Mart Resources, Inc has entered into a letter of intent with Midwestern Oil and Gas Company Limited, the operator of and one of Mart’s co-venturers in the Umusadege field. The Letter of Intent sets out the intention of the Company and Midwestern (collectively, the “Parties”), on a non-binding basis, to use good faith efforts to negotiate and
enter into a definitive agreement (the “Definitive Agreement”) pursuant to which Midwestern would agree to acquire all of the issued and outstanding shares of Mart for cash consideration of CAD$0.80 per common share (the “Proposed Offer Price”) by way of a plan of arrangement (the “Proposed Transaction”). The Proposed Offer Price represents a 40.3% premium to the closing price and a 28% premium to the 20 day VWAP price of Mart’s common shares on the Toronto Stock Exchange on February 27, 2015, the last trading day for Mart’s common shares
prior to the date of this announcement.
As previously announced, following the receipt of an unsolicited, non-binding offer to acquire Mart, the Company’s Board of Directors (the “Mart Board”) established an independent special committee (the “Special Committee”) to review the offer. The Special Committee has reviewed the Letter of Intent from Midwestern and has recommended that the Company enter into the Letter of Intent and proceed with the negotiation of a Definitive Agreement. On February 27, 2015, following receipt of the Special Committee’s recommendation and advice from its external financial advisor, Mart’s Board approved the Letter of Intent and negotiation of a Definitive Agreement.
Other Terms of the Letter of Intent
Period of Exclusivity and Non Solicitation
The Parties have agreed, on a binding basis, to a period of exclusivity commencing on February 27, 2015 and ending on March 15, 2015 (the “Exclusivity Period”), unless earlier terminated, during which Mart will not solicit a proposal that might be competitive with the Proposed Transaction and during which Mart and Midwestern will use good faith efforts to finalize the terms of the Definitive Agreement. The Letter of Intent contains customary provisions for transactions of this nature for the Mart Board to respond during the Exclusivity Period to any unsolicited acquisition proposal determined to be superior to the Proposed Transaction in the discharge of its fiduciary duties, subject to the ability of Midwestern to match.
Midwestern has advised Mart that its ability to complete the Proposed Transaction is subject to completing a private placement financing (the “Proposed Financing”). Accordingly, the Definitive Agreement, in the event one is entered into, will provide that Midwestern’s obligation to complete the Proposed Transaction will be subject to the completion of the Proposed Financing (the “Financing Condition”). Midwestern has agreed to use reasonable commercial efforts to satisfy the Financing Condition on or prior to June 15, 2015 and to keep Mart informed as to the status and timing of the satisfaction of the Financing Condition. Further, the Letter of Intent contemplates that prior to signing of the Definitive Agreement, Midwestern’s financial advisor will provide a highly confident letter acceptable to Mart in respect of the Proposed Financing.
The Letter of Intent contemplates that the Definitive Agreement will obligate Midwestern to provide evidence satisfactory to Mart that written binding commitments have been entered into with investors in the Proposed Financing on or before May 15, 2015 (the “Commitment Date”).
In the event such evidence is not received to the reasonable satisfaction of Mart on or prior to the Commitment Date, Mart (i) shall be permitted to provide due diligence access to certain eligible persons which are to be agreed by Mart and Midwestern equivalent to that which has been provided to Midwestern; and (ii) may adjourn or postpone any meeting of Mart shareholders previously called to approve the Proposed Transaction. Notwithstanding the
foregoing, the Letter of Intent contemplates that Midwestern shall have the right to satisfy the Financing Condition through to June 15, 2015 and complete the Proposed Transaction in accordance with the terms of the Definitive Agreement.
The Letter of Intent contemplates that the Definitive Agreement will provide for customary deal protection terms and the payment of a customary break fee by each party in certain circumstances to be mutually agreed upon, including in the event that Midwestern does not satisfy the Financing Condition by June 15, 2015.
Structure and Timing of Proposed Transaction
Subject to the Parties entering into a Definitive Agreement, the Proposed Transaction is expected to be carried out by way of a plan of arrangement under the provisions of the Business Corporations Act (Alberta) and will be subject to the approval of 66 2/3% of the votes cast by Mart shareholders at a special meeting of shareholders expected to be held in early to midJune, 2015. It is anticipated that closing of the Proposed Transaction will subject to certain other conditions, including receipt of Alberta court and other regulatory and third party approvals and is expected to close shortly after the special meeting. An information circular is expected to be mailed out to Mart shareholders in May, 2015.
A supplemental press release will be issued in the event that a Definitive Agreement is entered into or the Letter of Intent is terminated. There can be no assurance that a Definitive Agreement will be entered into or that the Proposed Transaction will be consummated. Further, readers are cautioned that those portions of the Letter of Intent that describe the Proposed Transaction including the Proposed Offer Price are non-binding.