow, will become CEO of the Combined Group;
· James Smith, CFO of Capricorn, will become CFO of the Combined
Group.
The Board of the Combined Group will include a further 5 Non-executive
Directors drawn from both companies, with 2 to be current Tullow Non-executive
Directors and 3 to be current Capricorn Non-executive Directors. The Board
composition as outlined will be finalised by agreement amongst the parties at
Completion. The Board of the Combined Group is likely to evolve over time,
to ensure a balance of skills and diversity including meaningful
representation of the geographies in which the Combined Group will operate.
After almost 11 years as CEO of Capricorn, Simon Thomson will step down as CEO
on Completion and will become Chair of the Integration Steering Committee to
help with the integration of the two companies.
It is intended that, following completion of the Combination, the headquarters
of the Combined Group will be at Tullow's existing offices in London and it is
intended that the Combined Group will also retain premises in Edinburgh and
through the application of a flexible work policy enable employees to operate
from both premises. The Combined Group will comply with any obligations to
inform and consult with employees and their representatives in respect of
these intentions.
Tullow's shares will continue to be listed on the premium listing segment of
the Official List of the Financial Conduct Authority (the "FCA") and on the
First Official List of the Ghana Stock Exchange, and will continue to trade on
the London Stock Exchange's main market for listed securities and on the Ghana
Stock Exchange. Tullow's shares are also currently listed on the secondary
listing segment of the Official List of The Irish Stock Exchange PLC, trading
as Euronext Dublin ("Euronext Dublin") as an overseas company and trade on the
Euronext Dublin Market operated by Euronext Dublin. Tullow intends to review
the appropriateness of a continued listing of its shares on the secondary
listing segment of the Official List of Euronext Dublin and to trading on the
Euronext Dublin Market in light of the volume of trading of its shares on the
Euronext Dublin Market and the costs related to such listing and admission to
trading. Accordingly, at Completion Tullow's shares may not be listed on the
secondary listing segment of the Official List of Euronext Dublin and admitted
to trading on the Euronext Dublin Market operated by Euronext Dublin.
Financial benefits and effects of the Combination
The Tullow Board is confident that as a direct result of the Combination, the
Combined Group will generate meaningful cost synergies and create additional
shareholder value. The Tullow Board, having reviewed and analysed the
potential cost synergies of the Combination, and taking into account the
factors it can influence, believes the Combination will result in $50 million
of pre-tax net cash cost synergies on an annual run-rate basis by the second
anniversary of the completion of the Combination.
The Tullow Board expects approximately 71% of these anticipated quantified net
cash cost synergies to be achieved by the end of the first twelve month
period following completion of the Combination.
The Tullow Board estimates that realisation of these net cash cost synergies
will give rise to one-off costs of approximately $45 million incurred in the
two years post-completion of the Combination. The Tullow Board has considered
potential areas of dis-synergy and these were determined to be immaterial for
the analysis.
These anticipated net cash cost synergies will accrue as a direct result of
the Combination and would not be achieved on a standalone basis.
Please refer to Appendix 4 to this Announcement for further details on these
anticipated synergies. The Quantified Financial Benefits Statement set out
above has been reported on under the Code by KPMG, and by Tullow's lead
financial adviser, PJT Partners. References to those anticipated synergies
should be read in conjunction with Appendix 4.
As of the date of this Announcement, Capricorn has suspended its previously
announced $200 million share buyback programme (other than in respect of the
$25 million tranche announced on 7 April 2022, which is being conducted by JP
Morgan Securities PLC on a non-discretionary basis and will end no later than
6 July 2022).
Recommendations and irrevocable undertakings
Capricorn Directors' recommendation and irrevocable undertakings
The Capricorn Directors, who have been so advised by Morgan Stanley as to the
financial terms of the Combination, consider the terms of the Combination to
be fair and reasonable. The Capricorn Directors have also received financial
advice on the Combination from Rothschild & Co. In providing its financial
advice to the Capricorn Directors, Morgan Stanley and Rothschild & Co have
each taken into account the commercial assessments of the Capricorn Directors.
Accordingly, the Capricorn Directors intend to recommend, unanimously, that
Capricorn Shareholders vote in favour of the Scheme at the Court Meeting and
the resolutions to be proposed at the Capricorn General Meeting, as the
Capricorn Directors who hold Capricorn Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of Capricorn Shares,
representing approximately 0.2 per cent. of Capricorn's issued share capital
as at 31 May 2022 (being the last Business Day prior to the date of this
Announcement).
Tullow Directors recommendation and irrevocable undertakings
The Combination constitutes a "Class 1" transaction for Tullow for the
purposes of the Listing Rules. Accordingly, the Combination will be
conditional on the approval of the Tullow Shareholders at the Tullow General
Meeting.
The Tullow Directors consider the Combination to be in the best interests of
the Tullow Group and the Tullow Shareholders as a whole and intend unanimously
to recommend that Tullow Shareholders vote in favour of the Tullow Resolutions
at the Tullow General Meeting which will be convened in connection with the
Combination, as the Tullow Directors who hold Tullow Shares have irrevocably
undertaken to do in respect of their own beneficial holdings of Tullow Shares,
representing approximately 0.1 per cent. of Tullow's issued share capital as
at 31 May 2022 (being the last Business Day prior to the date of this
Announcement).
The Tullow Directors have received financial advice from PJT Partners and
Barclays in relation to the Combination. In providing their financial advice
to the Tullow Directors, PJT Partners and Barclays have relied upon the Tullow
Directors' commercial assessments of the Combination.
Transaction Structure and Timetable
It is intended that the Combination will be implemented by way of a
Court-sanctioned scheme of arrangement of Capricorn under Part 26 of the
Companies Act, further details of which are contained in the full text of this
Announcement and full details of which will be set out in the Scheme Document.
However, Tullow reserves the right, subject to the terms of the Co-operation
Agreement and with the consent of the Panel, to implement the Combination by
way of a Takeover Offer.
The Combination will be subject to, amongst other things, the receipt of any
necessary antitrust or regulatory consents, any necessary governmental
approvals or consents, waivers or non-exercise of any material termination
rights, material pre-emption rights or similar rights in the jurisdictions in
which the Tullow Group and the Capricorn Group operate, including (where
required) in Egypt, Ghana, Mexico and Mauritania, in each case given on terms
or subject to conditions which are satisfactory to Tullow and Capricorn. The
Combination will also be subject to such other conditions as are set out in
Part II and Appendix 1 to this Announcement, and to the full terms and
conditions which will be set out in the Scheme Document, including the
approval of the Scheme by the Scheme Shareholders, the sanction of the Scheme
by the Court, the passing of the Tullow Resolutions at the Tullow General
Meeting and the Admission of the New Tullow Shares to listing on the relevant
stock exchanges.
The Scheme Document will include full details of the Scheme and the
Combination, together with notices of the Court Meeting and the Capricorn
General Meeting and the expected timetable of the Scheme, and will specify the
action to be taken by Capricorn Shareholders. It is intended that the Scheme
Document will be despatched to Capricorn Shareholders following receipt (where
required) of the consents, approvals or waivers referred to above and in or
around the fourth quarter of 2022 (unless otherwise agreed by the Panel,
Tullow and Capricorn) and a further announcement regarding the publication of
the Scheme Document will be made in due course.
It is expected that the Prospectus, containing information about the Combined
Group and the New Tullow Shares, will be published at or around the same time
as the Scheme Document is posted to Capricorn Shareholders. It is also
expected that the Circular, containing details of the Combination and notice
of the Tullow General Meeting, will be posted to Tullow Shareholders at or
around the same time as the Scheme Document is posted to Capricorn
Shareholders, such that the Tullow General Meeting will be held at or around
the same time and on the same date as the Court Meeting and/or the Capricorn
General Meeting. Following publication, the Prospectus and the Circular will
be made available by Tullow on its website at https://www.tullowoil.com/
(https://www.tullowoil.com/) and by Capricorn on its website at
https://www.capricornenergy.com/all-share-combination
(https://www.capricornenergy.com/all-share-combination) .
The Scheme is expected to become Effective during the fourth quarter of 2022,
subject to the satisfaction or, where applicable, waiver of the Conditions and
certain further terms set out in Appendix 1 to this Announcement.
Commenting on the Combination, Simon Thomson, Chief Executive Officer of
Capricorn said:
"The combination of our businesses will create a leading African energy
company, with significant scale and opportunities for growth. Our two
companies share a track record and continued vision of responsible energy
production to support the economic and social development of our host
communities. This combination will allow the two companies to accelerate
investment in new opportunities across the continent, while retaining a
resilient balance sheet and delivering attractive returns to shareholders."
Commenting on the Combination, Rahul Dhir, Chief Executive Officer of Tullow
said:
"Our two companies are a perfect fit and this combination draws on the proud
heritage of both Tullow and Capricorn to create a leading African energy
company. With renewed focus and ambition, the Combined Group will have the
financial flexibility to accelerate organic growth and pursue further
opportunities as they arise, while creating value for shareholders and host
countries alike. Together, we are committed to building a better future
through responsible energy development."
Analyst and investor presentation
There will be an analysts' briefing at The Lincoln Centre, 18 Lincoln's Inn
Fields, London WC2A 3ED today at 9.00 a.m. There will also be a live webcast
of this briefing. Information on how to access the live webcast can be found
in the 'Investors' section of the Tullow website at
https://www.tullowoil.com/investors/ (https://www.tullowoil.com/investors/)
and Capricorn website at https://www.capricornenergy.com/all-share-combination
(https://www.capricornenergy.com/all-share-combination) .
The recorded webcast (together with the accompanying slides) will be made
available, subject to certain restrictions relating to persons resident in
Restricted Jurisdictions, in due course on Tullow's website at
https://www.tullowoil.com/ (https://www.tullowoil.com/) and on Capricorn's
website at https://www.capricornenergy.com/all-share-combination
(https://www.capricornenergy.com/all-share-combination) . The contents of the
websites referred to in this Announcement are not incorporated into and do not
form part of this Announcement.
This summary should be read in conjunction with, and is subject to, the full
text of this Announcement including the Appendices.
The Combination will be subject to the satisfaction or, where applicable,
waiver of the Conditions and certain further terms of the Combination are set
out in Appendix 1 to this Announcement and to the full terms and conditions to
be set out in the Scheme Document. Appendix 2 contains bases and sources of
certain information contained within this Announcement. Appendix 3 contains
details of the irrevocable undertakings given to Capricorn and Tullow in
relation to the Combination. Appendix 4 contains further details and reports
on the Quantified Financial Benefits Statement. Appendix 5 contains the
definitions of certain terms used in this Announcement.
For the purpose of Rule 28 of the Code, the Quantified Financial Benefits
Statement contained in Part A of Appendix 4 to this Announcement is the
responsibility of Tullow and the Tullow Directors and not of the Capricorn
Directors. Any statement of intention, belief or expectation for the Combined
Group following the Effective Date is an intention, belief or expectation of
the Tullow Directors and not of the Capricorn Directors.
The person responsible for making this Announcement on behalf of Capricorn is
Anne McSherry, Company Secretary.
The person responsible for making this Announcement on behalf of Tullow is
Adam Holland, Company Secretary.
Enquiries:
Tullow
+44 (0)20 3249 9000
Investors
Robert Hellwig
Matthew Evans
Media
George
Cazenove
Capricorn
Analysts/Investors
David Nisbet, Corporate
Affairs
+44 (0)131 475 3000
Media
Jonathan Milne / Linda Bain, Corporate
Affairs
+44 (0)131 475 3000
Patrick Handley / David Litterick, Brunswick Group
LLP +44
(0)20 7404 5959
PJT Partners (Lead Financial Adviser to Tullow)
Ben Monaghan
+44 (0)20 3650 1100
Basil
Geoghegan
Jonathan
Hall
Barclays (Financial Adviser, Corporate Broker and Sole Sponsor to Tullow)
+44 (0)20 7623 2323
Grant Porter
Robert Mayhew
Tom
Macdonald
Morgan Stanley (Lead Financial Adviser and Corporate Broker to Capricorn)
+44 (0)20 7425 8000
Andrew Foster
Anthony Zammit
Matthew Ball
Rothschild & Co (Financial Adviser to Capricorn)
+44 (0)20 7280 5000
James McEwan
Murray Yuill
Camarco (PR advisers to Tullow)
+44 (0)20 3781 9244
Billy Clegg
Rebecca Waterworth
Herbert Smith Freehills LLP is acting as legal adviser to Tullow in connection
with the Combination.
Slaughter and May and Shepherd and Wedderburn LLP are acting as legal advisers
to Capricorn in connection with the Combination.
Further information
This Announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer, invitation or the solicitation
of an offer or invitation to purchase or otherwise acquire, subscribe for,
exchange, sell, or otherwise dispose of, any securities or the solicitation of
any vote or approval in any jurisdiction pursuant to the Combination or
otherwise, nor shall there be any sale, issuance, exchange, or transfer of
securities of Tullow or Capricorn pursuant to the Combination or otherwise in
any jurisdiction in contravention of applicable laws.
The Combination will be implemented solely pursuant to the terms of the Scheme
Document (or, in the event that the Combination is to be implemented by means
of a Takeover Offer, the Offer Document), which, together with the Forms of
Proxy, will contain the full terms and conditions of the Combination,
including details of how to vote in respect of the Combination. Any decision
by Capricorn Shareholders in respect of, or other response to, the Combination
(including any vote in respect of the resolutions to approve the Combination,
the Scheme or related matters), should be made only on the basis of the
information contained in the Scheme Document (or, if the Combination is
implemented by way of a Takeover Offer, the Offer Document).
Capricorn will prepare the Scheme Document to be distributed to Capricorn
Shareholders. Tullow will prepare the Circular to be distributed to Tullow
Shareholders and will also publish the Prospectus containing information on
the New Tullow Shares and the Combined Group. Capricorn urges Capricorn
Shareholders to read the Scheme Document and the Prospectus carefully when
they become available because they will contain important information in
relation to the Scheme, the New Tullow Shares and the Combined Group. Tullow
urges Tullow Shareholders to read the Prospectus and the Circular carefully
when they become available because they will contain important information in
relation to the Combination, the Scheme, the New Tullow Shares and the
Combined Group. Any vote in respect of resolutions to be proposed at the Court
Meeting, the Capricorn General Meeting or the Tullow General Meeting to
approve the Combination, the Scheme or related matters, should be made only on
the basis of the information contained in the Scheme Document, the Prospectus
and, in the case of Tullow Shareholders, the Circular.
This Announcement does not constitute a prospectus or an exempt document for
the purposes of Article 1(4) or (5) of the UK Prospectus Regulation.
The Combination will be subject to the applicable requirements of the Code,
the Panel, the FCA and the London Stock Exchange.
Please be aware that addresses, electronic addresses and certain other
information provided by Capricorn Shareholders, persons with information
rights and other relevant persons in connection with the receipt of
communications from Capricorn may be provided to Tullow during the offer
period as required under Section 4 of Appendix 4 of the Code.
Important Notices relating to the Financial Advisers
PJT Partners, which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom, is acting exclusively for Tullow and no-one
else in connection with the Combination and will not be responsible to anyone
other than Tullow for providing the protections afforded to clients of PJT
Partners nor for providing advice in relation to the Combination. Neither
PJT Partners nor any of its subsidiaries, branches or affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of PJT Partners in connection with this
Announcement, any statement contained herein or otherwise.
Morgan Stanley, which is authorised by Prudential Regulation Authority and
regulated by the Financial Conduct Authority and Prudential Regulation
Authority in the United Kingdom, is acting for Capricorn and no-one else in
connection with the Combination and will not be responsible to anyone other
than Capricorn for providing the protections afforded to clients of Morgan
Stanley nor for providing advice in relation to the Combination. Neither
Morgan Stanley nor any of its subsidiaries, branches or affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Morgan Stanley in connection with this
Announcement, any statement contained herein or otherwise.
Rothschild & Co, which is authorised and regulated by the FCA in the
United Kingdom, is acting exclusively for Capricorn and no one else in
connection with the matters described in this Announcement and will not be
responsible to anyone other than Capricorn for providing the protections
afforded to clients of Rothschild & Co nor for providing advice in
connection with any matter referred to herein. Neither Rothschild & Co nor
any of its affiliates (nor their respective directors, officers, employees or
agents) owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Rothschild & Co in
connection with this Announcement, any statement contained herein or
otherwise.
Barclays, which is authorised by the Prudential Regulation Authority and
regulated in the United Kingdom by the Financial Conduct Authority and the
Prudential Regulation Authority, is acting exclusively for Tullow and no one
else in connection with the matters referred to in this Announcement and will
not be responsible to anyone other than Tullow for providing advice in
relation to the Combination or any other matters referred to in this
Announcement.
In accordance with the Code, normal United Kingdom market practice and Rule
14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act
as exempt principal trader in Tullow securities on the London Stock Exchange.
These purchases and activities by exempt principal traders which are required
to be made public in the United Kingdom pursuant to the Code will be reported
to a Regulatory Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com
(https://protect-eu.mimecast.com/s/3vlbCZz5giErK0VhzVjvs?domain=londonstockexchange.com)
. This information will also be publicly disclosed in the United States to the
extent that such information is made public in the United Kingdom.
Overseas jurisdictions
The availability of the Combination and/or the New Tullow Shares in, and the
release, publication or distribution of this Announcement in or into
jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons into whose possession this Announcement comes who are
subject to the laws of any jurisdiction other than the United Kingdom should
inform themselves about, and observe any applicable legal or regulatory
requirements or restrictions. In particular, the ability of persons who are
not resident in the United Kingdom to vote their Capricorn Shares with respect
to the Scheme at the Court Meeting, to execute and deliver Forms of Proxy
appointing another to vote at the Court Meeting on their behalf, or to hold
and vote Tullow Shares at the Tullow General Meeting, may be affected by the
laws of the relevant jurisdictions in which they are located. Any failure to
comply with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by
applicable law, the companies and persons involved in the Combination disclaim
any responsibility or liability for the violation of such restrictions by any
person. This Announcement has been prepared for the purpose of complying with
Scots law, English law, the Code, the UK Market Abuse Regulation and the
Disclosure Guidance and Transparency Rules 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.
Unless otherwise determined by Tullow or required by the Code, and permitted
by applicable law and regulation, the New Tullow Shares to be issued pursuant
to the Combination to Capricorn Shareholders will not be made available,
directly or indirectly, in, into or from a Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction and no person may vote in
favour of the Combination by any such use, means, instrumentality or form
within a Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and any formal documentation relating to the Combination
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from any Restricted Jurisdiction
or any other jurisdiction where to do so would constitute a violation of the
laws of that jurisdiction, and persons receiving such documents (including
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send such documents in or into or from any Restricted
Jurisdiction. If the Combination is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the Takeover
Offer may not be made directly or indirectly, in or into, or by the use of
mails or any means or instrumentality (including, but not limited to,
facsimile, e-mail or other electronic transmission or telephone) of interstate
or foreign commerce of, or of any facility of a national, state or other
securities exchange of any Restricted Jurisdiction and the Takeover Offer will
not be capable of acceptance by any such use, means, instrumentality or
facilities or from within any Restricted Jurisdiction.
The availability of the Combination, New Tullow Shares pursuant to the
Combination and/or this Announcement to Capricorn Shareholders who are not
resident in the United Kingdom or the ability of those persons to hold such
New Tullow Shares may be affected by the laws or regulatory requirements of
the relevant jurisdictions in which they are resident. Persons who are not
resident in the United Kingdom should inform themselves of, and observe, any
applicable legal or regulatory requirements. Capricorn Shareholders who are in
any doubt about such matters should consult an appropriate independent
professional 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.
The New Tullow Shares may not be offered, sold or delivered, directly or
indirectly, in, into or from any Restricted Jurisdiction or to, or for the
account or benefit of, any Restricted Overseas Persons except pursuant to an
applicable exemption from, or in a transaction not subject to, applicable
securities laws of those jurisdictions, or otherwise permitted under
applicable securities laws of those jurisdictions.
Further details in relation to Capricorn Shareholders in overseas
jurisdictions will be contained in the Scheme Document.
Notes to U.S. investors in Capricorn
Capricorn Shareholders in the United States should note that the Combination
relates to the shares of a Scottish company and is proposed to be made by
means of a scheme of arrangement provided for under the Companies Act as it
applies to Scottish companies. Neither the proxy solicitation nor the tender
offer rules under the U.S. Securities Exchange Act, 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 U.S. proxy solicitation rules and
tender offer rules. Financial information included in this Announcement and
the Scheme 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 U.S. companies or companies whose financial statements are
prepared in accordance with generally accepted accounting principles in the
United States. If Tullow exercises its right to implement the Combination by
way of a Takeover Offer in accordance with the terms of the Co-operation
Agreement and determines to extend the offer into the United States, such
offer will be made in compliance with applicable United States securities laws
and regulations, including to the extent applicable, the U.S. Securities Act
and Section 14(E) of the U.S. Exchange Act and Regulation 14E thereunder. Such
Takeover Offer would be made in the United States by Tullow and no one else.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the
U.S. Exchange Act, Tullow or its nominees, or its brokers (acting as agents),
may from time to time make certain purchases of, or arrangements to purchase
Capricorn Shares outside of the United States, other than pursuant to the
Combination, until the date on which the Combination becomes Effective, lapses
or is otherwise withdrawn. Any such purchases may occur either in the open
market at prevailing prices or in private transactions at negotiated prices.
