Capricorn Energy plc today said it remained resolute on its proposal to merge with Israeli partnership NewMed Energy Ltd.
REQUISITION NOTICE
The company outlined its position to shareholders in an open letter which also concerned a special dividend and the December 2022 requisition notice from Palliser Capital Master Fund Ltd.
The shareholder has raised concerns over the planned merger and called for the removal of seven directors and recommended six replacements.
STRATEGIC ALTERNATIVES
In its letter, Capricorn said that the “challenges of a standalone future as a subscale, non-operated E&P company, focused on Egypt with considerable working capital requirements” had led the company to review a comprehensive range of strategic alternatives.
“As part of this process, the board held 20+ meetings over the last 12 months in their review of alternatives, including mergers, liquidations, breakups and potential modifications to its strategy.
“The board engaged in discussions with multiple counterparties regarding potential transactions and thoroughly reviewed all proposals received.
“In evaluating all proposals, the board considered the potential value creation from a transaction against pursuing a standalone strategy (including a breakup or liquidation).”
VIEW OF PALLISER PLAN
Capricorn added that the merger with NewMed would deliver “significantly more value to shareholders”, specifically a cash return of some US$620 million which was $120m more than on a standalone basis.
The company said that Palliser had based its alternative plan on an “overstated value of Capricorn on a standalone basis” and relied on “several outdated and incorrect facts and assumptions”.
This included that Capricorn could immediately return to shareholders some $620m in cash on a standalone basis.
Capricorn added that Palliser had valued the contingent value rights at over $300m and underestimated the costs and challenges associated with optimising the Egyptian fiscal terms.
MEETING
Capricorn added it expected to issue the notice for Palliser’s requisitioned general meeting on 9 January 2023 for a meeting on 1 February 2023.
The company anticipates holding the meeting to vote on the proposed combination on or around the same date.
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