Enterra Energy Trust said Monday that it has entered into an agreement under which a subsidiary will acquire all of the issued and outstanding common shares of Rocky Mountain Energy Corp.(RME).
Under the agreement, shareholders of Rocky will receive C$6.10 in cash (subject to an aggregate maximum of $10 million cash), 0.35078 of a trust unit of Enterra, or 0.35078 of an exchangeable share (each of which is exchangeable for a trust unit of Enterra) for each share of RME held. The transaction, including assumption of RME debt, has been valued at approximately C$55 million.
If the maximum cash is used and pro-rated among all Rocky Mountain Energy shareholders, those shareholders would receive approximately 80% consideration in Enterra trust units or exchangeable shares and 20% in cash, and Enterra would be issuing a combination of approximately 2.1 million trust units and exchangeable shares, which is less than 10% of the total number of Enterra trust units currently outstanding.
Lock-up agreements from certain directors and management of Rocky equaling 30.76% of Rocky’s outstanding common shares have been received. The transaction will require approval of 66 2/3% of the votes cast at a meeting of RME shareholders and court approval. The RME shareholders meeting is expected to be held on Sept. 28, and it is anticipated, assuming shareholder and court approval is obtained, that the transaction will close later that same day.
Acting as financial advisor to RME, FirstEnergy Capital Corp. has advised the company’s board of directors that they are of the opinion that the consideration to be provided to Rocky shareholders pursuant to the transaction is fair, from a financial point of view.
RME’s operations are conducted on freehold lands (Encana) located in southern Alberta. The company said its principal area of operation is in the Princess area, where Rocky operates 100% on 7,360 acres of land and has an interest in an additional 5,760 acres of joint interest lands.
Calgary-based Enterra Energy Trust is a Canadian oil and gas income trust operating in Western Canada. The Trust acquires, operates, and exploits crude oil and natural gas wells, focusing on low risk and low cost development. Rocky Mountain Energy Corp., which is also headquarterd in Calgary, is a public oil and gas company.
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