Summary
· Following the announcement by Trinity Exploration & Production Plc ("Trinity") on 24 July 2024 that it had received a possible offer from Lease Operators Limited ("Lease Operators"), the boards of directors of Lease Operators and Trinity are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition by Lease Operators of the entire issued and to be issued share capital of Trinity (excluding any Trinity Shares held in treasury) (the "Acquisition"). It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement between Trinity and Scheme Shareholders pursuant to Part 26 of the Companies Act.
· Under the terms of the Acquisition, Scheme Shareholders will be entitled to receive:
for each Scheme Share: 68.05 pence in cash
· The Consideration per Scheme Share values the issued share capital of Trinity at approximately £26.4 million and represents a premium of approximately:
? 30.6 per cent. to the implied value of 52.1 pence per Trinity Share under the terms of the Touchstone Offer calculated by reference to the closing mid-price of 34.8 pence per Touchstone Share on 1 August 2024 (the "Latest Practicable Date");
? 19.4 per cent. to the Closing Price of 57.0 pence per Trinity Share on the Latest Practicable Date;
? 39.6 per cent. to the implied value of 48.8 pence per Trinity Share under the terms of the Touchstone Offer calculated by reference to the Closing Price of 32.5 pence per Touchstone Share on 24 July 2024 (being the date of the Rule 2.4 Announcement);
? 41.8 per cent. to the Closing Price of 48.0 pence per Trinity Share on 24 July 2024 (being the date of the Rule 2.4 Announcement);
? 89.0 per cent. to the Closing Price of 36.0 pence per Trinity Share on 30 April 2024 (being the last Business Day prior to the commencement of the Offer Period);
? 71.0 per cent. to the volume-weighted average price of 39.8 pence per Trinity Share for the three-month period ended on 30 April 2024 (being the last Business Day prior to the commencement of the Offer Period); and
? 24.9 per cent. to the volume-weighted average price of 54.5 pence per Trinity Share for the nine-month period ended on 30 April 2024 (being the last Business Day prior to the commencement of the Offer Period).
· In accordance with Rule 2.5 of the Code and to the extent that Trinity declares, makes or pays any dividend or distribution or other payment or return of capital to Trinity Shareholders prior to the Effective Date, Lease Operators reserves the right to make an equivalent reduction to the terms of the Consideration payable pursuant to the Acquisition. In such circumstances Trinity Shareholders would be entitled to receive and retain any such dividend and/or other distribution and/or return of capital or value to which they are entitled.
Recommendation of the Acquisition and withdrawal of the recommendation of the Touchstone Offer by the Trinity Directors
· On 1 May 2024, the date on which the Touchstone Offer of 1.5 new Touchstone Shares in exchange for each Trinity Share was announced, the Trinity Directors considered, at the time, that it was in the best interests of Trinity Shareholders to recommend the Touchstone Offer. At the time of its announcement, the Touchstone Offer represented an implied value of 61.9 pence per Trinity Share, a significant premium to the then prevailing price of a Trinity Share.
· On 17 July 2024, the Trinity Directors received an unsolicited, conditional, non-binding proposal from Lease Operators regarding a possible cash offer for the entire issued and to be issued share capital of Trinity at a price of 68.05 pence per Trinity Share. In light of the existence of the Touchstone Offer and in order to seek initial feedback from key Trinity Shareholders on the potential for a substantially higher offer in cash, on 24 July 2024 the Trinity Directors considered it to be in the best interests of Trinity Shareholders to release the Rule 2.4 Announcement. Lease Operators has now satisfied the pre-conditions to the release of this Announcement.
· The Trinity Directors consider that the Acquisition provides Trinity Shareholders with an opportunity to realise a certain valuation in cash at a significant premium to the unaffected prevailing price, which reflects the current strength and future potential of Trinity. The Trinity Directors also consider that the Acquisition is a material improvement for Trinity Shareholders over the Touchstone Offer and accelerates, without further capital investment, time or operational risk, the delivery of fair value to Trinity Shareholders.