Any information about such purchases will be disclosed as required in the UK,
will be reported to the Regulatory Information Service of the London Stock
Exchange and will be available on the London Stock Exchange website at
http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
Capricorn is organised under the laws of Scotland and Tullow is organised
under the laws of England. Some or all of the officers and directors of
Capricorn and Tullow are residents of countries other than the United
States. It may not be possible to sue Capricorn and Tullow in a non-US court
for violations of U.S. securities laws. It may be difficult to compel
Capricorn, Tullow and their respective affiliates to subject themselves to the
jurisdiction and judgment of a U.S. court.
This Announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of any offer to purchase, subscribe for or
otherwise acquire, any securities in the United States.
Neither the U.S. Securities and Exchange Commission nor any securities
commission of any state or other jurisdiction of the United States has
approved the Combination, passed upon the fairness of the Combination, or
passed upon the adequacy or accuracy of this Announcement. Any representation
to the contrary is a criminal offence in the United States.
The receipt of consideration by a U.S. holder for the transfer of its
Capricorn Shares pursuant to the Combination may be a taxable transaction for
United States federal income tax purposes and under applicable United States
state and local, as well as overseas and other, tax laws. Each Capricorn
Shareholder is urged to consult their independent professional adviser
immediately regarding the tax consequences of the Combination applicable to
them, including under applicable United States federal, state and local, as
well as overseas and other, tax laws.
Notes regarding New Tullow Shares
The New Tullow Shares to be issued pursuant to the Scheme have not been and
will not be registered under the U.S. Securities Act of 1933 (as amended) or
under the relevant securities laws of any state or territory or other
jurisdiction of the United States. Accordingly, the New Tullow Shares are
not being, and may not be, offered, sold, resold, delivered or distributed,
directly or indirectly in or into a Restricted Jurisdiction 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 Tullow Shares will be issued in reliance upon the
exemption from the registration requirements of the U.S. Securities Act of
1933 (as amended) provided by Section 3(a)(10) thereof. For the purpose of
qualifying for the exemption provided by Section 3(a)(10) of the U.S.
Securities Act, Tullow will advise the Court that its sanctioning of the
Scheme will be relied on by Tullow for the purposes of a Section 3(a)(10)
exemption following a hearing on the fairness of the Scheme to Capricorn
Shareholders. Securities issued pursuant to the Scheme will not be registered
under any laws of any state, district or other jurisdiction of the United
States, and may only be issued to persons resident in such state, district or
other jurisdiction pursuant to an exemption from the registration requirements
of such laws.
Disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange 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 securities
exchange 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) the offeree company
and (ii) any securities exchange 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 securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange 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%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange 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) the offeree company and
(ii) any securities exchange offeror(s), 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 an offeree company or a securities exchange 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 the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
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. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Forward-looking statements
This Announcement contains certain forward-looking statements, including
statements regarding Tullow's and Capricorn'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 or oil and gas 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.
Neither Tullow nor Capricorn assumes any obligation to update or correct the
information contained in this Announcement (whether as a result of new
information, future events or otherwise), except as required by applicable
law.
No profit forecasts or estimates
Nothing in this Announcement (including any statement of estimated costs
savings or synergies) is intended as a profit forecast or estimate for any
period and no statement in this Announcement should be interpreted to mean
that earnings or earnings per share or dividend per share for Tullow or
Capricorn, as appropriate, for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share or dividend per share for Tullow or Capricorn, as appropriate.
Quantified Financial Benefits Statement
Appendix 4 sets out the Quantified Financial Benefits Statement and contains
details of, and bases of calculation of, the anticipated financial benefits of
the Combination, together with the related reports from Tullow's reporting
accountant, KPMG, and Tullow's lead financial adviser, PJT Partners, as
required under Rule 28.1(a) of the Code, and provides underlying information
and bases for the accountant's and adviser's respective reports. PJT Partners,
as lead financial adviser to Tullow, has provided such report for the purposes
of the Code stating that, in its opinion and subject to the terms of the
report, the Quantified Financial Benefits Statement, for which the Tullow
Directors are responsible, has been prepared with due care and consideration.
Each of KPMG and PJT Partners has given and not withdrawn its consent to the
publication of its report in this Announcement in the form and context in
which it is included.
The statements in the Quantified Financial Benefits Statement relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a result, the cost savings and synergies referred to may
not be achieved, may be achieved later or sooner than estimated, or those
achieved could be materially different from those estimated.
No statement in the Quantified Financial Benefits Statement, or this
Announcement generally, should be construed as a profit forecast or
interpreted to mean that the Combined Group's earnings in the first full year
following the Effective Date, or in any subsequent period, would necessarily
match or be greater than or be less than those of Tullow and/or Capricorn for
the relevant preceding financial period or any other period. For the purposes
of Rule 28 of the Code, the Quantified Financial Benefits Statement contained
in this Announcement is the responsibility of Tullow and the Tullow Directors.
Any statement of intention, belief or expectation for the Combined Group
following the Effective Date is an intention, belief or expectation of the
Tullow Directors and not of the Capricorn Directors.
Publication of this Announcement
A copy of this Announcement will be available subject to certain restrictions
relating to persons resident in Restricted Jurisdictions on Tullow's website
at https://www.tullowoil.com (https://www.tullowoil.com) and Capricorn's
website at https://www.capricornenergy.com/all-share-combination
(https://www.capricornenergy.com/all-share-combination) .
The contents of Tullow's website and Capricorn's website are not incorporated
into and do not form part of this Announcement.
Tullow Shareholders may request a hard copy of this Announcement by: (i)
contacting Adam Holland at 9 Chiswick Park, 566 Chiswick High Road, London, W4
5XT or by telephoning +44 20 3249 9000 or by emailing
companysecretary@tullowoil.com. If you have received this Announcement in
electronic form or by it being published on Tullow's website, you will not
receive a hard copy of this Announcement unless you so request. You may also
inform Adam Holland that you wish all future documents, announcements and
information in relation to the Combination be sent to you in hard copy.
Capricorn Shareholders may request a hard copy of this Announcement by: (i)
contacting Anne McSherry at 50 Lothian Road Edinburgh EH3 9BY or by
telephoning +44 (0)131 475 3000 or by emailing
IR.Mailbox@capricornenergy.com. If you have received this Announcement in
electronic form or by it being published on Capricorn's website, you will not
receive a hard copy of this Announcement unless you so request. You may also
inform Anne McSherry that you wish all future documents, announcements and
information in relation to the Combination be sent to you in hard copy.
If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant,
fund manager or from an independent financial adviser duly authorised under
the Financial Services and Markets Act 2000 (as amended) if you are in the
United Kingdom, or, if you are resident in Ireland, from a person,
organisation or firm authorised or exempted pursuant to the European
Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3)
of Ireland or the Investment Intermediaries Act 1995 of Ireland, or, if you
are resident in a territory outside of the United Kingdom or Ireland, from
another appropriately authorised independent financial adviser.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.
Rule 2.9 of the Code
For the purposes of Rule 2.9 of the Code, Capricorn confirms that, as at 31
May 2022 (being the last Business Day prior to the date of this Announcement),
it had in issue 316,338,439 ordinary shares of 21/13 pence each. The ISIN for
the shares is GB00BN0SMB92.
For the purposes of Rule 2.9 of the Code, Tullow confirms that, as at 31 May
2022 (being the last Business Day prior to the date of this Announcement), it
had in issue 1,437,999,835 ordinary shares of 10 pence each. The ISIN for the
shares is GB0001500809.
Part II
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.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW TULLOW SHARES EXCEPT ON THE BASIS OF THE
INFORMATION IN THE SCHEME DOCUMENT, THE PROSPECTUS AND THE CIRCULAR WHICH ARE
PROPOSED TO BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
FOR IMMEDIATE
RELEASE
1 June 2022
RECOMMENDED ALL-SHARE COMBINATION
of
TULLOW OIL PLC AND CAPRICORN ENERGY PLC
to be effected by means of a Scheme of Arrangement of Capricorn Energy PLC
under Part 26 of the Companies Act 2006
1. Introduction
The boards of Tullow Oil PLC ("Tullow") and Capricorn Energy PLC ("Capricorn")
are pleased to announce that they have reached agreement on the terms of a
recommended all-share combination of Tullow and Capricorn (the "Combination")
to create the Combined Group.
2. The Combination
Under the terms of the Combination, which will be subject to the Conditions
and certain further terms set out in Appendix 1 and to the full terms and
conditions which will be set out in the Scheme Document, each Capricorn
Shareholder will be entitled to receive:
for each Capricorn
Share: 3.8068 New Tullow Shares
On completion of the Combination, Capricorn Shareholders will hold
approximately 47 per cent. of the Combined Group and Tullow Shareholders will
hold approximately 53 per cent. of the Combined Group (based on the fully
diluted share capital of Capricorn and the fully diluted share capital of
Tullow, in each case as at the date of this Announcement).
The Combination constitutes a "Class 1" transaction for Tullow for the
purposes of the Listing Rules. Accordingly, the Combination will be
conditional on the approval of the Tullow Shareholders at the Tullow General
Meeting.
It is intended that the Combination will be implemented by means of a
Court-sanctioned scheme of arrangement under Part 26 of the Companies Act,
further details of which are contained in paragraph 12 below.
The New Tullow Shares will be issued credited as fully paid and will rank pari
passu in all respects with the Tullow Shares in issue at the time the New
Tullow Shares are issued pursuant to the Combination, including, subject as
outlined below, the right to receive and retain in full all dividends and
other distributions (if any) announced, declared, made or paid, or any other
return of value (whether by reduction of share capital or share premium
account or otherwise) made, in each case by reference to a record date falling
on or after the Effective Date. Applications will be made to the FCA and the
London Stock Exchange for the New Tullow Shares to be admitted to the premium
listing segment of the Official List of the FCA and to trading on the main
market for listed securities of the London Stock Exchange. Applications will
also be made to the Ghana Stock Exchange and the Ghana SEC for the New Tullow
Shares to be admitted to a secondary listing on the First Official List of the
Ghana Stock Exchange and to trading on the Ghana Stock Exchange. Tullow's
shares are also currently listed on the secondary listing segment of the
Official List of The Irish Stock Exchange PLC, trading as Euronext Dublin
("Euronext Dublin") as an overseas company and trading on the Euronext Dublin
Market operated by Euronext Dublin. Tullow intends to review the
appropriateness of a continued listing of its shares on the secondary listing
segment of the Official List of Euronext Dublin and to trading on the Euronext
Dublin Market operated by Euronext Dublin in light of the volume of trading of
its shares on the Euronext Dublin Market and the costs related to such listing
and admission to trading. Accordingly, at Completion Tullow's shares may not
be listed on the secondary listing segment of the Official List of Euronext
Dublin and admitted to trading on the Euronext Dublin Market operated by
Euronext Dublin.
The Capricorn Shares will be acquired pursuant to the Combination fully paid
and free from all liens, charges, equitable interests, encumbrances and rights
of pre-emption and any other interests of any nature whatsoever and together
with all rights attaching to them as at the date of this Announcement or
subsequently attaching or accruing to them.
3. Compelling strategic and financial rationale
The Tullow Board and the Capricorn Board believe the Combination has
compelling strategic, operational and financial rationale, with the ability to
deliver substantial benefits to shareholders, host nations and other
stakeholders. The Combination represents a unique opportunity to create a
leading African energy company listed in London, with the financial
flexibility and human resource capability to access and accelerate near-term
organic growth, add new reserves and resources cost-effectively, generate
significant future returns for shareholders, and pursue further
consolidation. The Combined Group is committed to building a sustainable
future through responsible oil and gas development, in close partnership and
collaboration with joint venture partners and host governments.
The Tullow Board and the Capricorn Board believe this Combination:
(a) Creates a leading African energy company with a material and
diversified asset base and a portfolio of investment opportunities delivering
visible production growth.
· The Combined Group provides shareholders with a diversified
pan-African upstream portfolio underpinned by low-cost producing assets with a
deep portfolio of incremental high return investment opportunities in Ghana,
Egypt, Gabon and Côte d'Ivoire.
· Capricorn's Egypt portfolio provides significant opportunity to
deliver self-funded growth production via infill drilling and low-cost
exploration to sustain the resource base over time, whilst championing
electrification and decarbonisation initiatives.
· The major resource development project in Kenya provides
additional growth and value creation optionality.
· The substantial prospective resource base in Guyana and
Mauritania provides material potential upside with limited capital exposure.
· Pro forma reserves and resources of 343mmboe and 696mmboe with
2021A production of 96kboe/d positions the Combined Group as one of the
largest, listed independent African focused Exploration & Production
companies today.
(b) Delivers a Combined Group with robust cash generation and a
resilient balance sheet and realises meaningful cost synergies.
· The Combined Group will have a resilient balance sheet, with pro
forma 2021A leverage of 1.5x and $1.8bn of liquidity. Expected leverage of
<1x at year end 2022 with rapid future deleveraging anticipated.
· The Combined Group is expected to realise pre-tax net cash cost
savings of $50 million on an annual run-rate basis by the second anniversary
of the completion of the Combination through the reduction of duplicate costs
across Board, Corporate and Group operational and technical functions and
administrative functions including consolidation of office space and
rationalisation of IT spend.
(c) Establishes a sustainable capital return programme for shareholders
underpinned by robust cash generation.
· Stable, low-cost production delivering forecast cumulative
pre-financing free cash flows of $2.4 billion over the 2022-2025 period at a
flat nominal Brent price of $75/bbl.
· Visible and robust cash generation, cost savings, a strengthened
balance sheet and disciplined capital allocation create a platform for
sustainable shareholder returns through a fixed plus variable returns
framework:
o Base annual dividend of $60 million, with additional returns driven by a
disciplined, value-driven capital allocation framework.
o Tullow currently has no distributable reserves and is therefore currently
unable to pay dividends or make other distributions to shareholders. The
Tullow Board intends to address this issue by taking such steps, which may
include a capital restructuring of the Tullow Group or (as the case may be)
the Combined Group and/or the upstreaming of dividends/ distributions from
other members of the Tullow Group or (as the case may be) the Combined Group,
as may be required to achieve the dividend policy outlined above.
(d) Creates a stronger, more resilient business with a deep commitment
to environmental stewardship, social investment, development of local content
and our national workforces.
· The Combined Group is committed to achieving net zero Scope 1 and
2 emissions by 2030. This is planned to be achieved through comprehensive
emissions reduction programmes underway in Ghana, Gabon, Côte d'Ivoire and
Egypt and by offsetting hard to abate emissions through company-run
nature-based solutions.
· The Combined Group will be an important supplier of gas in Egypt
and in Ghana - supporting the industrial development in these countries.
(e) Positions the Combined Group to play a leading role in the African
energy sector.
(f) Commits to environmental, social and corporate governance standards,
established stakeholder relationships, alongside a proven track record of
safe, low-cost operations and a strong balance sheet.
4. Financial benefits and effects of the Combination
The Tullow Board is confident that as a direct result of the Combination, the
Combined Group will generate meaningful cost synergies and create additional
shareholder value. The Tullow Board, having reviewed and analysed the
potential cost synergies of the Combination, and taking into account the
factors it can influence, believes the Combination will result in $50 million
of pre-tax net cash cost synergies on an annual run-rate basis by the second
anniversary of the completion of the Combination.
The quantified net cash cost synergies are expected to originate from the
following areas, subject to any obligations to inform and consult with
employees and/or their representatives:
(i) Corporate: approximately 26% of the identified net cash cost synergies
are expected to be generated from de-duplication and rationalisation of Board,
executive leadership and other costs associated with a listed company;
(ii) Central operational and technical functions: 32% of the identified
net cash cost synergies are expected to be generated from consolidation and
rationalisation of central operational and technical functions, driven by
increased scale and alignment of operating models; and
(iii) Administrative functions: 42% of the identified net cash cost
synergies are expected to be generated from consolidation and de-duplication
of overlapping administrative functions (including IT) and third-party spend.
The Tullow Board expects approximately 71% of these anticipated quantified net
cash cost synergies to be achieved by the end of the first twelve month period
following completion of the Combination.
The Tullow Board estimates that realisation of these net cash cost synergies
will give rise to one-off costs of approximately $45 million incurred in the
two years post-completion of the Combination. The Tullow Board has considered
potential areas of dis-synergy and these were determined to be immaterial for
the analysis.
These anticipated net cash cost synergies will accrue as a direct result of
the Combination and would not be achieved on a standalone basis.
Please refer to Appendix 4 to this Announcement for further details on the
bases of belief supporting the quantified financial benefits statement,
including the principal assumptions and sources of information. The Quantified
Financial Benefits Statement set out above has been reported on under the Code
by KPMG, and by Tullow's lead financial adviser, PJT Partners. References to
those anticipated synergies should be read in conjunction with Appendix 4.
For the purposes of Rule 28 of the Code, the Quantified Financial Benefits
Statement contained in this Announcement is the responsibility of Tullow and
the Tullow Directors.
As of the date of this Announcement, Capricorn has suspended its previously
announced $200 million share buyback programme (other than in respect of the
$25 million tranche announced on 7 April 2022, which is being conducted by JP
Morgan Securities PLC on a non-discretionary basis and will end no later than
6 July 2022).
5. Combined Group dividend policy
The Combined Group intends to implement a base annual dividend of $60 million,
with a capital return policy outlining the criteria for delivering additional
shareholder distributions to be announced in due course.
Tullow currently has no distributable reserves and is therefore unable to pay
dividends or make other distributions to its shareholders unless it first
takes steps to create distributable reserves. Therefore, unless steps are
taken to create distributable reserves, Tullow, as the parent company of the
Combined Group, would be unable to pay dividends or make other distributions
to its shareholders. The Tullow Board intends to address this issue by taking
such steps, which may include a capital restructuring of the Tullow Group or
(as the case may be) the Combined Group and/or the upstreaming of
dividends/distributions from other members of the Tullow Group or (as the case
may be) the Combined Group, as may be required to achieve the dividend policy
outlined above. Such steps may be dependent on shareholder and/or court
approval, among other things, and therefore there is no guarantee that the
required distributable reserves can or will be available to the Tullow Group
or (as the case may be) the Combined Group.
6. Recommendations
The Capricorn Directors, who have been so advised by Morgan Stanley as to the
financial terms of the Combination, consider the terms of the Combination to
be fair and reasonable. The Capricorn Directors have also received financial
advice on the Combination from Rothschild & Co. In providing its financial
advice to the Capricorn Directors, Morgan Stanley and Rothschild & Co have
each taken into account the commercial assessments of the Capricorn Directors.
Accordingly, the Capricorn Directors intend to recommend, unanimously, that
Capricorn Shareholders vote, at the Capricorn General Meeting and the Court
Meeting, in favour of such resolutions as are necessary to approve, implement
and give effect to the Scheme (including any such resolutions to amend the
articles of association of Capricorn as maybe necessary) (or, in the event
that the Combination is implemented by way of a Takeover Offer, to accept or
procure the acceptance of such Takeover Offer). The Capricorn Directors who
hold Capricorn Shares have irrevocably undertaken to vote in favour of the
relevant resolutions to give effect to the Scheme and the Combination in
respect of their entire beneficial holdings of, in aggregate, 744,346
Capricorn Shares representing approximately 0.2 per cent. of Capricorn's
issued share capital on 31 May 2022 (being the last Business Day prior to the
date of this Announcement). Further details of these irrevocable undertakings
are set out in Appendix 3 to this Announcement.
Morgan Stanley has given and not withdrawn its consent to the inclusion in
this Announcement of references to its advice to the Capricorn Directors in
the form and context in which they appear.
Rothschild & Co has given and not withdrawn its consent to the inclusion
in this Announcement of references to its advice to the Capricorn Directors in
the form and context in which they appear.
The Combination constitutes a "Class 1" transaction for Tullow for the
purposes of the Listing Rules. Accordingly, the Combination will be
conditional on, amongst other things, the approval of the Tullow Shareholders
at the Tullow General Meeting.
The Tullow Directors have received financial advice from PJT Partners and
Barclays in relation to the Combination. In providing their financial advice
to the Tullow Directors, PJT Partners and Barclays have relied upon the Tullow
Directors' commercial assessments of the Combination.
