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March 18, 2014
13:48 EDTVETVermilion Energy agrees to acquire southeast Saskatchewan assets
Vermilion Energy announced an arrangement agreement with a private southeast Saskatchewan producer for total consideration of $400M, comprised of cash and share consideration of $345M plus the assumption of $55M in debt. Vermilion has agreed to acquire all of the issued and outstanding common shares in the capital of Privateco, including all Privateco Shares issuable, in accordance with the terms of existing grants of options or warrants, prior to the effective time of the Arrangement. In aggregate, Privateco shareholders will receive $172.5M, or 50% of the consideration in the form of cash, to be funded from existing credit facilities, and $172.5M in the form of Vermilion shares. Based on a five-day weighted average trading price of $63.81 per Vermilion share, approximately 2.7M Vermilion Shares will be issued pursuant to the terms of the Arrangement. Holders of approximately 60% of Privateco Shares, on a fully-diluted basis, have entered into support agreements with Vermilion, and the Board of Directors of Privateco has unanimously approved the arrangement and recommended that Privateco shareholders vote in favor. The deal is expected to close on or about April 29, allowing Privateco shareholders to receive Vermilion's anticipated April dividend, which is expected to be paid on May 15. The acquisition is accretive on a fully-diluted per share basis for all pertinent metrics including production, fund flows from operations, reserves and net asset value. Making no deduction for undeveloped land value, transaction metrics equate to $38.92 per boe of 1P reserves, $24.20 per boe of 2P reserves, and $106,700 per flowing barrel of production.
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