European Gas, formerly a Canning Basin, Western Australia explorer known as Kimberley Oil, re-badged itself after farming-in to several French and Italian CSM exploration blocks held by Heritage.
The merger, if successful, would result in European Gas acquiring Heritage’s entire issued share capital and thereby the remaining interest in various projects in France and Italy it does not already own. This will concentrate the ownership, control and financing of those projects within the enlarged group.
The terms under discussion involve European Gas acquiring Heritage’s share capital on the following basis:
If the offer is made, the consideration for all of the issued capital in Heritage Petroleum would be 31.5 million ordinary shares in European Gas, £859,344 in cash and 2.3 million options in European Gas with a strike price of $A1.00 and a two-year maturity.
Based on the closing bid price of shares in European Gas on the Australian Stock Exchange on October 11 of 80c a share and an exchange rate of £1=A$2.50, the value placed on each share in Heritage Petroleum and on each of its “in the money” options and warrants by the terms of the offer under discussion would be 19.1p.
Discussions are at an early stage and may or may not lead to an offer being made. Due diligence has yet to be commenced by both parties and any offer would be conditional on, inter alia, the successful completion of due diligence and on a minimum level of acceptances.
The parties have entered into an agreement pursuant to which they have agreed a period of exclusivity, in which to conduct the negotiations, which expires on December 31, 2006 or on March 31, 2007 if European Gas is required to publish a prospectus in connection with the proposed offer.