The Tullow Directors consider the Combination to be in the best interests of
the Tullow Group and the Tullow Shareholders as a whole and intend to
recommend, unanimously, that Tullow Shareholders vote in favour of the Tullow
Resolutions at the Tullow General Meeting which will be convened in connection
with the Combination, as those Tullow Directors who hold Tullow Shares have
irrevocably undertaken to do in respect of their entire beneficial holdings
of, in aggregate, 1,555,824 Tullow Shares, representing approximately 0.1 per
cent. of Tullow's issued share capital on 31 May 2022 (being the last Business
Day prior to the date of this Announcement).
Each of PJT Partners and Barclays has given and not withdrawn its consent to
the inclusion in this Announcement of references to its advice to the Tullow
Directors in the form and context in which they appear.
7. Background to and reasons for the Capricorn Board's
recommendation
Since it was founded in 1980 as Cairn Energy PLC, Capricorn's management and
employees have, with the support of its shareholders, transformed the company
into a leading oil and gas explorer, developer and producer. Capricorn started
with a focus on South Asia where it created significant value for shareholders
and stakeholders, particularly through the discovery, development and
production of oil in Rajasthan, India (the largest onshore discovery in India
for more than 25 years). In 2006 the Indian business, Cairn India Limited
(CIL), was listed on the Indian stock exchanges and in 2012, the majority
stake in CIL was sold and the cash returned to shareholders. Between 2006 and
2012, $4.5 billion was returned to shareholders. Capricorn then focused on
rebuilding the business to create, add and realise value once again through
exploration, development and production. Capricorn made the largest global
offshore discovery of 2014 in Senegal and participated in the development of
two of the largest projects in the UK North Sea, Catcher and Kraken, which
began production in 2017, before interests were subsequently sold in November
2021.
Capricorn's strategy as a responsible energy producer is to ensure maximum
financial flexibility through active management of its portfolio.
The strategy is based on five key pillars with all investment decisions
assessed against multiple externally assured energy transition scenarios:
· Sustainable Cash Flow Base: Capricorn constantly looks to
diversify and extend its production base, targeting long-life, full-cycle
portfolios with low break-even costs to be in the best position to support
future shareholder returns.
· Balance Sheet Flexibility: Capricorn maintains a balance sheet
that is resilient to periods of volatility and a controllable and flexible
capital programme.
· Selective Exploration: Exploration remains core to Capricorn's
future strategy. New discoveries support future cash flows through organic
reserves replacement, with the potential for transformational events to create
further shareholder value. Exploration focus is on advantaged resources that
can remain competitive through stringent energy transition scenarios and will
move quickly to commercialisation.
· Shareholder Returns: Capricorn's strong shareholder returns is a
key differentiator. Capricorn weighs reinvestment in the business against
returning cash to shareholders when considering capital allocation.
· Portfolio Management: Proactive portfolio management allows
Capricorn to invest in growing, diversifying and sustaining the cash
flow-generating asset base.
Ultimately, this strategic focus has enabled Capricorn to differentiate its
business, enabling significant capital returns to shareholders. In 2021,
Capricorn returned or committed to return nearly $1 billion, with the $500
million Tender Offer completing on 6 April 2022 and the share buyback
programme of up to $200 million commencing on 7 April 2022.
While the Capricorn Board considers the standalone prospects for Capricorn to
be strong, the Capricorn Board believes that the Combination has particularly
compelling strategic logic, strong prospects for accelerating the strategy and
the growth of the business and offers high value creation opportunity for
Capricorn Shareholders.
The rationale and benefits for the Combination are set out more fully in
paragraphs 3 and 4. The Combination merges Capricorn's and Tullow's
complementary portfolio, becoming a leading African energy company with
significant investment opportunities. The Combined Group will have strong cash
flow generation and a resilient balance sheet to accelerate investment for
growth and drive greater operational efficiency.
The Combination is expected to result in material value creation for Capricorn
Shareholders, with significant synergy potential. Through material scale and a
diversified asset base, the Combined Group will have an enhanced cash flow
profile and a strong balance sheet that is expected to facilitate the
generation of attractive and sustainable returns for shareholders.
The Capricorn Board believes that the terms of the Combination fairly reflect
Capricorn's and Tullow's respective standalone businesses and their prospects,
and an appropriate sharing of the expected synergies resulting from the
Combination.
Accordingly, whilst Capricorn has attractive standalone prospects, following
careful consideration of the above factors, the Capricorn Board believes that
the Combination is in the best interests of Capricorn Shareholders and intends
unanimously to recommend the Combination to Capricorn Shareholders.
8. Conditions
The Combination will be subject to, amongst other things, the receipt of any
necessary antitrust or regulatory consents, any necessary governmental
approvals or consents, waivers or non-exercise of any material termination
rights, material pre-emption rights or similar rights in the jurisdictions in
which the Tullow Group and the Capricorn Group operate, including (where
required) in Egypt, Ghana, Mexico and Mauritania, in each case given on terms
or subject to conditions which are satisfactory to Tullow and Capricorn.
In addition to the conditions referred to above, the Combination will be
subject to the other Conditions and certain further terms as set out in
Appendix 1 to this Announcement, and to the full terms and conditions which
will be set out in the Scheme Document, including, amongst other things:
(i) approval by a majority in number of Capricorn Shareholders
representing not less than 75 per cent. in value of Capricorn Shareholders who
are on the register of members of Capricorn at the Voting Record Time, present
and voting, whether in person or by proxy, at the Court Meeting;
(ii) all resolutions required to approve and implement the Scheme and to
approve certain related matters being duly passed by the requisite majority of
Capricorn Shareholders at the Capricorn General Meeting;
(iii) the sanction of the Scheme by the Court (with or without modification
but subject to any modification being on terms acceptable to Capricorn and
Tullow) and, following such sanction, the delivery of a copy of the Court
Order to the Registrar of Companies by no later than the Long Stop Date;
(iv) the Tullow Resolutions being duly passed by the requisite majority of
Tullow Shareholders at the Tullow General Meeting; and
(v) Admission becoming effective.
9. Irrevocable undertakings to vote in favour of the
Combination
Court Meeting and Capricorn General Meeting
Tullow and Capricorn have received irrevocable undertakings from each of the
Capricorn Directors who hold Capricorn Shares in respect of their own legal
and/or beneficial holdings of Capricorn Shares to vote in favour of the Scheme
at the Court Meeting and the resolutions to be proposed at the Capricorn
General Meeting, in respect of a total of 744,346 Capricorn Shares
representing, in aggregate, approximately 0.2 per cent. of Capricorn's issued
share capital as at 31 May 2022 (being the last Business Day prior to the date
of this Announcement).
Tullow General Meeting
Those Tullow Directors who hold Tullow Shares have irrevocably undertaken to
vote in favour of the Tullow Resolutions at the Tullow General Meeting which
will be convened in connection with the Combination, in respect of a total of
1,555,824 Tullow Shares representing, in aggregate, approximately 0.1 per
cent. of Tullow's issued share capital as at 31 May 2022 (being the last
Business Day prior to the date of this Announcement).
Further details of the irrevocable undertakings described above are set out in
Appendix 3.
10. Directors, management, employees, pensions and locations
Tullow and Capricorn recognise the skills and experience of their respective
management and employees and intend the management teams of both Tullow and
Capricorn to play a leading role in the Combined Group. Tullow intends that
employees will have the potential to benefit from the broader opportunities
arising from being part of the larger Combined Group following Completion.
The management team of the Combined Group will comprise Rahul Dhir, CEO of
Tullow, James Smith, CFO of Capricorn, along with members from the existing
Tullow and Capricorn leadership teams and will be responsible for the
day-to-day management and operation of the Combined Group.
The Board of the Combined Group will have a clearly defined governance
structure, with Phuthuma Nhleko, the Chairman of Tullow, becoming the Chairman
of the Combined Group and Nicoletta Giadrossi, the Chair of Capricorn,
becoming the Senior Independent Director of the Combined Group. In addition,
the Board of the Combined Group will comprise the CEO, the CFO and 5 further
Non-executive Directors, with 2 expected to be current Tullow Directors and 3
expected to be current Capricorn Directors.
After almost 11 years as CEO of Capricorn, Simon Thomson will step down as CEO
on Completion and will become Chair of the Integration Steering Committee to
help with the integration of the two companies.
The composition of the Board of the Combined Group is expected to comply with
the UK Corporate Governance Code and have an effective balance of skills,
experience, independence and diversity.
Management, employees and head office
For the employees of the Combined Group, Tullow intends that the management
team of the Combined Group will aim to retain the best talent of Tullow and
Capricorn.
In order to achieve the expected benefits of the Combination, a detailed
review of the business and operations of the Combined Group will be carried
out following Completion. Tullow expects that this review will be completed
within approximately 3 to 6 months following completion of the Combination.
The Combined Group intends to seek material operating cost benefits derived
from the rationalisation of the board and senior management and consolidation
of administrative and central technical and operational functions, including
third party costs across the Combined Group.
The synergy work carried out to date has identified the potential to generate
operating costs benefits for the Combined Group through corporate and
administrative efficiencies. The synergies assume a potential headcount
reduction of approximately 25% of the total Combined Group workforce. However,
at this stage, there are no fully developed proposals as to how and where such
headcount reductions will be implemented. Headcount reductions are expected in
areas where there is overlap such as in corporate service functions. Any
redundancies will be carried out in accordance with applicable information and
consultation processes. No changes are expected in the operating asset
organisations across the Combined Group: Ghana, Egypt, Gabon, Côte d'Ivoire
and Kenya.
The finalisation and implementation of any workforce reductions will be
subject to comprehensive planning and appropriate engagement and (if
applicable) consultation with relevant stakeholders.
After Completion, a detailed review of the business will be undertaken to
ensure the organisation has the skillset, structure and is sized correctly for
the combined business, with the aim of retaining and motivating the best
talent across the Combined Group.
Save as set out above, it is not envisaged that there will be any material
change to the balance of skills and functions of the employees and management
in the Combined Group.
Tullow has confirmed that the Combined Group will fully safeguard the existing
statutory and contractual employment rights of both Capricorn and Tullow
employees. Subject to the detailed review of the business, relocation of the
headquarters and any changes in respect of working location and flexible
working arrangements as referred to in this paragraph 10 (which in each case
will be subject to all necessary information and consultation processes with
employees and their representatives), Tullow does not envisage making any
material changes in the conditions of employment of the Capricorn employees in
the period of 12 months following Completion.
Tullow has not entered into any, and has not held any discussions in respect
of the remuneration or incentive arrangements that may apply following
completion of the Combination with any of the Capricorn Directors, save for in
connection with the Co-operation Agreement and as disclosed in paragraph 11
and the immediately following paragraphs below.
The Co-operation Agreement contains provisions that will apply in respect of
the Capricorn Share Plans and certain other employee arrangements. In
particular:
(A) options and awards under the Capricorn Share Plans will be
treated as outlined in paragraph 11 below;
(B) subject to any necessary consents, Tullow and Capricorn have
agreed that cash retention awards may be made to certain key employees
(including Executive Directors and other senior executives) of Capricorn,
following and conditional on completion of the Combination (the "Employee
Retention Arrangements"). The aggregate maximum quantum that may be awarded
under the Employee Retention Arrangements is £4 million, of which a maximum
of £1,007,231 may be awarded to Executive Directors; and
(C) prior to Completion, Tullow and Capricorn will agree a
policy under which the Combined Group will offer enhanced redundancy payments
and related arrangements to employees whose roles become redundant during the
period of 18 months following Completion, and who, if requested at the
relevant time by Tullow, sign an appropriate settlement agreement. The
details of the policy are yet to be determined and will be made available to
staff after the policy is finalised;
(D) as stated in this paragraph 10 above, it has been agreed
that Simon Thomson's appointment as Chief Executive Officer, and as a
director, of Capricorn will end on the Effective Date, following which he will
be engaged by Tullow for a period of up to 12 months to facilitate the
integration of Capricorn and Tullow, including through chairing the
Integration Committee. As at the date of this Announcement, no incentivisation
arrangements have been entered into with Mr Thomson by Tullow in relation to
that role, and Tullow has not reached an advanced stage of discussions with Mr
Thomson in relation to the terms on which he might hold such a role.
As required by, and solely for the purposes of, Rule 16.2 of the Code, Morgan
Stanley has (in its capacity as independent adviser to the Capricorn Directors
for the purposes of Rule 3 of the Code) reviewed the terms of the Employee
Retention Arrangements and the proposed transition and integration role for Mr
Thomson and has confirmed that, in its opinion, the Employee Retention
Arrangements set out above are fair and reasonable as far as Capricorn's
Shareholders are concerned. In providing this advice to the Capricorn
Directors, Morgan Stanley has taken into account the commercial assessments of
the Capricorn Directors.
While each of Tullow and Capricorn currently has their own headquarters, it is
the intention of the Combined Group to rationalise its UK office space as soon
as possible following Completion. Tullow intends that the Combined Group will
retain premises in London and Edinburgh and, through the application of a
flexible work policy, enable employees to operate from both premises.
Immediately following Completion, the headquarters of the Combined Group will
be Tullow's office in London, subject to any obligations to inform and consult
with affected employees and/or their representatives. The Combined Group does
not otherwise envisage any redeployment of Capricorn's fixed asset base.
Owing to the nature of its business, Capricorn has no research and development
function and Tullow has no intentions in this regard.
Tullow intends that the Combined Group will not make any changes with regard
to the agreed employer contributions to either Tullow's or Capricorn's
existing defined contribution pension schemes or the accrual of benefits to
existing members or the admission of new members to such pension schemes.
Listing and re-registration
Following Completion, the Combined Group will retain Tullow's listing of
Tullow Shares on the Official List and admission to trading on the London
Stock Exchange.
The Capricorn Shares are currently listed on the Official List and admitted to
trading on the London Stock Exchange. As set out in paragraph 16, applications
will be made for the cancellation of the listing of the Capricorn Shares on
the Official List and the cancellation of trading of the Capricorn Shares on
the London Stock Exchange. Tullow intends to re-register Capricorn as a
private company as soon as it is appropriate to do so under the provisions of
the Companies Act.
Change of name
A name change is intended to take effect upon completion of the Combination,
and a further update will be provided in due course. The new name will not
include the words "Tullow" or "Capricorn". Tullow and Capricorn will consult
with key stakeholders as the new corporate name for the Combined Group is
considered.
No statements in this paragraph 10 constitute "post-offer undertakings" for
the purposes of Rule 19.5 of the Code.
11. Capricorn Share Plans
Participants in the Capricorn Share Plans will be contacted regarding the
effect of the Combination on their options and awards under the Capricorn
Share Plans.
A summary of the effect of the Combination on outstanding options and awards
under the Capricorn Share Plans is as follows:
(A) options granted under the Capricorn Long Term Incentive Plan
(2017), the Capricorn Long Term Incentive Plan (2009) and the Capricorn
Employee Share Award Scheme (2015) will be automatically "rolled-over" into
comparable options over Tullow Shares (unless the relevant option holder does
not agree to the rollover, in which case the relevant option will lapse upon
the Court Order);
(B) options granted under the Capricorn Approved Share Option
Plan (2009) and the Capricorn Unapproved Share Option Plan (2009) will remain
exercisable for a period of no longer than six months after the Court Order is
obtained, at the end of which they will lapse. However, as an alternative,
Tullow will offer participants in the Capricorn Approved Share Option Plan
(2009) and the Capricorn Unapproved Share Option Plan (2009) the opportunity
to exchange or "rollover" their options for equivalent options over Tullow
Shares; and
(C) Capricorn Shares held under the Capricorn 2010 Share
Incentive Plan at the Scheme Record Time will participate in the Scheme in the
same way as other Capricorn Shares.
Details of the proposals will be set out in the Scheme Document or, as the
case may be, the Offer Document, and in separate letters to be sent to
participants in the relevant Capricorn Share Plans.
The Combination will extend to any Capricorn Shares which are unconditionally
allotted or issued before the Scheme Record Time, including those allotted or
issued as a result of the exercise of options or vesting of awards under the
Capricorn Share Plans.
As the Scheme will not extend to Capricorn Shares issued after the Scheme
Record Time, it is proposed to amend Capricorn's articles of association at
the Capricorn General Meeting to provide that, if the Combination become
effective, any Capricorn Shares issued to any person after the Scheme Record
Time (including in satisfaction of an option exercised under one of the
Capricorn Share Plans) will be automatically transferred to Tullow in
consideration for the issue or transfer by Tullow to such persons of New
Tullow Shares for each Capricorn Share so transferred on the same basis as
under the Scheme.
As required by, and solely for the purposes of Rule 16.2 of the Code, Morgan
Stanley has (in its capacity as independent adviser to Capricorn for the
purposes of Rule 3 of the Code) reviewed the terms of the rollover of options
under the Capricorn Share Plans, together with other information deemed
relevant, and advised Capricorn that the rollover of such options is fair and
reasonable so far as the Capricorn Shareholders are concerned. In providing
this advice to the Capricorn Directors, Morgan Stanley has taken into account
the commercial assessments of the Capricorn Directors.
12. Structure of the Combination
It is intended that the Combination will be implemented by means of a
Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.
The purpose of the Scheme is to provide for Tullow to become the owner of the
entire issued and to be issued share capital of Capricorn. In order to achieve
this, the Scheme Shares will be transferred to Tullow under the Scheme. In
consideration for this transfer, the Scheme Shareholders will receive New
Tullow Shares on the basis set out in paragraph 2. The transfer to Tullow of
the Scheme Shares will result in Capricorn becoming a wholly-owned subsidiary
of Tullow.
The Combination is subject to the Conditions and further terms set out in
Appendix 1 of this Announcement and to be set out in the Scheme Document.
In order for the Scheme to become Effective:
(a) the Scheme must be approved by Capricorn Shareholders
who are on the register of members of Capricorn at the Voting Record Time by
the passing of a resolution at the Court Meeting. This resolution must be
approved by a majority in number of such Capricorn Shareholders (or relevant
classes thereof) present and voting (and entitled to vote) at the Court
Meeting, and any separate class meeting(s) which may be required by the Court
either in person or by proxy, representing not less than 75 per cent. in value
of such Capricorn Shareholders (or relevant classes thereof);
(b) resolutions to deal with certain ancillary matters in
connection with the Scheme must be passed at the Capricorn General Meeting to
be held immediately after the Court Meeting;
(c) following the Court Meeting, the Scheme must also be
sanctioned by the Court; and
(d) following the sanction by the Court, a copy of the Court
Order must be delivered to the Registrar of Companies for registration.
The Scheme will only become Effective if, among other things, the events
described in the paragraph immediately above occur no later than the Long Stop
Date.
Additionally, the Scheme will lapse if, amongst other things:
(a) the Court Meeting and Capricorn General Meeting are
not held on or before the 22(nd) day after the expected date of such meetings,
which will be set out in the Scheme Document in due course (or such later date
as may be agreed by Tullow and Capricorn with the consent of the Panel and, if
required, the Court);
(b) the Court Sanction Hearing is not held on or before the
22(nd) day after the expected date of such hearing, which will be set out in
the Scheme Document in due course (or such later date as may be agreed by
Tullow and Capricorn with the consent of the Panel and, if required, the
Court); or
(c) the Scheme does not become Effective on or before the
Long Stop Date.
Any Scheme Shareholder is entitled to attend the Court Sanction Hearing in
person or through counsel to support or oppose the sanctioning of the Scheme.
Once the Scheme becomes Effective, it will be binding on all Scheme
Shareholders, whether or not they voted at the Court Meeting and/or the
Capricorn General Meeting and, if they did vote, whether or not they voted in
favour of or against the resolutions proposed at those meetings.
The terms of the Scheme will provide that the Capricorn Shares will be
acquired under the Scheme fully paid and free from all liens, equitable
interests, charges, encumbrances, options, rights of pre-emption and any other
third party rights or interests of any nature whatsoever and together with all
rights attaching thereto, including the right to receive and retain all
dividends and other distributions and returns of value declared, paid or made
after the Effective Date.
No dividends or other distributions are intended to be announced, declared,
made or paid by Tullow or Capricorn following this Announcement and until the
Scheme becomes Effective (or lapses), other than in connection with the $25
million tranche of the Capricorn share buyback programme announced by
Capricorn on 7 April 2022. Notwithstanding the foregoing intention, if after
the date of this Announcement and prior to the Effective Date any dividend or
distribution is announced, declared, made, paid or becomes payable by
Capricorn (other than in connection with the $25 million tranche of the
Capricorn share buyback programme announced by Capricorn on 7 April 2022),
Tullow will have the right to reduce the value of the consideration payable
for the Capricorn Shares by up to the amount of any such dividend or
distribution except where the Capricorn Shares are or will be acquired
pursuant to the Scheme on a basis which entitles Tullow to receive the
dividend or distribution and to retain it.