· The Trinity Directors, who have been so advised by Houlihan Lokey as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable and superior to the Touchstone Offer. In providing its advice to the Trinity Directors, Houlihan Lokey has taken into account the commercial assessments of the Trinity Directors. Houlihan Lokey is providing independent advice to the Trinity Directors for the purposes of Rule 3 of the Takeover Code.
· Accordingly, the Trinity Directors intend to unanimously recommend that eligible Trinity Shareholders vote in favour of the Scheme at the Court Meeting and in favour of the Resolution to be proposed at the General Meeting or, subject to the consent of the Panel, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer.
· The Trinity Directors have withdrawn their recommendation of the Touchstone Offer with immediate effect and intend to postpone indefinitely the Court sanction hearing in respect of the Touchstone Offer which has been rescheduled to 23 August 2024.
Information on the Lease Operators Group and its shareholders
Lease Operators
· Lease Operators is a company limited by shares, incorporated in Trinidad and Tobago, under the laws of the Republic of Trinidad and Tobago.
The Lease Operators Group
· Lease Operators is a member of the Well Services Group, which began operations in 1967 as a single company called Well Services Limited. It was founded in Trinidad and Tobago by Charles Anthony Brash Sr., who is still active in the Well Services Group and is currently the Chairman of Lease Operators.
· Well Services Limited began doing workovers on oil wells in 1967 and subsequently expanded its land-based operations by providing workover services for other internationally based companies. In 1972, it began its offshore operations by drilling slant holes and providing platform operations.
· The Well Services Group purchased several offshore drilling rigs over the years and were awarded several long-term drilling contracts by major international oil companies operating in Trinidad and Tobago.
· This led to the establishment of Lease Operators which was formed in 1988 to produce oil from existing oil wells. It was a successful programme, which has led to Lease Operators operating seven onshore blocks. Lease Operators is currently the largest independent onshore oil producer in Trinidad and Tobago, ahead of Trinity and Touchstone. In June 2024, Lease Operators produced 2,152 bopd from its producing assets.
· Well Services Marine Limited (the marine division of the Well Services Group) was awarded a drilling contract in 1996 for the supply of a jack-up mat supported rig to commence operations in July 1996 and a joint venture was formed for this project. In December 1997, Well Services Marine Limited sold its offshore assets to concentrate on land drilling and crude oil operations in Trinidad.
· Well Services Petroleum Company Limited began operating as a successor company to Well Services Marine Limited providing drilling onshore services to the national oil company of Trinidad and Tobago, private lease operators and other companies in the Well Services Group.
· In 2013 Trinity Exploration & Production Limited merged with Bayfield Energy Holdings plc to form Trinity, in which several of Lease Operators' Directors namely Charles Anthony Brash Jr, David Bernard Brash and Daniel Cuthbert Brash, together with WSHL are shareholders. Charles Anthony Brash Jr was one of the early directors of Trinity.
· The Well Services Group has previously operated in Venezuela, Guyana, Barbados and St. Lucia and currently operates in Trinidad and Tobago and Suriname. The Well Services Group owns its own tugs, crew boats, liftboats and barges and employs approximately 1,100 personnel.
The shareholders of Lease Operators are WSHL, Charles Anthony Brash Jr, David Bernard Brash and Daniel Cuthbert Brash, whose biographies are set out later in the Announcement. WSHL is owned by Arawak Trading Limited IBC (an international business company incorporated in St. Lucia), whose immediate shareholders are Charles Anthony Brash Jr, David Bernard Brash and Daniel Cuthbert Brash.
Acquisition Structure, Timetable and Conditions
· It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement between Trinity and the Scheme Shareholders under Part 26 of the Companies Act (although Lease Operators reserves the right to effect the Acquisition by way of a Takeover Offer, subject to the consent of the Panel).
