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Winstar Reaches Agreement for Sale of the Company to KOV

Source: 4/25/2013, Location: Africa

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Winstar Resources Ltd announces that it has entered into an Arrangement Agreement (the "Agreement") whereby Kulczyk Oil Ventures Inc. ("KOV" or the "Purchaser") will acquire all of the issued and outstanding common shares of Winstar (the "Transaction").

Under the terms of the Agreement, each Winstar shareholder will receive, for each Winstar share, at the shareholder's election: i) C$2.50 in cash (the "Cash Consideration"); or ii) 7.555 KOV ordinary shares (the "Share Consideration"), subject to a maximum of C$35 million in cash being paid to Winstar shareholders in aggregate. The Cash Consideration will be funded by a consortium of investors (together, the "Consortium") led by Kulczyk Investments SA ("KI"), which is a significant shareholder of KOV. Pursuant to the terms of the Transaction, any Winstar shares acquired by the Consortium under the Agreement will be exchanged for the Share Consideration and will be subject to a hold period of 180 days post-closing of the Transaction.

The Transaction values the entire issued and to be issued share capital of Winstar at approximately C$112 million1, based on the closing price of KOV's shares on April 24, 2013 of PLN 1.28 (approximately C$0.41 based on the April 24, 2013 Bank of Canada noon spot rate) and the exchange ratio which values each Winstar share at C$3.11, representing a 73% premium over the closing price of the Winstar shares on the Toronto Stock Exchange ("TSX") on April 24, 2013 , a 57% premium over the volume weighted average price (VWAP) of the Winstar shares on the TSX over the last thirty trading days, and a 40% premium over the VWAP of the Winstar shares on the TSX on the day prior to announcement of its strategic alternatives process on July 3, 2012 .

Winstar's Chairman, Bruce Libin, comments: "After evaluating Winstar's strategic alternatives over the last months, including a thorough consideration of our ability to create shareholder value as an independent entity, the Board concluded the proposed transaction with KOV is in the best interests of shareholders. We believe KOV's business plan, highly experienced management team and proven track record of identifying and delivering value in upstream oil and gas assets when applied to the combination of KOV's and Winstar's assets provides significant potential to enhance shareholder value. The merged company will have a very attractive diversified portfolio. I look forward to being a shareholder and director of the new KOV."

KOV's President and CEO, Tim Elliott , comments: "The combination of Winstar's and KOV's assets will result in a company with 2P reserves in excess of 20 million boe and production of approximately 4,760 barrels of oil equivalent per day ("boe/d") with a clear path to materially increasing production in the near term. The acquisition will also allow KOV to leverage its proven operational expertise to rapidly, and materially, increase production, reserves and cash flow from Winstar's Tunisian assets for the benefit of both companies' shareholders. We thank everyone involved in this transaction and are looking forward to working with Winstar's staff going forward"

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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