Further details of the Scheme, including an indicative timetable for its
implementation, will be set out in the Scheme Document. It is intended that
the Scheme Document will be despatched to Capricorn Shareholders following
receipt (where required) of the consents, approvals or waivers referred to in
paragraph 8 above and in or around the fourth quarter of 2022 (unless
otherwise agreed by the Panel, Tullow and Capricorn) and a further
announcement regarding the publication of the Scheme Document will be made in
due course. For the purposes of paragraph 3(a) of Appendix 7 to the Code, the
Panel has consented to an extension of the applicable date for posting.
Tullow reserves the right, subject to the prior consent of the Panel and the
terms of the Co-operation Agreement, to elect to implement the Combination by
way of a takeover offer (as such term is defined in section 974 of the
Companies Act). In such event, such takeover offer will be implemented on
the same terms (subject to appropriate amendments as described in Part 3 of
Appendix 1), so far as applicable, as those which would apply to the Scheme.
Furthermore, if such offer is made and sufficient acceptances of such offer
are received, when aggregated with Capricorn Shares otherwise acquired by
Tullow, it is the intention of Tullow to apply the provisions of section 979
of the Companies Act to acquire compulsorily any outstanding Capricorn Shares
to which such offer relates.
13. Tullow Shareholder approval and Prospectus
The Combination constitutes a Class 1 transaction for Tullow. Accordingly,
Tullow will be required to seek the approval of Tullow Shareholders for the
Combination at the Tullow General Meeting.
The Tullow Directors intend to recommend, unanimously, Tullow Shareholders to
vote in favour of the relevant resolutions at the Tullow General Meeting which
will be convened in connection with the Combination, as the Tullow Directors
who hold Tullow Shares have irrevocably undertaken to do in respect of their
entire beneficial holdings of, in aggregate, 1,555,824 Tullow Shares,
representing approximately 0.1 per cent. of Tullow's issued share capital on
31 May 2022 (being the last Business Day prior to the date of this
Announcement).
Tullow will prepare and send to Tullow Shareholders the Circular summarising
the background to and reasons for the Combination which will include a notice
convening the Tullow General Meeting. The Combination is conditional on, among
other things, the Tullow Resolutions being passed by the requisite majority of
Tullow Shareholders at the Tullow General Meeting (but not, for the avoidance
of doubt, any other resolutions to be proposed at the Tullow General Meeting
which shall not be Conditions to the Combination).
Tullow will also be required to produce the Prospectus in connection with the
issue of the New Tullow Shares and Admission. The Prospectus will contain
information relating to the Combined Group and the New Tullow Shares. The
Prospectus, containing information about the New Tullow Shares, will be
published at or around the same time as the Scheme Document is posted to
Capricorn Shareholders. The Circular, containing details of the Combination
and notice of the Tullow General Meeting, will also be posted to Tullow
Shareholders at or around the same time as the Scheme Document is posted to
Capricorn Shareholders, and the Tullow General Meeting will be held at or
around the same time and on the same date as the Court Meeting and/or the
Capricorn General Meeting.
Following publication, the Prospectus and the Circular will be made available
by Tullow on its website at https://www.tullowoil.com/
(https://www.tullowoil.com/) and by Capricorn on its website at
https://www.capricornenergy.com/all-share-merger
(https://www.capricornenergy.com/all-share-merger) .
14. Information on the Tullow Group
Tullow is a leading independent oil and gas, exploration and production group,
and is a constituent of the FTSE 250 Index. Tullow has producing assets in
West Africa, material positions in discovered resources in Kenya and emerging
basins in Latin America. Tullow is headquartered in London and its shares are
listed on the London, Irish and Ghana stock exchanges. Tullow also pursues
near-field exploration opportunities in and around its producing and
development assets.
Tullow is a full cycle upstream oil and gas company, operating assets through
the lifecycle of exploration and appraisal, through to the development and
production phase to decommissioning at the end of life. Tullow's business is
focused on finding, or acquiring assets to extract, oil and gas which is then
sold in the global commodity market. By doing this, Tullow is able to unlock
and maximise value from the hydrocarbon resources of its host nations. Tullow
is committed to doing this efficiently and safely, while minimising its
environmental impact.
In 2021, the Tullow Group's working interest production averaged 59.2 kboepd,
with notable production growth from the Jubilee field in Ghana and Simba field
in Gabon.
Exploration and appraisal
In addition to selective exploration in emerging basins, Tullow is focused on
leveraging its geoscience expertise to enhance the value of its core assets.
This is largely done through 'Infrastructure-led exploration', which involves
identifying new resources near existing infrastructure.
Development
Tullow has made material discoveries in East Africa and has been progressing
its project in Northern Kenya towards development. Tullow's development
activities are focused on preparing capital efficient development plans that
enable the production of discovered resources. For Tullow, this primarily
relates to Project Oil Kenya and further developments of its existing
producing fields such as the Jubilee South East Development.
Production
Tullow's production assets are in West Africa with offshore production from
Ghana, Gabon and Côte d'Ivoire. Tullow has a goal to become a leading West
African operator and is striving for top quartile operating performance in
terms of safety, emissions, reliability and costs. Tullow operates both the
Jubilee and TEN fields in Ghana and works in partnership with the operators of
its non-operated assets.
For the year ended 31 December 2021, Tullow reported profits from continuing
activities before tax of $202.7 million and gross assets of $5,540.6 million.
15. Information on the Capricorn Group
Capricorn is a leading independent upstream energy company which has
historically discovered, developed, and produced oil and gas around the world.
It is headquartered in Edinburgh and its shares are listed on the London Stock
Exchange, where it is a constituent of the FTSE 250 index.
Capricorn's current focus is the growth of its gas and liquids production base
through development and exploration, using its portfolio of development,
production and exploration assets. Its assets include interests in Egypt,
Mauritania, Mexico, Suriname and the UK.
Capricorn's business model is to hold assets within the oil and gas life cycle
in order to create, add and deliver value for stakeholders. The cash flow from
production assets funds exploration, appraisal and development activity.
Assets can be monetised at different stages of hydrocarbon exploration,
development and production in order to optimise the portfolio and create the
opportunity for further cash returns to shareholders.
Capricorn adheres to high sustainability standards, and it invests to ensure
its portfolio remains competitive through stringent energy transition
scenarios. It is committed to net zero carbon emissions by 2040.
In 2021, the Capricorn Group's working interest production averaged 36.5
kboepd post completion of its acquisition of assets in Egypt.
For the year ended 31 December 2021, Capricorn reported profits before tax
from continuing operations of $873.7 million and gross assets of $2,246.4
million.
16. De-listing and re-registration
It is expected that the last day of dealings in, and for registration of
transfers of, Capricorn Shares (other than the registration of the transfer of
the Scheme Shares to Tullow pursuant to the Scheme) will be the last Business
Day prior to the Effective Date, following which all of the Capricorn Shares
will be suspended from the Official List and from trading on the London Stock
Exchange's Main Market for listed securities, and Capricorn Shares will be
disabled in CREST.
On the Effective Date, all share certificates in respect of Capricorn will
cease to be valid and should be destroyed and, by the first Business Day after
the Effective Date, entitlements to Capricorn Shares in CREST will be
cancelled.
Applications will be made to the FCA for the cancellation of the listing of
the Capricorn Shares on the Official List and to the London Stock Exchange for
the cancellation of the admission to trading of Capricorn Shares on the London
Stock Exchange's Main Market for listed securities. It is expected that such
delisting and cancellation of admission to trading would take effect on the
Business Day after the Effective Date.
If the Scheme is sanctioned, any Capricorn shares held in treasury will be
cancelled prior to the Scheme Record Time.
Tullow intends to re-register Capricorn as a private company as soon as it is
appropriate to do so under the provisions of the Companies Act.
17. Settlement, listing and dealing of New Tullow Shares
Once the Scheme has become Effective, New Tullow Shares will be allotted to
the Scheme Shareholders. The New Tullow Shares will be issued credited as
fully paid and will rank pari passu in all respects with the Tullow Shares in
issue at the time the New Tullow Shares are issued pursuant to the
Combination, including the right to receive and retain in full all dividends
and other distributions (if any) announced, declared, made or paid, or any
other return of value (whether by reduction of share capital or share premium
account or otherwise) made, in each case by reference to a record date falling
on or after the Effective Date.
It is intended that applications will be made to the FCA and the London Stock
Exchange, respectively, for the New Tullow Shares to be admitted to the
premium listing segment of the Official List of the FCA and to trading on the
London Stock Exchange's Main Market for listed securities (together, the "UK
Admission"). Applications will also be made to the Ghana Stock Exchange and
the Ghana SEC for the New Tullow Shares to be admitted to the First Official
List of the Ghana Stock Exchange and to trading on the Ghana Stock Exchange
(together, the "Ghana Admission"). Subject to the outcome of Tullow's review
as to the continued appropriateness of the continued listing of its shares on
the secondary listing segment of the Official List of Euronext Dublin and to
trading on the Euronext Dublin Market, if Tullow decides to maintain such
listing and admission to trading then applications will also be made to
Euronext Dublin for the New Tullow Shares to be admitted to the secondary
listing segment of the Official List of Euronext Dublin as an overseas company
and to trading on the Euronext Dublin Market operated by Euronext Dublin
(together, the "Irish Admission", and together with the UK Admission and the
Ghana Admission, "Admission")). It is expected that UK Admission and Ghana
Admission will become effective, and if applications are made for Irish
Admission that Irish Admission will become effective, and that dealings for
normal settlement in the New Tullow Shares will commence, at 8.00 a.m. on the
first Business Day after the date on which the Scheme becomes Effective. The
existing Tullow Shares are admitted to CREST. It is expected that all of the
New Tullow Shares, when issued and fully paid, will be capable of being held
and transferred by means of CREST.
Further details on listing, dealing and settlement will be included in the
Scheme Document.
18. Offer-related arrangements
18.1 Confidentiality Agreement
Tullow and Capricorn entered into a confidentiality agreement on 31 May 2022. Pursuant to the confidentiality agreement Tullow and Capricorn agreed to keep confidential certain information provided by the other party for the purposes of evaluating the Combination. The confidentiality obligations will not apply to confidential information the disclosure of which is required by any applicable law, including by stock exchange regulations or by a governmental order, decree, regulation or rule.
18.2 Co-operation Agreement
Tullow and Capricorn have entered into a Co-operation Agreement dated 1 June
2022, pursuant to which Tullow has agreed to take all required, necessary or
advisable steps to pursue the clearances required to satisfy the regulatory
Conditions (provided that such clearances are on terms satisfactory to Tullow
and Capricorn), with a view to satisfying such conditions as soon as is
reasonably practicable. Tullow and Capricorn have agreed to co-operate with
each other in good faith to provide each other, in a timely manner, with such
information, assistance and access as may reasonably be required in order to
obtain the regulatory clearances and authorisations. Tullow and Capricorn have
also agreed to co-operate with each other in good faith to provide each other,
in a timely manner, with such information, assistance and access as may
reasonably be required for the preparation of the key shareholder
documentation.
Under the terms of the Co-operation Agreement, it has been agreed between
Tullow and Capricorn that Simon Thomson will step down as CEO of Capricorn and
his employment will terminate with effect from Completion. He will assume a
transitional advisory role as Chair of the Integration Steering Committee to
help with the integration of the two companies on commercial terms to be
agreed. Under the terms of his service agreement, Mr Thomson will in
accordance with the terms of his employment contract receive (i) a sum in lieu
of salary and the value of benefits for his 12-month notice period and (ii) an
amount equal to his annual salary by way of compensation for the termination
of his employment in connection with the change of control of Capricorn.
Tullow has the right to terminate the Co-operation Agreement where:
(A) the Capricorn General Meeting and/or the Court Meeting and/or the
Court Sanction Hearing is not held on or before the 22nd day after the
expected date of such meeting or hearing as set out in the Scheme Document (or
such later date as may be agreed in writing between the parties with the
consent of the Panel and the approval of the Court (if such approval is
required));
(B) the Scheme Document and, if different, the document convening the
Capricorn General Meeting does not include the unconditional recommendation
that the Capricorn Shareholders vote in favour of the Scheme;
(C) Capricorn makes an announcement that:
(i) it no longer intends to make an unconditional recommendation
that the Capricorn Shareholders vote in favour of the Scheme;
(ii) it will not convene the Court Meeting or the Capricorn General
Meeting, or it will delay the convening of or will adjourn the Court Meeting
or the Capricorn General Meeting for a period longer than 22 days after the
expected date of such meeting as set out in the Scheme Document (or such later
date as may be agreed in writing between the parties with the consent of the
Panel and the approval of the Court (if such approval is required)), in each
case without the consent of Tullow; or
(iii) it intends not to post the Scheme Document or, if different, the
document convening the Capricorn General Meeting;
(D) the Capricorn Directors publicly withdraw, qualify or modify their
unconditional recommendation that the Capricorn Shareholders vote in favour of
the Scheme; or
(E) a competing transaction is recommended by the Capricorn Directors.
Capricorn has the right to terminate the Co-operation Agreement where:
(A) the Tullow Directors have withdrawn, qualified, modified or
they have failed to reaffirm (when reasonably requested by Capricorn to do so)
their unconditional recommendation that the Tullow Shareholders vote in favour
of the Tullow Resolutions at the Tullow General Meeting (including, prior to
the publication of the Tullow Circular, their intention to do so);
(B) Tullow adjourns or postpones the Tullow General Meeting for
longer than 15 days; or
(C) the Tullow Resolutions are not passed by the requisite
majority at the Tullow General Meeting.
Tullow and Capricorn may also terminate the Co-operation Agreement by mutual
consent.
Tullow and Capricorn may each also terminate the Co-operation Agreement by
service of written notice on the other if the Combination is being implemented
by way of the Scheme and:
(A) a competing offer by a third party becomes effective;
(B) if any Condition is invoked by Tullow (where permitted by
the Panel);
(C) the Combination is withdrawn or lapses before the Long Stop
Date, other than where Tullow has exercised its right to implement the
Combination as an Offer (with the consent of the Panel and subject to the
approval of Capricorn (or otherwise in accordance with the Co-operation
Agreement));
(D) the Scheme is not approved by the requisite majority of
Capricorn Shareholders at the Court Meeting or the Capricorn Resolutions are
not passed by the requisite majority at the Capricorn General Meeting;
(E) the Court refuses to sanction the Scheme or grant the Court
Order at the Court Sanction Hearing; or
(F) the Scheme has not become effective by the Long Stop Date.
The Co-operation Agreement also contains provisions that will apply in respect
of the Capricorn Share Plans and certain other employee arrangements, as
referred to in paragraphs 10 and 11 above.
19. Overseas shareholders
The distribution of this Announcement to, and the availability of the
Combination and/or New Tullow Shares to be issued pursuant to the Combination
to, persons not resident in the United Kingdom may be affected by the laws and
regulations of the relevant jurisdiction. Such persons should inform
themselves of and observe any applicable legal or regulatory requirements.
Further details in relation to overseas shareholders will be contained in the
Scheme Document.
This Announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities, nor is it a solicitation of any
vote or approval in any jurisdiction, nor will there be any purchase or
transfer of the securities referred to in this Announcement in any
jurisdiction in contravention of applicable law or regulation.
The New Tullow Shares to be issued pursuant to the Combination have not been,
and, unless Tullow otherwise elects in the event of a Takeover Offer, will not
be, registered under the U.S. Securities Act or under any laws of any state,
district or other jurisdiction, of the United States. Accordingly, unless an
exemption under relevant securities laws is available, including the exemption
from the registration requirements of the U.S. Securities Act provided by
Section 3(a)(10) thereof, the New Tullow Shares are not being, and may not be,
offered, sold, resold, delivered or distributed, directly or indirectly, in,
into or from the United States. Neither the U.S. Securities and Exchange
Commission nor any U.S. state securities commission has approved or
disapproved of the existing Tullow Shares or New Tullow Shares or determined
if this Announcement is accurate or complete. Any representation to the
contrary is a criminal offence.
20. Disclosure of interests in Capricorn Shares
As at the close of business on 30 May 2022 (being the last practicable date
prior to the publication of this Announcement), save for the irrevocable
undertakings referred to in paragraph 9 above, neither Tullow, nor any of the
Tullow Directors, nor, so far as Tullow is aware, any person acting in concert
(within the meaning of the Code) with Tullow has:
a) any interest in, or right to subscribe for, any Capricorn Shares nor
does any such person have any short position in Capricorn Shares, including
any short position under a derivative, any agreement to sell, any delivery
obligation or right to require another person to purchase or take delivery of
Capricorn Shares; or
b) borrowed or lent any Capricorn Shares or entered into any financial
collateral arrangements relating to Capricorn Shares; or
c) any dealing arrangement of the kind referred to in Note 11 on the
definition of acting in concert in the Code in relation to Capricorn Shares or
in relation to securities convertible or exchangeable into Capricorn Shares,
and "interests in securities" for these purposes arise, in summary, when a
person has long economic exposure, whether absolute or conditional, to changes
in the price of securities (and a person who only has a short position in
securities is not treated as interested in those securities). In particular, a
person will be treated as having an 'interest' by virtue of the ownership,
voting rights or control of securities, or by virtue of any agreement to
purchase, option in respect of, or derivative referenced to, securities.
In the interests of secrecy prior to this Announcement, Tullow has not made
any enquiries in respect of the matters referred to in this paragraph of
certain parties who may be deemed by the Panel to be acting in concert with
Tullow for the purposes of the Combination. Further enquiries will be
completed prior to publication of Tullow's Opening Position Disclosure.
21. Expected timetable
Further details of the Scheme will be contained in the Scheme Document which
is intended to be despatched to Capricorn Shareholders following receipt
(where required) of the consents, approvals or waivers referred to in
paragraph 8 above and in or around the fourth quarter of 2022 (unless
otherwise agreed with the Panel). A further announcement regarding the
publication of the Scheme Document will be made in due course. For the
purposes of paragraph 3(a) of Appendix 7 of the Code, the Panel has consented
to an extension of the applicable date for posting.
Further details on the timetable for implementation of the Scheme will be set
out in the Scheme Document, which will also include the notices of the Court
Meeting and the Capricorn General Meeting and specify the necessary actions to
be taken by Capricorn Shareholders.
Subject to satisfaction or waiver of the relevant Conditions as set out in
Appendix 1 to this Announcement, the Scheme is expected to become Effective in
the fourth quarter of 2022.
22. Documents available on website
Copies of the following documents will shortly be available on the Tullow
website at https://www.tullowoil.com/ (https://www.tullowoil.com/) and on the
Capricorn website at https://www.capricornenergy.com/all-share-combination
(https://www.capricornenergy.com/all-share-combination) in each case until the
Scheme has become Effective or has lapsed or been withdrawn:
(A) this Announcement;
(B) the irrevocable undertakings;
(C) the Confidentiality Agreement;
(D) the Co-operation Agreement; and
(E) the consent letters from each of PJT Partners, Barclays, Morgan Stanley, Rothschild & Co and KPMG.
23. General
Each of PJT Partners, Barclays, Morgan Stanley, Rothschild & Co and KPMG
has given and not withdrawn its consent to the publication of this
Announcement with the inclusion herein of the references to its opinion and
name in the form and context in which they are included.
The Combination will be subject to the satisfaction or, where applicable,
waiver of the Conditions and certain further terms of the Combination are set
out in Appendix 1 to this Announcement and to the full terms and conditions to
be set out in the Scheme Document. Appendix 2 contains bases and sources of
certain information contained within this Announcement. Appendix 3 contains
details of the irrevocable undertakings given to Capricorn and Tullow in
relation to the Combination. Appendix 4 contains further details and reports
on the Quantified Financial Benefits Statement. Appendix 5 contains the
definitions of certain terms used in this Announcement.
Analyst and investor presentation
There will be an analysts' briefing at The Lincoln Centre, 18 Lincoln's Inn
Fields, London WC2A 3ED today at 9.00 a.m. There will also be a live webcast
of this briefing. Information on how to access the live webcast can be found
in the 'Investors' section of the Tullow website at
https://www.tullowoil.com/investors/ (https://www.tullowoil.com/investors/)
and Capricorn website at https://www.capricornenergy.com/all-share-combination
(https://www.capricornenergy.com/all-share-combination) .
The recorded webcast (together with the accompanying slides) will be made
available, subject to certain restrictions relating to persons resident in
Restricted Jurisdictions, in due course on Tullow's website at
https://www.tullowoil.com (https://www.tullowoil.com) and on Capricorn's
website at https://www.capricornenergy.co.uk/all-share-combination
(https://www.capricornenergy.co.uk/all-share-combination) . The contents of
the websites referred to in this Announcement are not incorporated into and do
not form part of this Announcement.