· The Acquisition will be considered by Trinity Shareholders at the Court Meeting and the General Meeting. The Court Meeting and the General Meeting are required to enable eligible Trinity Shareholders to consider, and if thought fit, to vote in favour of the Scheme and the Resolution to facilitate the implementation of the Scheme. In order to become Effective, the Scheme must be approved by a majority in number of Voting Scheme Shareholders, present and voting (and entitled to vote) at the Court Meeting, whether in person or by proxy, representing at least 75 per cent. by value of the voting rights of the Voting Scheme Shareholders (or the relevant class or classes thereof). In addition, in order for the Scheme to become Effective, at the General Meeting, the Resolution must be passed by Trinity Shareholders representing, whether in person or by proxy, at least 75 per cent. of the votes validly cast on the Resolution. The General Meeting will be held immediately after the Court Meeting.
· The Trinity Shares held in treasury (being 1,096,819 Trinity Shares as at the close of business on the Latest Practicable Date) will not constitute Scheme Shares. The Trinity Shares owned or controlled by a member of the Lease Operators Group (being, 290,756 Trinity Shares owned by WSHL as at the close of business on the Latest Practicable Date) or by any Lease Operators Connected Individual (being, in aggregate, 268,545 Trinity Shares as at the close of business on the Latest Practicable Date) will constitute Scheme Shares. Neither WSHL nor any Lease Operators Connected Individual will be permitted to vote the Trinity Shares owned by them at the Court Meeting but will be permitted to vote such Trinity Shares at the General Meeting.
· The Acquisition will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement, including, amongst other things:
(i) the receipt of or waiver of regulatory and anti-trust clearances in Trinidad and Tobago including:
a. approval from the Fair Trading Commission under section 14 of the Fair Trading Act;
b. insofar as the Acquisition requires such confirmation the Minister having provided his consent to the Acquisition in a form and subject to conditions (if any) that are reasonably satisfactory to Lease Operators;
c. the receipt of the Heritage Consents and Waivers;
(ii) approval by the requisite majority of Voting Scheme Shareholders of the Scheme at the Court Meeting and sanction of the Scheme by the Court;
(iii) approval by the requisite majority of Trinity Shareholders of the Resolution to be proposed at the General Meeting; and
(iv) to the full terms and conditions of the Acquisition which will be set out in the Scheme Document.
· Given the material importance of Trinity's operating assets in the context of the Acquisition, and the Heritage Consents and Waivers in that regard, Trinity Shareholders should be aware that, if any Regulatory Condition is not satisfied and following discussions with the Panel, it would be Lease Operators' intention to seek the Panel's consent to invoke the relevant Regulatory Condition to cause the Acquisition to lapse.
· It is expected that the Scheme Document containing further details of the Scheme and the Acquisition and the notices of the Meetings, together with the accompanying Forms of Proxy, will be published in August 2024. An expected timetable of principal events will be included in the Scheme Document. The Scheme Document will also be made available by Trinity on its website at https://trinityexploration.com/investors/.
· The Acquisition is expected to become Effective in the fourth quarter of 2024, subject to the satisfaction (or, where applicable, waiver) of the Conditions and further terms set out in Appendix 1 to this Announcement and to all terms and conditions of the Acquisition which will be set out in the Scheme Document.
Commenting on the Acquisition, Charles Anthony Brash Jr, Chief Executive Officer of Lease Operators, said:
"We are pleased to make an offer for Trinity to purchase all the Scheme Shares in cash at a value of 68.05 pence per Scheme Share. We believe this Acquisition will benefit the Well Services Group of Companies and create more opportunities for the oilfield service sector.
Both Lease Operators and Trinity will benefit from sharing knowledge and experiences learned, by increasing production throughout their oil fields.
Our plans are to have a combined drilling programme between both companies to have a rig drilling on a continuous basis. We are also excited to acquire offshore acreage to give our offshore rigs and vessels more opportunities for continuous work."
Commenting on the Acquisition, Nick Clayton, Non-Executive Chairman of Trinity, said:
"We believe that the Acquisition is a material improvement for Trinity Shareholders over the Touchstone Offer and accelerates, without further capital investment, time or operational risk, the delivery of fair value to Trinity Shareholders."
This summary should be read in conjunction with, and is subject to, the full text of this Announcement and the Appendices. The Acquisition will be subject to the Conditions and certain other terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 to this Announcement contains the bases of calculation and sources of certain information contained within this Announcement. Certain terms used in this Announcement are defined in Appendix 3 to this Announcement.