Enquiries:
Tullow
+44 20 3249 9000
Robert Hellwig, Investors
Matthew Evans, Investors
George Cazenove,
Media
Capricorn
Analysts/Investors
David Nisbet, Corporate
Affairs
+44 (0)131 475 3000
Media
Jonathan Milne / Linda Bain, Corporate
Affairs
+44 (0)131 475 3000
Patrick Handley / David Litterick, Brunswick Group
LLP +44
(0)20 7404 5959
PJT Partners (Lead Financial Adviser to Tullow)
Ben
Monaghan
+44 (0)20 3650 1100
Basil
Geoghegan
Jonathan
Hall
Barclays (Financial Adviser, Corporate Broker and Sole Sponsor to
Tullow) +44 (0)20 7623 2323
Grant Porter
Robert Mayhew
Tom Macdonald
Morgan Stanley (Lead Financial Adviser and Corporate Broker to Capricorn)
+44 (0)20 7425 8000
Andrew Foster
Anthony Zammit
Matthew Ball
Rothschild & Co (Financial Adviser to Capricorn)
+44 (0)20 7280 5000
James McEwen
Murray Yuill
Camarco (PR Advisers to
Tullow)
+44 (0)20 3781 9244
Billy Clegg
Rebecca
Waterworth
Herbert Smith Freehills LLP is acting as legal adviser to Tullow in connection
with the Combination.
Slaughter and May and Shepherd and Wedderburn LLP are acting as legal advisers
to Capricorn in connection with the Combination.
Further information
This Announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer, invitation or the solicitation
of an offer or invitation to purchase or otherwise acquire, subscribe for,
exchange, sell, or otherwise dispose of, any securities or the solicitation of
any vote or approval in any jurisdiction pursuant to the Combination or
otherwise, nor shall there be any sale, issuance, exchange, or transfer of
securities of Tullow or Capricorn pursuant to the Combination or otherwise in
any jurisdiction in contravention of applicable laws.
The Combination will be implemented solely pursuant to the terms of the Scheme
Document (or, in the event that the Combination is to be implemented by means
of a Takeover Offer, the Offer Document), which, together with the Forms of
Proxy, will contain the full terms and conditions of the Combination,
including details of how to vote in respect of the Combination. Any decision
by Capricorn Shareholders in respect of, or other response to, the Combination
(including any vote in respect of the resolutions to approve the Combination,
the Scheme or related matters), should be made only on the basis of the
information contained in the Scheme Document (or, if the Combination is
implemented by way of a Takeover Offer, the Offer Document).
Capricorn will prepare the Scheme Document to be distributed to Capricorn
Shareholders. Tullow will prepare the Circular to be distributed to Tullow
Shareholders and will also publish the Prospectus containing information on
the New Tullow Shares and the Combined Group. Capricorn urges Capricorn
Shareholders to read the Scheme Document and the Prospectus carefully when
they become available because they will contain important information in
relation to the Scheme, the New Tullow Shares and the Combined Group. Tullow
urges Tullow Shareholders to read the Prospectus and the Circular carefully
when they become available because they will contain important information in
relation to the Combination, the Scheme, the New Tullow Shares and the
Combined Group. Any vote in respect of resolutions to be proposed at the Court
Meeting, the Capricorn General Meeting or the Tullow General Meeting to
approve the Combination, the Scheme or related matters, should be made only on
the basis of the information contained in the Scheme Document, the Prospectus
and, in the case of Tullow Shareholders, the Circular.
This Announcement does not constitute a prospectus or an exempt document for
the purposes of Article 1(4) or (5) of the UK Prospectus Regulation.
The Combination will be subject to the applicable requirements of the Code,
the Panel, the FCA and the London Stock Exchange.
Please be aware that addresses, electronic addresses and certain other
information provided by Capricorn Shareholders, persons with information
rights and other relevant persons in connection with the receipt of
communications from Capricorn may be provided to Tullow during the offer
period as required under Section 4 of Appendix 4 of the Code.
Important Notices relating to the Financial Advisers
PJT Partners, which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom, is acting exclusively for Tullow and no-one
else in connection with the Combination and will not be responsible to anyone
other than Tullow for providing the protections afforded to clients of PJT
Partners nor for providing advice in relation to the Combination. Neither
PJT Partners nor any of its subsidiaries, branches or affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of PJT Partners in connection with this
Announcement, any statement contained herein or otherwise.
Morgan Stanley, which is authorised by Prudential Regulation Authority and
regulated by the Financial Conduct Authority and Prudential Regulation
Authority in the United Kingdom, is acting for Capricorn and no-one else in
connection with the Combination and will not be responsible to anyone other
than Capricorn for providing the protections afforded to clients of Morgan
Stanley nor for providing advice in relation to the Combination. Neither
Morgan Stanley nor any of its subsidiaries, branches or affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Morgan Stanley in connection with this
Announcement, any statement contained herein or otherwise.
Rothschild & Co, which is authorised and regulated by the FCA in the
United Kingdom, is acting exclusively for Capricorn and no one else in
connection with the matters described in this Announcement and will not be
responsible to anyone other than Capricorn for providing the protections
afforded to clients of Rothschild & Co nor for providing advice in
connection with any matter referred to herein. Neither Rothschild & Co nor
any of its affiliates (nor their respective directors, officers, employees or
agents) owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Rothschild & Co in
connection with this Announcement, any statement contained herein or
otherwise.
Barclays, which is authorised by the Prudential Regulation Authority and
regulated in the United Kingdom by the Financial Conduct Authority and the
Prudential Regulation Authority, is acting exclusively for Tullow and no one
else in connection with the matters referred to in this Announcement and will
not be responsible to anyone other than Tullow for providing advice in
relation to the Combination or any other matters referred to in this
Announcement.
In accordance with the Code, normal United Kingdom market practice and Rule
14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act
as exempt principal trader in Tullow securities on the London Stock Exchange.
These purchases and activities by exempt principal traders which are required
to be made public in the United Kingdom pursuant to the Code will be reported
to a Regulatory Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com
(https://protect-eu.mimecast.com/s/3vlbCZz5giErK0VhzVjvs?domain=londonstockexchange.com)
. This information will also be publicly disclosed in the United States to the
extent that such information is made public in the United Kingdom.
Overseas jurisdictions
The availability of the Combination and/or the New Tullow Shares in, and the
release, publication or distribution of this Announcement in or into
jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons into whose possession this Announcement comes who are
subject to the laws of any jurisdiction other than the United Kingdom should
inform themselves about, and observe any applicable legal or regulatory
requirements or restrictions. In particular, the ability of persons who are
not resident in the United Kingdom to vote their Capricorn Shares with respect
to the Scheme at the Court Meeting, to execute and deliver Forms of Proxy
appointing another to vote at the Court Meeting on their behalf, or to hold
and vote Tullow Shares at the Tullow General Meeting, may be affected by the
laws of the relevant jurisdictions in which they are located. Any failure to
comply with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by
applicable law, the companies and persons involved in the Combination disclaim
any responsibility or liability for the violation of such restrictions by any
person. This Announcement has been prepared for the purpose of complying with
Scots law, English law, the Code, the UK Market Abuse Regulation and the
Disclosure Guidance and Transparency Rules 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.
Unless otherwise determined by Tullow or required by the Code, and permitted
by applicable law and regulation, the New Tullow Shares to be issued pursuant
to the Combination to Capricorn Shareholders will not be made available,
directly or indirectly, in, into or from a Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction and no person may vote in
favour of the Combination by any such use, means, instrumentality or form
within a Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and any formal documentation relating to the Combination
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from any Restricted Jurisdiction
or any other jurisdiction where to do so would constitute a violation of the
laws of that jurisdiction, and persons receiving such documents (including
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send such documents in or into or from any Restricted
Jurisdiction. If the Combination is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the Takeover
Offer may not be made directly or indirectly, in or into, or by the use of
mails or any means or instrumentality (including, but not limited to,
facsimile, e-mail or other electronic transmission or telephone) of interstate
or foreign commerce of, or of any facility of a national, state or other
securities exchange of any Restricted Jurisdiction and the Takeover Offer will
not be capable of acceptance by any such use, means, instrumentality or
facilities or from within any Restricted Jurisdiction.
The availability of the Combination, New Tullow Shares pursuant to the
Combination and/or this Announcement to Capricorn Shareholders who are not
resident in the United Kingdom or the ability of those persons to hold such
New Tullow Shares may be affected by the laws or regulatory requirements of
the relevant jurisdictions in which they are resident. Persons who are not
resident in the United Kingdom should inform themselves of, and observe, any
applicable legal or regulatory requirements. Capricorn Shareholders who are in
any doubt about such matters should consult an appropriate independent
professional 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.
The New Tullow Shares may not be offered, sold or delivered, directly or
indirectly, in, into or from any Restricted Jurisdiction or to, or for the
account or benefit of, any Restricted Overseas Persons except pursuant to an
applicable exemption from, or in a transaction not subject to, applicable
securities laws of those jurisdictions, or otherwise permitted under
applicable securities laws of those jurisdictions.
Further details in relation to Capricorn Shareholders in overseas
jurisdictions will be contained in the Scheme Document.
Notes to U.S. investors in Capricorn
Capricorn Shareholders in the United States should note that the Combination
relates to the shares of a Scottish company and is proposed to be made by
means of a scheme of arrangement provided for under the Companies Act as it
applies to Scottish companies. Neither the proxy solicitation nor the tender
offer rules under the U.S. Securities Exchange Act, 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 U.S. proxy solicitation rules and
tender offer rules. Financial information included in this Announcement and
the Scheme 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 U.S. companies or companies whose financial statements are
prepared in accordance with generally accepted accounting principles in the
United States. If Tullow exercises its right to implement the Combination by
way of a Takeover Offer in accordance with the terms of the Co-operation
Agreement and determines to extend the offer into the United States, such
offer will be made in compliance with applicable United States securities laws
and regulations, including to the extent applicable, the U.S. Securities Act
and Section 14(E) of the U.S. Exchange Act and Regulation 14E thereunder. Such
Takeover Offer would be made in the United States by Tullow and no one else.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the
U.S. Exchange Act, Tullow or its nominees, or its brokers (acting as agents),
may from time to time make certain purchases of, or arrangements to purchase
Capricorn Shares outside of the United States, other than pursuant to the
Combination, until the date on which the Combination becomes Effective, lapses
or is otherwise withdrawn. Any such purchases may occur either in the open
market at prevailing prices or in private transactions at negotiated prices.
Any information about such purchases will be disclosed as required in the UK,
will be reported to the Regulatory Information Service of the London Stock
Exchange and will be available on the London Stock Exchange website at
http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
Capricorn is organised under the laws of Scotland and Tullow is organised
under the laws of England. Some or all of the officers and directors of
Capricorn and Tullow are residents of countries other than the United
States. It may not be possible to sue Capricorn and Tullow in a non-US court
for violations of U.S. securities laws. It may be difficult to compel
Capricorn, Tullow and their respective affiliates to subject themselves to the
jurisdiction and judgment of a U.S. court.
This Announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of any offer to purchase, subscribe for or
otherwise acquire, any securities in the United States.
Neither the U.S. Securities and Exchange Commission nor any securities
commission of any state or other jurisdiction of the United States has
approved the Combination, passed upon the fairness of the Combination, or
passed upon the adequacy or accuracy of this Announcement. Any representation
to the contrary is a criminal offence in the United States.
The receipt of consideration by a U.S. holder for the transfer of its
Capricorn Shares pursuant to the Combination may be a taxable transaction for
United States federal income tax purposes and under applicable United States
state and local, as well as overseas and other, tax laws. Each Capricorn
Shareholder is urged to consult their independent professional adviser
immediately regarding the tax consequences of the Combination applicable to
them, including under applicable United States federal, state and local, as
well as overseas and other, tax laws.
Notes regarding New Tullow Shares
The New Tullow Shares to be issued pursuant to the Scheme have not been and
will not be registered under the U.S. Securities Act of 1933 (as amended) or
under the relevant securities laws of any state or territory or other
jurisdiction of the United States. Accordingly, the New Tullow Shares are
not being, and may not be, offered, sold, resold, delivered or distributed,
directly or indirectly in or into a Restricted Jurisdiction 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 Tullow Shares will be issued in reliance upon the
exemption from the registration requirements of the U.S. Securities Act of
1933 (as amended) provided by Section 3(a)(10) thereof. For the purpose of
qualifying for the exemption provided by Section 3(a)(10) of the U.S.
Securities Act, Tullow will advise the Court that its sanctioning of the
Scheme will be relied on by Tullow for the purposes of a Section 3(a)(10)
exemption following a hearing on the fairness of the Scheme to Capricorn
Shareholders. Securities issued pursuant to the Scheme will not be registered
under any laws of any state, district or other jurisdiction of the United
States, and may only be issued to persons resident in such state, district or
other jurisdiction pursuant to an exemption from the registration requirements
of such laws.
Disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange 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 securities
exchange 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) the offeree company
and (ii) any securities exchange 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 securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange 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%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange 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) the offeree company and
(ii) any securities exchange offeror(s), 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 an offeree company or a securities exchange 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 the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
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. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Forward-looking statements
This Announcement contains certain forward-looking statements, including
statements regarding Tullow's and Capricorn'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 or oil and gas 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.
Neither Tullow nor Capricorn assumes any obligation to update or correct the
information contained in this Announcement (whether as a result of new
information, future events or otherwise), except as required by applicable
law.
No profit forecasts or estimates
Nothing in this Announcement (including any statement of estimated costs
savings or synergies) is intended as a profit forecast or estimate for any
period and no statement in this Announcement should be interpreted to mean
that earnings or earnings per share or dividend per share for Tullow or
Capricorn, as appropriate, for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share or dividend per share for Tullow or Capricorn, as appropriate.
Quantified Financial Benefits Statement
Appendix 4 sets out the Quantified Financial Benefits Statement and contains
details of, and bases of calculation of, the anticipated financial benefits of
the Combination, together with the related reports from Tullow's reporting
accountant, KPMG, and Tullow's lead financial adviser, PJT Partners, as
required under Rule 28.1(a) of the Code, and provides underlying information
and bases for the accountant's and adviser's respective reports. PJT Partners,
as lead financial adviser to Tullow, has provided such report for the purposes
of the Code stating that, in its opinion and subject to the terms of the
report, the Quantified Financial Benefits Statement, for which the Tullow
Directors are responsible, has been prepared with due care and consideration.
Each of KPMG and PJT Partners has given and not withdrawn its consent to the
publication of its report in this Announcement in the form and context in
which it is included.
The statements in the Quantified Financial Benefits Statement relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a result, the cost savings and synergies referred to may
not be achieved, may be achieved later or sooner than estimated, or those
achieved could be materially different from those estimated.
No statement in the Quantified Financial Benefits Statement, or this
Announcement generally, should be construed as a profit forecast or
interpreted to mean that the Combined Group's earnings in the first full year
following the Effective Date, or in any subsequent period, would necessarily
match or be greater than or be less than those of Tullow and/or Capricorn for
the relevant preceding financial period or any other period. For the purposes
of Rule 28 of the Code, the Quantified Financial Benefits Statement contained
in this Announcement is the responsibility of Tullow and the Tullow Directors.
Any statement of intention, belief or expectation for the Combined Group
following the Effective Date is an intention, belief or expectation of the
Tullow Directors and not of the Capricorn Directors.
Publication of this Announcement
A copy of this Announcement will be available subject to certain restrictions
relating to persons resident in Restricted Jurisdictions on Tullow's website
at https://www.tullowoil.com (https://www.tullowoil.com) and Capricorn's
website at https://www.capricornenergy.com/all-share-combination
(https://www.capricornenergy.com/all-share-combination) .
The contents of Tullow's website and Capricorn's website are not incorporated
into and do not form part of this Announcement.
Tullow Shareholders may request a hard copy of this Announcement by: (i)
contacting Adam Holland at 9 Chiswick Park, 566 Chiswick High Road, London, W4
5XT or by telephoning +44 20 3249 9000 or by emailing
companysecretary@tullowoil.com. If you have received this Announcement in
electronic form or by it being published on Tullow's website, you will not
receive a hard copy of this Announcement unless you so request. You may also
inform Adam Holland that you wish all future documents, announcements and
information in relation to the Combination be sent to you in hard copy.
Capricorn Shareholders may request a hard copy of this Announcement by: (i)
contacting Anne McSherry at 50 Lothian Road Edinburgh EH3 9BY or by
telephoning +44 (0)131 475 3000 or by emailing
IR.Mailbox@capricornenergy.com. If you have received this Announcement in
electronic form or by it being published on Capricorn's website, you will not
receive a hard copy of this Announcement unless you so request. You may also
inform Anne McSherry that you wish all future documents, announcements and
information in relation to the Combination be sent to you in hard copy.
If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant,
fund manager or from an independent financial adviser duly authorised under
the Financial Services and Markets Act 2000 (as amended) if you are in the
United Kingdom, or, if you are resident in Ireland, from a person,
organisation or firm authorised or exempted pursuant to the European
Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3)
of Ireland or the Investment Intermediaries Act 1995 of Ireland, or, if you
are resident in a territory outside of the United Kingdom or Ireland, from
another appropriately authorised independent financial adviser.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.
Rule 2.9 of the Code
For the purposes of Rule 2.9 of the Code, Capricorn confirms that, as at 31
May 2022 (being the last Business Day prior to the date of this Announcement),
it had in issue 316,338,439 ordinary shares of 21/13 pence each. The ISIN for
the shares is GB00BN0SMB92.
For the purposes of Rule 2.9 of the Code, Tullow confirms that, as at 31 May
2022 (being the last Business Day prior to the date of this Announcement), it
had in issue 1,437,999,835 ordinary shares of 10 pence each. The ISIN for the
shares is GB0001500809.
Appendix 1
CONDITIONS AND CERTAIN FURTHER TERMS OF THE Combination
Part 1 Conditions of the Combination
Scheme Conditions
1. The Combination will be conditional upon:
(a) the Scheme Meeting and Capricorn General Meeting being
held on or before the 22nd day after the expected date of the meetings to be
set out in the Scheme Document in due course or such later date (if any) as
Tullow and Capricorn may agree with (if required) the consent of the Panel and
(if required) as the Court may allow;
(b) the Court Sanction Hearing being held on or before the
22nd day after the expected date of the hearing date to be set out in the
Scheme Document in due course, or such later date (if any) as Tullow and
Capricorn may agree with (if required) the consent of the Panel and (if
required) as the Court may allow; and
(c) the Scheme becoming unconditional and becoming
Effective, subject to the provisions of the Code, by no later than 1 March
2023 or such later date (if any) as Tullow and Capricorn may agree with (if
required) the consent of the Panel and (if required) as the Court may allow.
2. The Scheme will be conditional on:
(a) its approval by a majority in number of the holders of
Capricorn Shares present, entitled to vote and voting at the Court Meeting or
at any adjournment thereof (and at any separate class meeting which may be
required by the Court or at any adjournment thereof), either in person or by
proxy, representing not less than 75% in value of the Capricorn Shares voted
by such holders of the Capricorn Shares in issue as at the Voting Record Time;
(b) all resolutions required to approve and implement the
Scheme (including, without limitation, to amend Capricorn's articles of
association) being duly passed by the requisite majority of the Capricorn
Shareholders at the Capricorn General Meeting, or at any adjournment,
reconvening or postponing thereof;
(c) the sanction of the Scheme by the Court (with or
without modifications, on terms acceptable to Capricorn and Tullow); and
(d) a copy of the Court Order being delivered for
registration to the Registrar of Companies.
General conditions
3. The Combination will also be 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:
Admission of new shares
(a) (i) the Financial Conduct Authority
having acknowledged to Tullow or its agent (and such acknowledgement not
having been withdrawn) that the application for the admission of the New
Tullow Shares to the premium listing segment of the Official List has been
approved and (after satisfaction of any conditions to which such approval is
expressed to be subject ("UK listing conditions")), admission will become
effective as soon as a dealing notice has been issued by the FCA and any UK
listing conditions having been satisfied;
(ii) the London Stock Exchange having acknowledged to Tullow or
its agent (and such acknowledgement not having been withdrawn) that the New
Tullow Shares will be admitted to trading on the main market for listed
securities of the London Stock Exchange;
(iii) the Ghana Stock Exchange and the Ghana SEC having
acknowledged to Tullow or its agent (and such acknowledgement not having been
withdrawn) that the application for the admission of the New Tullow Shares to
the First Official List of the Ghana Stock Exchange has been approved and
(after satisfaction of any conditions to which such approval is expressed to
be subject ("Ghana listing conditions")), admission will become effective as
soon as a listing approval has been issued by the Ghana Stock Exchange and any
Ghana listing conditions have been satisfied;
(iv) the Ghana Stock Exchange and the Ghana SEC having acknowledged
to Tullow or its agent (and such acknowledgement not having been withdrawn)
that the New Tullow Shares will be admitted to the First Official List of the
Ghana Stock Exchange and to trading on the Ghana Stock Exchange;
(v) Euronext Dublin having acknowledged to Tullow or its agent
(and such acknowledgement not having been withdrawn) that the application for
the admission of the New Tullow Shares to the secondary listing segment of the
Official List of Euronext Dublin as an overseas company has been approved and
(after satisfaction of any conditions to which such approval is expressed to
be subject ("Irish listing conditions")), admission will become effective as
soon as a dealing notice has been issued by Euronext Dublin and any Irish
listing conditions have been satisfied; and
(vi) Euronext Dublin having acknowledged to Tullow or its agent
(and such acknowledgement not having been withdrawn) that the New Tullow
Shares will be admitted to the secondary listing segment of the Official List
of Euronext Dublin and to trading on the Euronext Dublin Market operated by
Euronext Dublin;
Tullow General Meeting
(b) the passing at the Tullow General Meeting (or at any
adjournment thereof) of all necessary resolutions to approve and implement the
Combination (including approval of the Combination as a "class 1" transaction
for the purposes of the Listing Rules and the authority to allot the New
Tullow Shares);
Regulatory clearances
(c) to the extent required or necessary in connection with
the Combination (and/or its implementation), the approval or consent of, or
waiver or non-exercise of any material termination, pre-emption or similar
rights by, any relevant government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental or investigative body,
court, trade agency, association, institution, any entity owned or controlled
by any relevant government or state, or any other body or person whatsoever
in, or in respect of the interests held by the Capricorn Group or the Tullow
Group in Egypt, Ghana, Mauritania and Mexico, in each case given on terms or
subject to conditions in each case which are satisfactory to Tullow and
Capricorn;
Official authorisations, regulatory clearances and third party clearances
(d) other than in respect of Conditions 3(a) to (c), the
waiver (or non-exercise within any applicable time limits) by any relevant
government or governmental, quasi-governmental, supranational, statutory,
regulatory, environmental or investigative body, court, trade agency,
association, institution, any entity owned or controlled by any relevant
government or state, or any other body or person whatsoever ("Third Party") of
any termination right, right of pre-emption, first refusal or similar right
(which is material in the context of the Wider Capricorn Group taken as a
whole) arising as a result of or in connection with the Combination including,
without limitation, its implementation or the proposed direct or indirect
acquisition of any shares or other securities in, or control or management of,
Capricorn by Tullow or any member of the Wider Tullow Group, in each case
given on terms or subject to conditions which are satisfactory to Tullow and
Capricorn;
(e) other than in respect of Conditions 3(a) to (c), all
necessary filings or applications having been made in connection with the
Combination and all statutory or regulatory obligations in any jurisdiction
having been complied with in connection with the Combination or the
acquisition by any member of the Wider Tullow Group of any shares or other
securities in, or control of, Capricorn and all authorisations, orders,
grants, recognitions, determinations, confirmations, consents, licences,
clearances, permissions, exemptions and approvals reasonably deemed necessary
by Tullow or any member of the Wider Tullow Group for or in respect of the
Combination including without limitation, its implementation or the proposed
direct or indirect acquisition of any shares or other securities in, or
control of, Capricorn or any member of the Wider Capricorn Group by any member
of the Wider Tullow Group having been obtained in each case on terms or
subject to conditions which are satisfactory to Tullow and Capricorn from all
appropriate Third Parties or persons with whom any member of the Wider
Capricorn Group has entered into contractual arrangements and all such
material authorisations, orders, grants, recognitions, determinations,
confirmations, consents, licences, clearances, permissions, exemptions and
approvals necessary or appropriate to carry on the business of any member of
the Wider Capricorn Group which is material in the context of the Tullow Group
or the Capricorn Group as a whole remaining in full force and effect and all
filings necessary for such purpose having been made and there being no notice
or intimation of any intention to revoke or not to renew any of the same at
the time at which the Combination becomes otherwise unconditional and all
necessary statutory or regulatory obligations in any jurisdiction having been
complied with;
(f) other than in respect of Conditions 3(a) to (c), no
Third Party having given notice of a decision to take, institute, implement or
threaten any action, proceeding, suit, investigation, enquiry or reference
(and, in each case, not having withdrawn the same), or having enacted, made or
proposed any statute, regulation, decision or order, or change to published
practice or having taken any other steps, and there not continuing to be
outstanding any statute, regulation, decision or order, which in each case
would reasonably be expected to:
(i) require, prevent or materially delay the divestiture, or
materially alter the terms envisaged for any proposed divestiture by any
member of the Wider Tullow Group or any member of the Wider Capricorn Group of
all or any portion of their respective businesses, assets or property or
impose any limitation on the ability of any of them to conduct their
respective businesses (or any of them) or to own any of their respective
assets or properties or any part thereof which, in any such case, is material
in the context of the Wider Tullow Group or the Wider Capricorn Group in
either case taken as a whole;
(i) require, prevent or materially delay the divestiture by
any member of the Wider Tullow Group of any shares or other securities in
Capricorn;
(ii) impose any material limitation on, or result in a material
delay in, the ability of any member of the Wider Tullow Group directly or
indirectly to acquire or to hold or to exercise effectively any rights of
ownership in respect of shares or loans or securities convertible into shares
or any other securities (or the equivalent) in any member of the Wider
Capricorn Group or the Wider Tullow Group or to exercise voting or management
control over any such member;
(iii) otherwise materially adversely affect the business, assets
or profits of any member of the Wider Tullow Group or of any member of the
Wider Capricorn Group to an extent which is material in the context of the
Wider Tullow Group or the Wider Capricorn Group in either case taken as a
whole;
(iv) make the Combination or its implementation or the acquisition
or proposed acquisition by Tullow or any member of the Wider Tullow Group of
any shares or other securities in, or control of Capricorn void, illegal,
and/or unenforceable under the laws of any jurisdiction, or otherwise,
directly or indirectly, materially restrain, restrict, prohibit, delay or
otherwise interfere with the same, or impose material additional conditions or
obligations with respect thereto;
(v) except pursuant to Chapter 3 of Part 28 of the Companies
Act, require any member of the Wider Tullow Group or the Wider Capricorn Group
to offer to acquire any shares or other securities (or the equivalent) or
interest in any member of the Wider Capricorn Group or the Wider Tullow Group
owned by any third party;
(vi) impose any limitation on the ability of any member of the
Wider Capricorn Group to co-ordinate its business, or any part of it, with the
businesses of any other members which is adverse to and material in the
context of the Wider Capricorn Group taken as a whole or in the context of the
Combination; or
(vii) result in any member of the Wider Capricorn Group ceasing to
be able to carry on business under any name under which it presently does so;
Certain matters arising as a result of any arrangement, agreement etc.
(g) save as disclosed, there being no provision of any
agreement, arrangement, licence, permit or other instrument to which any
member of the Wider Capricorn Group is a party or by or to which any such
member or any of its assets is bound, entitled or subject, or any circumstance
which in consequence of the Combination or the proposed acquisition of any
shares or other securities (or equivalent) in Capricorn or because of a change
in the control or management of Capricorn or otherwise, would reasonably be
expected to result in any of the following to an extent which is material and
adverse in the context of the Wider Capricorn Group, or the Wider Tullow
Group, in either case taken as a whole, or in the context of the Combination:
(i) any moneys borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or grant available to any such member,
being or becoming repayable or capable of being declared repayable immediately
or earlier than their or its stated maturity date or repayment date or the
ability of any such member to borrow moneys or incur any indebtedness being
withdrawn or inhibited or being capable of becoming or being withdrawn or
inhibited;
(ii) any such agreement, arrangement, licence, permit or
instrument or the rights, liabilities, obligations or interests of any such
member thereunder being terminated or adversely modified or affected or any
obligation or liability arising or any action being taken or arising
thereunder;
(iii) any asset or interest of any such member being or failing
to be disposed of or charged or ceasing to be available to any such member or
any right arising under which any such asset or interest could be required to
be disposed of or charged or could cease to be available to any such member
otherwise than in the ordinary course of business;
(iv) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business, property, assets
or interest of any such member;
(v) the rights, liabilities, obligations or interests of any
such member, or the business of any such member with, any person, firm,
company or body (or any arrangement or arrangements relating to any such
interest or business) being terminated, adversely modified or adversely
affected;
(vi) the value of any such member or its financial or trading
position or prospects being prejudiced or adversely affected;
(vii) any such member ceasing to be able to carry on business
under any name under which it presently does so; or
(viii) the creation or acceleration of any liability, actual or
contingent, by any such member (including any material tax liability or any
obligation to obtain or acquire any material authorisation, notice, waiver,
concession, agreement or exemption from any Third Party or any person) other
than trade creditors or other liabilities incurred in the ordinary course of
business or in connection with the Combination,
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
Wider Capricorn Group is a party or by or to which any such member or any of
its assets is bound, entitled or subject, would reasonably be expected to
result in any of the events or circumstances as are referred to in
sub-paragraphs (i) to (viii) of this Condition;
Certain events occurring since Last Accounts Date
(h) save as disclosed, no member of the Wider Capricorn
Group having, since the Last Accounts Date:
(i) save as between Capricorn and wholly-owned subsidiaries of
Capricorn or for Capricorn Shares issued under or pursuant to the exercise of
options and vesting of awards granted under the Capricorn Share Plans, issued
or agreed to issue, authorised or proposed the issue of additional shares of
any class;
(ii) save as between Capricorn and wholly-owned subsidiaries of
Capricorn or for the grant of options and awards and other rights under the
Capricorn Share Plans, issued or agreed to issue, authorised or proposed the
issue of securities convertible into shares of any class or rights, warrants
or options to subscribe for, or acquire, any such shares or convertible
securities;
(iii) other than to another member of the Capricorn Group, prior
to completion of the Combination, recommended, declared, paid or made any
dividend or other distribution payable in cash or otherwise or made any bonus
issue;
(iv) save for intra-Capricorn Group transactions, merged or
demerged with any body corporate or acquired or disposed of or transferred,
mortgaged or charged or created any security interest over any assets or any
right, title or interest in any asset (including shares and trade investments)
or authorised or proposed or announced any intention to propose any merger,
demerger, disposal, transfer, mortgage, charge or security interest, in each
case, other than in the ordinary course of business and, in each case, to the
extent which is material in the context of the Wider Capricorn Group taken as
a whole;
(v) save for intra-Capricorn Group transactions, made or
authorised or proposed or announced an intention to propose any change in its
loan capital in each case, to the extent which is material in the context of
the Wider Capricorn Group taken as a whole;
(vi) issued, authorised or proposed the issue of, or made any
change in or to, any debentures or (save for intra-Capricorn Group
transactions), save in the ordinary course of business, incurred or increased
any indebtedness or become subject to any contingent liability, to the extent
which is material in the context of the Wider Capricorn Group taken as a
whole;
(vii) purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities or reduced
or, save in respect to the Capricorn tender offer which completed on 6 April
2022, the $25 million tranche of the Capricorn share repurchase programme
which was announced by Capricorn on 7 April 2022 and the matters mentioned in
sub-paragraphs (i) or (ii) above, made any other change to any part of its
share capital in each case, to the extent which is material in the context of
the Wider Capricorn Group taken as a whole;
(viii) save for intra-Capricorn Group transactions, implemented, or
authorised, proposed or announced its intention to implement, any
reconstruction, merger, demerger, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of business;
(ix) entered into or varied or announced its intention to enter
into or vary any contract, transaction or commitment (whether in respect of
capital expenditure or otherwise) which is of a long term, onerous or unusual
nature or magnitude or which involves an obligation of such a nature or
magnitude other than in the ordinary course of business, in each case, to the
extent which is material in the context of the Wider Capricorn Group taken as
a whole;
(x) (other than in respect of a member which is dormant and was
solvent at the relevant time) taken any corporate action or steps or had any
legal proceedings started or threatened against it in relation to the
suspension of payments, a moratorium of any indebtedness, its winding-up,
dissolution or reorganisation or for the appointment of a receiver,
administrative receiver, administrator, manager, trustee or similar officer of
all or any part of its assets or revenues or any analogous proceedings in any
jurisdiction or appointed any analogous person in any jurisdiction or had any
such person appointed, in each case, to the extent which is material in the
context of the Wider Capricorn Group taken as a whole;
(xi) entered into any contract, transaction or arrangement which
would be restrictive on the business of any member of the Wider Capricorn
Group or the Wider Tullow Group other than of a nature and extent which is
normal in the context of the business concerned;
(xii) waived or compromised any claim otherwise than in the
ordinary course of business which is material in the context of the Wider
Capricorn Group taken as a whole;
(xiii) made any alteration to its memorandum or articles of
association or other incorporation documents, to the extent which is material
in the context of the Wider Capricorn Group taken as a whole;
(xiv) been unable, or admitted in writing that it is unable, to pay
its debts or commenced negotiations with one or more of its creditors with a
view to rescheduling or restructuring any of its indebtedness, 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;
(xv) entered into any contract, commitment, arrangement or agreement
otherwise than in the ordinary course of business or passed any resolution or
made any offer (which remains open for acceptance) with respect to any of the
transactions, matters or events referred to in this Condition;
(xvi) made or agreed or consented to any change to:
a) the terms of the trust deeds constituting the pension scheme(s)
established by any member of the Wider Capricorn Group for its directors,
employees or their dependents, including the Capricorn defined contribution
pension scheme;
b) the contributions payable to any such scheme(s) or to the benefits
which accrue or to the pensions which are payable thereunder;
c) the basis on which qualification for, or accrual or entitlement to,
such benefits or pensions are calculated or determined; or
d) the basis upon which the liabilities (including pensions) of such
pension schemes are funded, valued or made,
in each case, to the extent which is material in the context of the Wider
Capricorn Group taken as a whole;
(xvii) proposed, agreed to provide or modified the terms of any of the
Capricorn Share Plans or other benefit constituting a material change relating
to the employment or termination of employment of a material category of
persons employed by the Wider Capricorn Group or which constitutes a material
change to the terms or conditions of employment of any senior employee of the
Wider Capricorn Group, save as agreed by the Panel (if required) and by
Tullow, or entered into or changed the terms of any contract with any director
or senior executive;
(xviii) taken (or agreed to take) any action which requires, or would
require, the consent of the Panel or the approval of Capricorn Shareholders in
general meeting in accordance with, or as contemplated by, Rule 21.1 of the
Code;
(xix) entered into or varied in a material way the terms of, any
contracts, agreement or arrangement with any of the directors or senior
executives of any members of the Wider Capricorn Group; or
(xx) waived or compromised any claim which is material in the
context of the Wider Capricorn Group taken as a whole, otherwise than in the
ordinary course of business.
No adverse change, litigation or regulatory enquiry
(i) save as disclosed, since the Last Accounts Date:
(i) no adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or operational
performance of any member of the Wider Capricorn Group which, in any such
case, is material in the context of the Wider Capricorn Group taken as a whole
and no circumstances have arisen which would reasonably be expected to result
in such adverse change or deterioration;
(ii) no litigation, arbitration proceedings, prosecution or
other legal proceedings to which any member of the Wider Capricorn Group is a
party (whether as a plaintiff, defendant or otherwise) and no enquiry, review
or investigation by, or complaint or reference to, any Third Party or other
investigative body against or in respect of any member of the Wider Capricorn
Group having been instituted, announced, implemented or threatened by or
against or remaining outstanding in respect of any member of the Wider
Capricorn Group which in any such case has had or might reasonably be expected
to have an adverse effect on the Wider Capricorn Group taken as a whole or in
the context of the Combination;
(iii) no contingent or other liability of any member of the
Wider Capricorn Group having arisen or become apparent to Tullow or increased
which has had or would reasonably be expected to have an adverse effect on the
Wider Capricorn Group taken as a whole or in the context of the Combination;
(iv) no enquiry or investigation by, or complaint or reference to,
any Third Party having been threatened, announced, implemented, instituted by
or remaining outstanding against or in respect of any member of the Wider
Capricorn Group which in any case is material in the context of the Wider
Capricorn Group taken as a whole;
(v) no member of the Wider Capricorn Group having conducted its
business in breach of any applicable laws and regulations and which is
material in the context of the Wider Capricorn Group as a whole or material in
the context of the Combination; and
(vi) no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence or permit
held by any member of the Wider Capricorn Group which is necessary for the
proper carrying on of its business and the withdrawal, cancellation,
termination or modification of which has had, or would reasonably be expected
to have, an adverse effect on the Wider Capricorn Group taken as a whole;
No discovery of certain matters
(j) save as disclosed, Tullow not having discovered:
(i) that any financial, business or other information
concerning the Wider Capricorn Group as contained in the information publicly
disclosed at any time by or on behalf of any member of the Wider Capricorn
Group is materially misleading, contains a material misrepresentation of fact
or omits to state a fact necessary to make that information not misleading and
which was not subsequently corrected before the date of this Announcement by
disclosure either publicly or otherwise to Tullow or its professional
advisers, in each case, to the extent which is material in the context of the
Wider Capricorn Group taken as a whole;
(ii) that any member of the Wider Capricorn Group or
partnership, company or other entity in which any member of the Wider
Capricorn Group has a significant economic interest and which is not a
subsidiary undertaking of Capricorn, is subject to any liability (contingent
or otherwise) which is not disclosed in the 2021 Capricorn annual report and
accounts, in each case, to the extent which is material in the context of the
Wider Capricorn Group taken as a whole; or
(iii) any information which affects the import of any
information disclosed at any time by or on behalf of any member of the Wider
Capricorn Group and which is material in the context of the Wider Capricorn
Group taken as a whole;
(k) save as disclosed, Tullow not having discovered that:
(i) any past or present member of the Wider Capricorn Group
has failed to comply with any and/or all applicable legislation or regulation,
of any jurisdiction with regard to the use, treatment, handling, storage,
carriage, disposal, spillage, release, discharge, leak or emission of any
waste or hazardous substance or any substance likely to impair the environment
or harm human health or animal health or otherwise relating to environmental
matters or the health and safety of humans, or that there has otherwise been
any such use, treatment, handling, storage, carriage, disposal, spillage,
release, discharge, leak or emission (whether or not the same constituted a
non-compliance by any person with any such legislation or regulations, and
wherever the same may have taken place) any of which storage, carriage,
disposal, spillage, release, discharge, leak or emission would be likely to
give rise to any liability (actual or contingent) or cost on the part of any
member of the Wider Capricorn Group and which is material in the context of
the Wider Capricorn Group taken as a whole;
(ii) there is, or is likely to be, for any reason whatsoever,
any liability (actual or contingent) of any past or present member of the
Wider Capricorn Group to make good, remediate, repair, reinstate or clean up
any property or any controlled waters now or previously owned, occupied,
operated or made use of or controlled by any such past or present member of
the Wider Capricorn Group (or on its behalf) or by any person for which a
member of the Wider Capricorn Group is or has been responsible, or in which
any such member may have or previously have had or be deemed to have had an
interest, under any environmental legislation, regulation, notice, circular or
order of any Third Party and which is material in the context of the Wider
Capricorn Group taken as a whole;
(iii) circumstances exist (whether as a result of the
Combination or otherwise) which would be reasonably likely to lead to any
Third Party instituting, or whereby any member of the Wider Tullow Group or
any present or past member of the Wider Capricorn Group would be likely to be
required to institute, an environmental audit or take any other steps which
would in any such case be reasonably likely to result in any liability
(whether actual or contingent) to improve, modify existing or install new
plant, machinery or equipment or carry out changes in the processes currently
carried out or make good, remediate, repair, re-instate or clean up any land
or other asset currently or previously owned, occupied or made use of by any
past or present member of the Wider Capricorn Group (or on its behalf) or by
any person for which a member of the Wider Capricorn Group is or has been
responsible, or in which any such member may have or previously have had or be
deemed to have had an interest which is material in the context of the Wider
Capricorn Group taken as a whole; or
(iv) circumstances exist whereby a person or class of persons
would be likely to have any claim or claims in respect of any product or
process of manufacture or materials used therein currently or previously
manufactured, sold or carried out by any past or present member of the Wider
Capricorn Group which claim or claims would be likely, materially and
adversely, to affect any member of the Wider Capricorn Group and which is
material in the context of the Wider Capricorn Group taken as a whole; and
Anti-corruption, economic sanctions, criminal property and money laundering
(l) save as disclosed, Tullow not having discovered
that, in each case to an extent which is material in the context of the Wider
Capricorn Group taken as a whole:
(i) (A) any past or present member, director, officer or
employee of the Wider Capricorn Group is or has at any time engaged in any
activity, practice or conduct which would constitute an offence under the
Bribery Act 2010, the U.S. Foreign Corrupt Practices Act of 1977 or any other
applicable anti-corruption or anti-bribery law, rule or regulation or any
other applicable law, rule, or regulation concerning improper payments or
kickbacks or (B) any person that performs or has performed services for or on
behalf of the Wider Capricorn Group is or has at any time engaged in any
activity, practice or conduct in connection with the performance of such
services which would constitute an offence under the Bribery Act 2010, the
U.S. Foreign Corrupt Practices Act of 1977 or any other applicable
anti-corruption or anti-bribery law, rule or regulation or any other
applicable law, rule, or regulation concerning improper payments or kickbacks;
or
(ii) any asset of any member of the Wider Capricorn Group
constitutes criminal property as defined by section 340(3) of the Proceeds of
Crime Act 2002 (but disregarding paragraph (b) of that definition) or proceeds
of crime under any other applicable law, rule, or regulation concerning money
laundering or proceeds of crime or any member of the Wider Capricorn Group is
found to have engaged in activities constituting money laundering under any
applicable law, rule, or regulation concerning money laundering; or
(iii) any past or present member, director, officer or employee
of the Wider Capricorn Group, or any other person for whom any such person may
be liable or responsible, is or has engaged in any conduct which would violate
applicable economic sanctions or dealt with, made any investments in, made any
funds or assets available to or received any funds or assets from:
(a) any government, entity or individual in respect of which U.S., UK
or European Union persons, or persons operating in those territories, are
prohibited from engaging in activities or doing business, or from receiving or
making available funds or economic resources, by U.S., UK or European Union
laws or regulations, including the economic sanctions administered by the
United States Office of Foreign Assets Control, or HMRC; or
(b) any government, entity or individual targeted by any of the
economic sanctions of the United Nations, the United States, the United
Kingdom, the European Union or any of its member states, save that this shall
not apply if and to the extent that it is or would be unenforceable by reason
of breach of any applicable Blocking Law; or
(iv) any past or present member, director, officer or employee of
the Wider Capricorn Group, or any other person for whom any such person may be
liable or responsible:
(a) has engaged in conduct which would violate any relevant
anti-terrorism laws, rules, or regulations, including but not limited to the
U.S. Anti-Terrorism Act;
(b) has engaged in conduct which would violate any relevant
anti-boycott law, rule, or regulation or any applicable export controls,
including but not limited to the Export Administration Regulations
administered and enforced by the U.S. Department of Commerce or the
International Traffic in Arms Regulations administered and enforced by the
U.S. Department of State;
(c) has engaged in conduct which would violate any relevant laws,
rules, or regulations concerning human rights, including but not limited to
any law, rule, or regulation concerning false imprisonment, torture or other
cruel and unusual punishment, or child labour; or
(d) is debarred or otherwise rendered ineligible to bid for or to
perform contracts for or with any government, governmental instrumentality, or
international organization or found to have violated any applicable law, rule,
or regulation concerning government contracting or public procurement; or
(v) any member of the Wider Capricorn Group is or has been
engaged in any transaction which would cause Tullow to be in breach of any law
or regulation upon completion of the Combination, including but not limited to
the economic sanctions of the United States Office of Foreign Assets Control,
or HMRC, or any other relevant government authority.
For the purposes of these Conditions the "Wider Capricorn Group" means
Capricorn and its subsidiary undertakings, associated undertakings and any
other undertaking in which Capricorn and/or such undertakings (aggregating
their interests) have a significant interest and the "Wider Tullow Group"
means Tullow and its subsidiary undertakings, associated undertakings and any
other undertaking in which Tullow and/or such undertakings (aggregating their
interests) have a significant interest and for these purposes subsidiary
undertaking and undertaking have the meanings given by the Companies Act,
associated undertaking has the meaning given by paragraph 19 of Schedule 6 to
the Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008, other than paragraph 19(1)(b) of Schedule 6 to those
regulations which shall be excluded for this purpose, and significant interest
means a direct or indirect interest in 20 per cent. or more of the total
voting rights conferred by the equity share capital (as defined in section 548
of the Companies Act).
Part 2 Waiver and invocation of Conditions
1. The Combination will be subject to the satisfaction (or
waiver, if permitted) of the Conditions set out in this Appendix 1, to the
further terms set out in this Appendix 1, and to the full terms and conditions
which will be set out in the Scheme Document.
2. Subject to the requirements of the Panel, Tullow reserves
the right to waive, in whole or in part, all or any of the Conditions set out
in Part 1 of Appendix 1 above, except for Conditions 2, 3(a)(i), 3(a)(ii) and
3(b), which cannot be waived. The deadlines in the Conditions set out at
paragraphs 1(a), 1(b) and 1(c) may also be extended to such later date as may
be agreed in writing by Tullow and Capricorn (with the Panel's consent and
approval of the Court, if required). If any of the Conditions set out at
paragraphs 1(a), 1(b) and 1(c) are not satisfied by the relevant deadline
specified in the relevant Condition, Tullow shall make an announcement by 8.00
a.m. on the Business Day following such deadline confirming whether, subject
to paragraph 3 below and the other sub-paragraphs of this Part 2, it has
invoked the relevant Condition, waived the relevant deadline or agreed with
Capricorn to extend the relevant deadline.
3. Tullow shall be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as satisfied any
of Conditions 3(c) to (l) (inclusive) by a date earlier than the latest date
specified above for the fulfilment of the relevant Condition, notwithstanding
that the other Conditions to the Combination may at such earlier date have
been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any such Condition(s) may not be capable of
fulfilment.
4. Under Rule 13.5(a) of the Code, Tullow may not invoke a
Condition to the Combination so as to cause the Combination not to proceed or
to be withdrawn unless the circumstances which give rise to the right to
invoke the Condition are of material significance to Tullow in the context of
the Combination.
5. Tullow may only invoke a condition that is subject to Rule
13.5(a) with the consent of the Panel and any condition that is subject to
Rule 13.5(a) may be waived by Tullow.
6. Conditions 1, 2, 3(a)(i), 3(a)(ii) and 3(b) are not subject
to Rule 13.5(a) of the Code.
7. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other Condition.
Conditions 3(b) to (l) inclusive must be fulfilled or (if capable of waiver)
be waived by Tullow by 11.59 p.m. on the date immediately preceding the Court
Sanction Hearing, failing which the Scheme shall lapse.
Part 3 Certain further terms of the Combination
8. Tullow reserves the right to elect (subject to the consent
of the Panel and the terms of the Co-operation Agreement) to implement the
Combination by way of a takeover offer (as defined in section 974 of the
Companies Act). In such event, such offer will (unless otherwise determined
by Tullow and subject to the consent of the Panel) be implemented on the same
terms and conditions subject to the terms of the Co-operation Agreement and
appropriate amendments to reflect the change in method of effecting the
Combination, which may include changing the consideration structure under the
terms of the Combination and (without limitation and subject to the consent of
the Panel) an acceptance condition set at 75 per cent. (or such lesser
percentage, being more than 50 per cent., as Tullow may decide) of the voting
rights then exercisable at a general meeting of Capricorn, including, for this
purpose, any such voting rights attaching to Capricorn Shares that are
unconditionally allotted or issued, and to any Treasury Shares which are
unconditionally transferred or sold by Capricorn, before the takeover offer
becomes or is declared unconditional, whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise.
9. The Scheme and any dispute or claim arising out of, or in
connection with, it (whether contractual or non-contractual in nature) will be
governed by Scots law, and will be subject to the jurisdiction of the Scottish
courts. The Combination will be subject to the applicable requirements of the
Code, the Panel, the FCA, the London Stock Exchange, Euronext Dublin, the
Ghana Stock Exchange, the Ghana SEC, the Listing Rules, the Irish Listing
Rules and the Ghana Listing Rules.
10. The Capricorn Shares will be acquired under the Combination
fully paid and free from all liens, equitable interests, charges,
encumbrances, options, rights of pre-emption and any other third party rights
or interests of any nature whatsoever and together with all rights attaching
thereto, including the right to receive and retain all dividends and other
distributions and returns of value declared, paid or made after the date of
this Announcement. No dividends or other distributions are intended to be
announced, declared, made or paid by Tullow or Capricorn following this
Announcement and until the Scheme becomes Effective (or lapses), other than in
connection with the $25 million tranche of the Capricorn share buyback
programme announced by Capricorn on 7 April 2022. Notwithstanding the
foregoing intention, if after the date of this Announcement and prior to the
Effective Date any dividend or distribution is announced, declared, made, paid
or becomes payable by Capricorn (other than in connection with the $25 million
tranche of the Capricorn share buyback programme announced by Capricorn on 7
April 2022), Tullow will have the right to reduce the value of the
consideration payable for the Capricorn Shares by up to the amount of any such
dividend or distribution except where the Capricorn Shares are or will be
acquired pursuant to the Scheme on a basis which entitles Tullow to receive
the dividend or distribution and to retain it.
11. The availability of the Combination and/or New Tullow Shares
to persons not resident in the United Kingdom may be affected by the laws of
the relevant jurisdictions. Persons who are not resident in the United
Kingdom should inform themselves about and observe any applicable
requirements. The New Tullow Shares to be issued pursuant to the Combination
have not been and, unless Tullow otherwise elects in the event of a Takeover
Offer, will not be, registered under the U.S. Securities Act or under any laws
of any state, district or other jurisdiction, of the United States, under any
of the relevant securities laws of any other Restricted Jurisdiction.
Accordingly, the New Tullow Shares may not be offered, sold or delivered,
directly or indirectly, in the United States or any other Restricted
Jurisdiction, except pursuant to exemptions from applicable requirements of
any such jurisdiction, including the exemption from the registration
requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof.
12. The New Tullow 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 Tullow, including the right to receive and retain in full
all dividends and other distributions (if any) announced, declared, made or
paid, or any other return of value (whether by reduction of share capital or
share premium account or otherwise) made, in each case by reference to a
record date falling on or after the Effective Date. Applications will be made
to the FCA and the London Stock Exchange, respectively, for the New Tullow
Shares to be admitted to the premium listing segment of the Official List of
the FCA and to trading on the main market for listed securities of the London
Stock Exchange. Applications will also be made to the Ghana Stock Exchange
and the Ghana SEC for the New Tullow Shares to be admitted to a secondary
listing on the First Official List of the Ghana Stock Exchange and to trading
on the Ghana Stock Exchange. Subject to the outcome of Tullow's review as to
the continued appropriateness of the continued listing of its shares on the
secondary listing segment of the Official List of Euronext Dublin and to
trading on the Euronext Dublin Market, if Tullow decides to maintain such
listing and admission to trading then applications will also be made to
Euronext Dublin for the New Tullow Shares to be admitted to the secondary
listing segment of the Official List of Euronext Dublin and to trading on the
Euronext Dublin Market operated by Euronext Dublin.
13. Fractions of New Tullow Shares will not be allotted or issued
to Capricorn Shareholders. Fractional entitlements to New Tullow Shares will
be aggregated and sold in the market and the net proceeds of sale distributed
pro rata to the Capricorn Shareholders entitled thereto. However, individual
entitlements to amounts of less than £5 will not be paid to Capricorn
Shareholders but will be retained for the benefit of the Combined Group.
Appendix 2
SOurces and bases of information
In this Announcement, unless otherwise stated or the context otherwise
requires, the following bases and sources have been used:
1. All references to Tullow Shares are to Tullow ordinary
shares of 10 pence each, and references to Capricorn Shares are to Capricorn
ordinary shares of 21/13 pence each.
2. The fully diluted share capital of Tullow (being
1,494,637,596 Tullow Shares) is calculated on the basis of:
a. the 1,437,999,835 Tullow Shares in issue as at close of business on 31
May 2022 (being the last Business Day prior to the date of this Announcement);
and
b. any further Tullow Shares which may be issued on or after the date of
this Announcement on the exercise of options or vesting of awards under the
Tullow Share Plans, amounting in aggregate to 56,637,761 Tullow Shares.
3. The fully diluted share capital of Capricorn (being
348,179,346 Capricorn Shares) is calculated on the basis of:
a. the 316,338,439 Capricorn Shares in issue as at close of business on 31
May 2022 (being the last Business Day prior to the date of this Announcement);
and
b. any further Capricorn Shares which may be issued on or after the date
of this Announcement on the exercise of options or vesting of awards under the
Capricorn Share Plans, amounting in aggregate to 31,840,907 Capricorn Shares.
4. On the date of this Announcement, each of Tullow and
Capricorn holds zero ordinary shares in treasury.
5. The financial information relating to Tullow is extracted
or derived (without adjustment) from the audited consolidated financial
statements of Tullow for the year ended 31 December 2021. Combined Group 2021A
leverage is calculated using Tullow cash balances at 31 December 2021;
Combined Group 2021A liquidity is calculated using Tullow cash balances at 31
December 2021 plus undrawn Tullow RCF facilities of $500 million.
6. The financial information relating to Capricorn is
extracted or derived (without adjustment) from the audited consolidated
financial statements of Capricorn for the year ended 31 December 2021.
Combined Group 2021A leverage and liquidity is calculated using Capricorn cash
balances at 31 December 2021, adjusted for subsequent receipt of $1.056
billion India tax net proceeds less $522 million capital returned to Capricorn
Shareholders via Tender Offer and share buyback.
7. The synergy numbers are unaudited and are based on analysis
by Tullow's management and on Tullow's internal records. Further information
underlying the Quantified Financial Benefits Statement contained in this
Announcement is provided in Appendix 4 to this Announcement.
8. Certain figures in this Announcement have been subject to
rounding adjustments.
Appendix 3
IRREVOCABLE UNDERTAKINGS
Part A - Irrevocable undertakings from Capricorn Directors
The following Capricorn Directors have given irrevocable undertakings to,
amongst other things, vote in favour of the Scheme at the Court Meeting and
the resolutions to be proposed at the Capricorn General Meeting in relation to
the following Capricorn Shares currently held by them as well as any further
Capricorn Shares which they may become the registered or beneficial owner of
or otherwise interested in:
Name of Capricorn Director Number of Capricorn Shares Percentage of Capricorn Shares in issue as at 31 May 2022 (being the last
Business Day prior to this Announcement)
Simon Thomson 703,190 0.2%
James Smith 31,864 0.0%
Nicoletta Giadrossi - -
Peter Kallos 9,292 0.0%
Keith Lough - -
Alison Wood - -
Catherine Krajicek - -
Erik Daugbjerg - -
Luis Araujo - -
The obligations of the Capricorn Directors under the irrevocable undertakings
they have given shall lapse and cease to have effect if:
(a) the Scheme Document is not despatched to
Capricorn shareholders on or before the Long Stop Date or such later time as
may be agreed by the Panel save that, if Tullow subsequently elects to proceed
by way of a Takeover Offer (in accordance with and subject to the terms of the
Co-operation Agreement) on or before the Long Stop Date, the Offer Document is
not despatched to Capricorn shareholders within 28 days of the date of
publication of an RIS announcement announcing the change in structure (or such
other date as the Panel may require); or
(b) the Scheme does not become effective on or
before the Long Stop Date, provided that the reason is not because Tullow has
elected (in accordance with and subject to the terms of the Co-operation
Agreement) to proceed by way of a Takeover Offer rather than by way of a
Scheme; or
(c) the Scheme (or Takeover Offer, as applicable)
lapses or is withdrawn in accordance with its terms, provided that the reason
is not because Tullow has elected (in accordance with and subject to the terms
of the Co-operation Agreement) to proceed by way of a Takeover Offer rather
than by way of a Scheme; or
(d) any competing offer for the entire issued and
to be issued share capital of Capricorn becomes or is declared unconditional
in all respects (if implemented by way of takeover offer) or becomes effective
(if implemented by way of scheme of arrangement); or
(e) the Co-operation Agreement is terminated in
accordance with its terms; or
(f) Tullow announces, with the Panel's consent,
that it does not intend to make or proceed with the Combination and no new
replacement scheme or Takeover Offer is announced by Tullow in accordance with
Rule 2.7 of the Code at the same time, which has been recommended by
Capricorn.
Part B - Irrevocable undertakings from Tullow Directors
The following Tullow Directors have given irrevocable undertakings to, amongst
other things, vote in favour of the Tullow Resolutions at the Tullow General
Meeting in relation to the following Tullow Shares currently held by them as
well as any further Tullow Shares which they may become the registered or
beneficial owner of or otherwise interested in:
Name of Tullow Director Number of Tullow Shares Percentage of Tullow Shares in issue as at 31 May 2022 (being the last
Business Day prior to this Announcement)
Rahul Dhir 1,346,000 0.1%
Phuthuma Nhleko - -
Mike Daly 4,795 0.0%
Jeremy Wilson 87,959 0.0%
Genevieve Sangudi - -
Sheila Khama 7,070 0.0%
Martin Greenslade 60,000 0.0%
Mitchell Ingram 50,000 0.0%
The obligations of the Tullow Directors under the irrevocable undertakings
they have given shall lapse and cease to have effect if:
(a) the Scheme does not become effective on or before the Long Stop Date,
provided that the reason is not because Tullow has elected (in accordance with
and subject to the terms of the Co-operation Agreement) to proceed by way of a
Takeover Offer rather than by way of a Scheme; or
(b) the Scheme (or Takeover Offer, as applicable) lapses or is withdrawn in
accordance with its terms, provided that the reason is not because Tullow has
elected (in accordance with and subject to the terms of the Co-operation
Agreement) to proceed by way of a Takeover Offer rather than by way of a
Scheme; or
(c) the Co-operation Agreement is terminated in accordance with its terms;
or
(d) Tullow announces, with the Panel's consent, that it does not intend to
make or proceed with the Combination and no new replacement scheme or Takeover
Offer is announced by Tullow in accordance with Rule 2.7 of the Code at the
same time, which has been recommended by Capricorn.
Appendix 4
QUantified financial benefits STATEMENT AND reports
PART A
Paragraph 4 of Part II of this Announcement (Financial benefits and effects of
the Combination) contains statements of estimated cost savings and synergies
arising from the Combination (together, the "Quantified Financial Benefits
Statement").
A copy of the Quantified Financial Benefits Statement is set out below.
"The Tullow Board, having reviewed and analysed the potential cost synergies
of the Combination, and taking into account the factors it can influence,
believes the Combination will result in $50 million of pre-tax net cash cost
synergies on an annual run-rate basis by the second anniversary of the
completion of the Combination.
The quantified net cash cost synergies are expected to originate from the
following areas, subject to any obligations to inform and consult with
employees and/or their representatives:
· Corporate: approximately 26% of the identified net cash cost
synergies are expected to be generated from de-duplication and rationalisation
of Board, executive leadership and other costs associated with a listed
company;
· Central operational and technical functions: 32% of the
identified net cash cost synergies are expected to be generated from
consolidation and rationalisation of central operational and technical
functions, driven by increased scale and alignment of operating models; and
· Administrative functions: 42% of the identified net cash cost
synergies are expected to be generated from consolidation and de-duplication
of overlapping administrative functions (including IT) and third-party spend.
The Tullow Board expects approximately 71% of these anticipated quantified net
cash cost synergies to be achieved by the end of the first twelve month period
following completion of the Combination.
The Tullow Board estimates that realisation of these net cash cost synergies
will give rise to one-off costs of approximately $45 million incurred in the
two years post-completion of the Combination. The Tullow Board has considered
potential areas of dis-synergy and these were determined to be immaterial for
the analysis.
These anticipated net cash cost synergies will accrue as a direct result of
the Combination and would not be achieved on a standalone basis."
Further information on the bases of belief supporting the Quantified Financial
Benefits Statement, including the principal assumptions and sources of
information, is set out below.
Bases of belief
Following commencement of discussions regarding the Combination, teams
comprised of Executive leadership and senior finance and HR personnel at
Tullow and Capricorn have worked to identify, challenge, and quantify
potential synergies available from the Combination as well as to estimate the
potential costs to achieve such net cash cost synergies and any associated
costs.
In preparing the Quantified Financial Benefits Statement, both Tullow and
Capricorn have shared certain organisational and financial information to
facilitate analysis in support of evaluating the potential net cash cost
synergies available from the creation of the Combined Group. The Tullow team
has sought to include in the synergy analysis those costs which it believes
will either be reduced or eliminated as part of the Combined Group.
In circumstances where the scope of data exchanged or the individuals having
access to it has been limited for commercial or other reasons, Tullow has made
estimates and assumptions to aid its development of individual synergy
initiatives.
The synergy assumptions have been risk adjusted.
In arriving at the Quantified Financial Benefits Statement, the Tullow Board
has, in addition, made the following assumptions (some or all of which are
outside the influence of the Tullow Group):
· No material change to macroeconomic, political, legal or
regulatory conditions in the markets or regions in which Tullow and Capricorn
operate;
· No material change in accounting standards;
· No material change to the underlying operations of either
business from the Combination;
· No material impact from divestments from either the Tullow or
Capricorn existing businesses;
· Net cash cost synergies are estimated net of General and
Administrative costs charged to joint venture partners, based on the combined
average recharge of the current asset base and joint venture arrangements of
the Tullow and Capricorn existing joint ventures (with no future changes
assumed);
· The actual realised synergy benefit may arise in net General and
Administrative, operating expenditure or capital expenditure;
· No material change in current foreign exchange rates;
· D&O insurance is assumed to reduce in line with the expected
improved financial risk of the Combined Group.
The baselines used for the quantified net cash cost synergies are:
· Relating to non-payroll costs: FY22 forecast gross cash cost
information for both Tullow and Capricorn (including three months of FY22
actuals for Capricorn).
· Relating to payroll: latest available headcount and associated
costs for both Tullow and Capricorn.
Reports
As required by Rule 28.1(a) of the Code, KPMG, as reporting accountants to
Tullow, has provided a report stating that, in its opinion, the Quantified
Financial Benefits Statement has been properly compiled on the basis stated.
In addition, PJT Partners as lead financial adviser to Tullow, has provided a
report stating that, in its opinion, the Quantified Financial Benefits
Statement has been prepared with due care and consideration. Copies of these
reports are included in Part B and Part C of this Appendix 4.
KPMG and PJT Partners have given and not withdrawn their consent to the
publication of their reports in the form and context in which they are
included.
Notes
The statements of estimated synergies relate to future actions and
circumstances which, by their nature, involve risks, uncertainties and
contingencies. As a result, the synergies referred to may not be achieved, or
may be achieved later or sooner than estimated, or those achieved could be
materially different from those estimated.
Due to the scale of the Combined Group, there may be additional changes to the
Combined Group's operations. As a result, and given the fact that the changes
relate to the future, the resulting synergies may be materially greater or
less than those estimated.
No statement should be construed as a profit forecast or interpreted to mean
that the Combined Group's earnings in the first full year following
implementation of the Combination, or in any subsequent period, would
necessarily match or be greater than or be less than those of Tullow and/or
Capricorn for the relevant preceding financial period or any other period.
PART B
REPORT FROM KPMG LLP ON QUANTIFIED FINANCIAL BENEFITS STATEMENT
Private & confidential
The Directors
Tullow Oil PLC
9 Chiswick Park,
566 Chiswick High Road, London,
W4 5XT
PJT Partners (UK) Limited
One Curzon Street
London
W1J 5HD
1 June 2022
Ladies and Gentlemen
Tullow Oil PLC - Published report on quantified financial benefits statement
We report on the statement ('the Statement') made by the directors of Tullow
Oil PLC ('the Directors') in Part A of Appendix 4 to this Announcement to the
effect that:
"The Tullow Board, having reviewed and analysed the potential cost synergies
of the Combination, and taking into account the factors it can influence,
believes the Combination will result in $50 million of pre-tax net cash cost
synergies on an annual run-rate basis by the second anniversary of the
completion of the Combination.
The quantified net cash cost synergies are expected to originate from the
following areas, subject to any obligations to inform and consult with
employees and/or their representatives:
· Corporate: approximately 26% of the identified net cash cost
synergies are expected to be generated from de-duplication and rationalisation
of Board, executive leadership and other costs associated with a listed
company;
· Central operational and technical functions: 32% of the
identified net cash cost synergies are expected to be generated from
consolidation and rationalisation of central operational and technical
functions, driven by increased scale and alignment of operating models; and
· Administrative functions: 42% of the identified net cash cost
synergies are expected to be generated from consolidation and de-duplication
of overlapping administrative functions (including IT) and third-party spend.
The Tullow Board expects approximately 71% of these anticipated quantified net
cash cost synergies to be achieved by the end of the first twelve month period
following completion of the Combination.
The Tullow Board estimates that realisation of these net cash cost synergies
will give rise to one-off costs of approximately $45 million incurred in the
two years post-completion of the Combination. The Tullow Board has considered
potential areas of dis-synergy and these were determined to be immaterial for
the analysis.
These anticipated net cash cost synergies will accrue as a direct result of
the Combination and would not be achieved on a standalone basis."
This report is required by Rule 28.1(a) of the City Code on Takeovers and
Mergers ('the City Code') and is given for the purpose of complying with that
requirement and for no other purpose.
Opinion
In our opinion, the Statement has been properly compiled on the basis stated.
The Statement has been made in the context of the disclosures in Part A of
Appendix 4 to this Announcement setting out, inter alia, the basis of the
Directors' belief (including the principal assumptions and sources of
information) supporting the Statement and their analysis and explanation of
the underlying constituent elements.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in
accordance with the requirements of Rule 28 of the City Code.
It is our responsibility to form an opinion, as required by Rule 28.1(a) of
the City Code as to whether the Statement has been properly compiled on the
basis stated and to report that opinion to you.
Save for any responsibility which we may have to those persons to whom this
report is expressly addressed, to the fullest extent permitted by law we do
not assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in connection with this report or our statement, required by and
given solely for the purposes of complying with Rule 23.2 of the City Code,
consenting to its inclusion in this Announcement.
Basis of preparation of the Statement
The Statement has been prepared on the basis stated in Part A of Appendix 4 to
this Announcement.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting
issued by the Financial Reporting Council in the United Kingdom (the 'FRC').
We are independent, and have fulfilled our other ethical responsibilities, in
accordance with the relevant ethical requirements of the FRC's Ethical
Standard as applied to Investment Circular Reporting Engagements.
We have discussed the Statement, together with the underlying plans, with the
Directors and PJT Partners (UK) Limited. Our work did not involve any
independent examination of any of the financial or other information
underlying the Statement.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Statement has been properly compiled on the basis stated.
Our work has not been carried out in accordance with auditing or other
standards and practices generally accepted in the United States of America and
accordingly should not be relied upon as if it had been carried out in
accordance with those standards and practices.
We do not express any opinion as to the achievability of the benefits
identified by the Directors in the Statement. The Statement is subject to
uncertainty as described in Appendix 4 to this Announcement. Since the
Statement relates to the future and may therefore be affected by unforeseen
events, we express no opinion as to whether the actual benefits achieved will
correspond to those anticipated in the Statement and the differences may be
material.
Yours faithfully,
KPMG LLP
PART C
REPORT FROM PJT PARTNERS ON QUANTIFIED FINANCIAL BENEFITS STATEMENT
The Directors
Tullow Oil PLC
9 Chiswick Park,
566 Chiswick High Road,
London,
W4 5XT
1 June 2022
Dear Ladies and Gentlemen,
Recommended all-share combination of Tullow Oil PLC ("Tullow") and Capricorn
Energy PLC ("Capricorn") - Report on Quantified Financial Benefits Statement
of Tullow
We refer to the Quantified Financial Benefits Statement, the bases of belief
thereof and the notes thereto (together, the "Statement") as set out in Part A
of Appendix 4 to this Announcement, for which the directors of Tullow (the
"Directors") are solely responsible under Rule 28.3(a) of the City Code on
Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions, accounting
policies, bases of calculation and sources of information referred to
therein), with the Directors and those officers and employees of Tullow who
developed the underlying plans, as well as with KPMG LLP ("KPMG"). The
Statement is subject to uncertainty as described in this Announcement and our
work did not involve an independent examination of any of the financial or
other information underlying the Statement.
We have relied upon the accuracy and completeness of all the financial and
other information provided to us by or on behalf of Tullow, or otherwise
discussed with or reviewed by us, and we have assumed such accuracy and
completeness for the purposes of providing this letter.
We do not express any view or opinion as to the achievability of the
quantified financial benefits identified by the Directors.
We have also reviewed the work carried out by KPMG and have discussed with
them the opinion set out in Part B of Appendix 4 to this Announcement
addressed to yourselves and ourselves on this matter, and the accounting
policies and bases of calculation for the Statement.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of
the Code and for no other purpose. We accept no responsibility to Tullow or
its shareholders or any person other than the Directors in respect of the
contents of this letter. We are acting exclusively as financial adviser to
Tullow and no one else in connection with the combination of Tullow and
Capricorn and it was for the purpose of complying with Rule 28.1(a)(ii) of the
Code that Tullow requested us to prepare this report on the Statement. No
person other than the Directors can rely on the contents of this letter, and
to the fullest extent permitted by law, we exclude all liability (whether in
contract, tort or otherwise) to any other person, in respect of this letter,
its results, or the work undertaken in connection with this letter, or any of
the results that can be derived from this letter or any written or oral
information provided in connection with this letter, and any such liability is
expressly disclaimed except to the extent that such liability cannot be
excluded by law.
On the basis of the foregoing, we consider that the Statement, for which you
as the Directors are solely responsible for the purposes of the Code, has been
prepared with due care and consideration.
Yours faithfully,
PJT Partners (UK) Limited
Appendix 5
DEFINITIONS
The following definitions apply throughout this Announcement unless the
context requires otherwise:
"Admission" the UK Admission, the Ghana Admission and the Irish Admission
"Announcement" this announcement
"Barclays" Barclays Bank PLC, acting through its Investment Bank
"Blocking Law" any provision of Council Regulation (EC) No. 2271/1996 of 22 November 1996 (or
any law implementing such Regulation in any member state of the European
Union) or any similar blocking or anti-boycott law
"Board" the board of directors
"Business Day" a day, other than a Saturday or Sunday or a public holiday in England, on
which banks in London are open for general commercial business other than
solely for trading and settlement in Euro
"Capricorn" Capricorn Energy PLC of 50 Lothian Road, Edinburgh, EH3 9BY
"Capricorn Directors" or "Capricorn Board" the board of directors of Capricorn and "Capricorn Director" means any of them
"Capricorn General Meeting" the general meeting of Capricorn Shareholders to be convened in connection
with the Combination, notice of which will be set out in the Scheme Document,
to consider and if thought fit approve the resolutions being proposed in
connection with the implementation of the Scheme, including any adjournment,
postponement or reconvening thereof
"Capricorn Group" Capricorn and its subsidiary undertakings
"Capricorn Shareholders" holders of Capricorn Shares
"Capricorn Shares" ordinary shares of 21/13 pence each in the capital of Capricorn
"Capricorn Share Plans" the Capricorn Long Term Incentive Plan (2017), the Capricorn Employee Share
Award Scheme (2015), the Capricorn Long Term Incentive Plan (2009), the
Capricorn 2010 Share Incentive Plan, the Capricorn Approved Share Option Plan
(2009) and the Capricorn Unapproved Share Option Plan (2009)
"CEO" Chief Executive Officer
"CFO" Chief Financial Officer
"Circular" the circular to be sent by Tullow to Tullow Shareholders summarising the
background to, and reasons for, the Combination, which will include a notice
convening the Tullow General Meeting
"Code" the City Code on Takeovers and Mergers, as amended from time to time
"Combination" the proposed all-share combination of Tullow and Capricorn to be implemented
by means of the Scheme or a Takeover Offer (as the case may be) on the terms
and subject to conditions set out in this Announcement
"Combined Group" the enlarged group comprising the Tullow Group and the Capricorn Group
"Companies Act" the Companies Act 2006, as amended from time to time
"Completion" the completion of the Combination
"Conditions" the conditions to the implementation of the Combination (including the Scheme)
which are set out in Appendix 1 to this Announcement and to be set out in the
Scheme Document
"Co-operation Agreement" the co-operation agreement entered into between Tullow and Capricorn dated 1
June 2022
"Court" the Court of Session in Edinburgh, Scotland
"Court Meeting" the meeting of Scheme Shareholders or of any class or classes thereof to be
convened by an order of the Court under section 896 the Companies Act, notice
of which will be set out in the Scheme Document, to consider and if thought
fit approve the Scheme (with or without amendment) including any adjournment,
postponement or reconvening thereof
"Court Order" the order of the Court sanctioning the Scheme under Part 26 of the Companies
Act
"Court Sanction Hearing" the hearing of the Court to sanction the Scheme under Part 26 of the Companies
Act including any adjournment, postponement or reconvening thereof
"Court Sanction Hearing Date" the date of the Court Sanction Hearing
"CREST" the relevant system (as defined in the Uncertificated Securities Regulations
2001 (SI 2001/3755), as it forms part of the domestic law of the United
Kingdom by virtue of the European Union (Withdrawal) Act 2018) in respect of
which Euroclear UK & International Ltd is the Operator (as defined in said
Regulations)
"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
"Disclosure Guidance and Transparency Rules" the disclosure guidance and transparency rules issued by the FCA pursuant to
Part 6 of FSMA
"Effective" in the context of the Combination:
(i) if the Combination is implemented by way of Scheme,
means the Scheme having become effective pursuant to its terms; or
(ii) if the Combination is implemented by way of a
Takeover Offer, such Takeover Offer having become or been declared
unconditional in accordance with its terms
"Effective Date" the date on which either: (i) the Scheme becomes effective in accordance with
its terms; or (ii) if Tullow elects to implement the Combination by way of a
Takeover Offer (subject to the consent of the Panel and the terms of the
Co-operation Agreement), the date on which the Takeover Offer becomes or is
declared unconditional in all respects
"EU Merger Regulation" Council Regulation (EC) No. 139/2004
"Euronext Dublin" The Irish Stock Exchange PLC, trading as Euronext Dublin
"Euronext Dublin Market" the Euronext Dublin Market, operated by Euronext Dublin
"FCA" the Financial Conduct Authority of the United Kingdom, acting in its capacity
as the competent authority for the purposes of FSMA
"Forms of Proxy" the forms to appoint a proxy to vote at the Court Meeting and the Capricorn
General Meeting
"FSMA" the Financial Services and Markets Act 2000, as amended from time to time
"Ghana Admission" admission of the New Tullow Shares to listing on the First Official List of
the Ghana Stock Exchange and to trading on the Ghana Stock Exchange
"Ghana SEC" the Securities and Exchange Commission of Ghana
"Irish Admission" admission of the New Tullow Shares to a secondary listing on the Official List
of Euronext Dublin and to trading on the Euronext Dublin Market operated by
Euronext Dublin
"Irish Listing Rules" Book I: Harmonised Rules of the Euronext Rule Book and Book II: Listing Rules
of Euronext Dublin, taken together
"kboepd" thousand barrels of oil equivalent per day
"KPMG" KPMG LLP
"Last Accounts Date" 31 December 2021
"Listing Rules" the listing rules issued by the FCA pursuant to Part 6 of FSMA
"Long Stop Date" 1 March 2023 or such later date as may be agreed by Tullow and Capricorn in
writing with the Panel's consent and (if required) as the Court may approve
"London Stock Exchange" London Stock Exchange PLC
"Morgan Stanley" Morgan Stanley & Co. International PLC
"New Tullow Shares" the new ordinary shares of 10 pence each in Tullow, to be issued and allotted
to Capricorn Shareholders in connection with the Combination
"Official List" the official list maintained by the FCA pursuant to Part 6 of FSMA
"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
"PJT Partners" PJT Partners (UK) Limited
"Prospectus" the prospectus to be published by Tullow at or around the same time as the
Scheme Document in respect of the New Tullow Shares to be issued to the Scheme
Shareholders in connection with the Combination and for the purpose of
Admission
"Quantified Financial Benefits Statement" the quantified financial benefits statement set out in Part A of Appendix 4 to
this Announcement
"Registrar of Companies" the Registrar of Companies in Scotland
"Regulatory Information Service" a primary information provider which has been approved by the FCA to
disseminate regulated information
"Restricted Jurisdiction" any jurisdiction where local laws or regulations may result in a significant
risk of civil, regulatory or criminal exposure if information concerning the
Combination is sent or made available to Capricorn Shareholders in that
jurisdiction
"Restricted Overseas Person" Capricorn Shareholders resident in, or nationals or citizens of, Restricted
Jurisdictions or who are nominees or custodians, trustees or guardians for,
citizens, residents or nationals of such Restricted Jurisdictions
"Rothschild & Co" N.M. Rothschild & Sons Limited
"Scheme" or "Scheme of Arrangement" the scheme of arrangement proposed to be made under Part 26 of the Companies
Act between Capricorn and the Scheme Shareholders to be set out in the Scheme
Document, with or subject to any modification, addition or condition approved
or imposed by the Court
"Scheme Document" the document to be sent to Capricorn Shareholders setting out, amongst other
things, the Scheme and notices convening the Court Meeting and the Capricorn
General Meeting
"Scheme Record Time" 6.00pm on the Business Day immediately preceding the Effective Date
"Scheme Shareholders" holders of Scheme Shares and a "Scheme Shareholder" shall mean any one of
those scheme shareholders
"Scheme Shares" the Capricorn Shares:
(i) in issue at the date of the Scheme Document and
which remain in issue at the Scheme Record Time;
(ii) (if any) issued after the date of the Scheme Document
but before the Voting Record Time and which remain in issue at the Scheme
Record Time; and
(iii) (if any) issued at or after the Voting Record Time but
at or before the Scheme Record Time on terms that the holder thereof shall be
bound by the Scheme or in respect of which the original or any subsequent
holders thereof are, or have agreed in writing to be, bound by the Scheme and,
in each case, which remain in issue at the Scheme Record Time
excluding, in any case, any Capricorn Shares held by or on behalf of Tullow or
the Tullow Group at the Scheme Record Time
"subsidiary" and "subsidiary undertaking" have the meanings given to them in the Companies Act
"Takeover Offer" should the Combination be implemented by way of a takeover offer as defined in
Chapter 3 of Part 28 of the Companies Act, the offer to be made by or on
behalf of Tullow to acquire the entire issued and to be issued share capital
of Capricorn and, where the context admits, any subsequent revision,
variation, extension or renewal of such offer
"Takeover Offer Document" should the Combination be implemented by way of the Takeover Offer, the
document to be sent to Capricorn Shareholders which will contain, inter alia,
the terms and conditions of the Takeover Offer
"Treasury Shares" shares held as treasury shares as defined in section 724(5) of the Companies
Act
"Tullow" Tullow Oil PLC of 9 Chiswick Park, 566 Chiswick High Road, London, W4 5XT
"Tullow Directors" or "Tullow Board" the board of directors of Tullow and "Tullow Director" means any of them
"Tullow General Meeting" the general meeting of Tullow Shareholders to be convened in connection with
the Combination, to consider and if thought fit approve the Tullow
Resolutions, including any adjournment, postponement or reconvening thereof
"Tullow Group" Tullow and its subsidiary undertakings
"Tullow Share Plans" the Tullow Incentive Plan, the Tullow Executive Share Award Plan, the Tullow
2010 Share Option Plan, the Tullow UK Share Incentive Plan, the Tullow Irish
Share Incentive Plan and the Tullow Save as You Earn Option Plan
"Tullow Shares" ordinary shares of 10 pence each in the capital of Tullow
"Tullow Resolutions" the resolutions to be proposed to Tullow Shareholders in connection with the
Combination, including to: (i) approve the Combination as a "class 1"
transaction for the purposes of the Listing Rules; and (ii) approve the
allotment and issue of the New Tullow Shares, and any amendment thereof
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"UK Admission" admission of the New Tullow Shares to listing on the premium listing segment
of the Official List of the FCA and to trading on the London Stock Exchange's
main market for listed securities
"UK Market Abuse Regulation" the UK version of the EU Market Abuse Regulation which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018
"UK Prospectus Regulation" the UK version of the EU Prospectus Regulation (2017/1129/EU) which is part of
UK law by virtue of the European Union (Withdrawal) Act 2018
"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
"U.S. Exchange Act" the United States Securities Exchange Act of 1934
"U.S. Securities Act" the United States Securities Act of 1933, as amended
"Voting Record Time" the time and date specified in the Scheme Document by reference to which
entitlement to vote at the Court Meeting will be determined, expected to be
6.30pm on the day which is two days before the date of the Court Meeting or if
the Court Meeting is adjourned, 6.30pm on the day which is two days before
such adjourned meeting
"Wider Capricorn Group" has the meaning given in Appendix 1
"Wider Tullow Group" has the meaning given in Appendix 1
"£" or "Sterling" pounds sterling, the lawful currency for the time being of the UK and
references to "pence" and "p" shall be construed accordingly
"$" or "U.S. dollars" United States dollars, the lawful currency for the time being of the U.S. and
references to "cents" shall be construed accordingly
All times referred to are London time unless otherwise stated.
All references to statutory provision or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or re-enacted from time to time and all
statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END MSCQFLBBLQLBBBQRecent news on Tullow Oil
See all newsREG - Tullow Oil PLC - Director/PDMR Shareholding
AnnouncementREG - Tullow Oil PLC - Total Voting Rights
AnnouncementREG - Tullow Oil PLC - 2025 Half Year Results
AnnouncementREG - Tullow Oil PLC - Directorate Change
AnnouncementREG - Tullow Oil PLC - Tullow completes sale of Gabon assets
Announcement