Summary

The boards of Parkmead and Lochard are pleased to announce that they have reached agreement on the terms of a recommended all-share offer for Lochard, pursuant to which Parkmead will acquire the entire issued and to be issued ordinary share capital of Lochard (the “Acquisition”). It is intended that the Acquisition be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.

Under the terms of the Acquisition, Scheme Shareholders will be entitled to receive 0.385 Parkmead Consideration Shares for each Scheme Share held at the Scheme Record Time.

Based on the Closing Price of a Parkmead Share of 12.625 pence on 22 May 2013 (being the latest practicable date prior to the date of this Announcement), the Acquisition values the entire issued and to be issued share capital of Lochard at approximately £14.5 million, and each Lochard Share at approximately 4.9 pence. This is based on 298,865,616 Lochard Shares in issue as at the date of this Announcement.

Parkmead is an AIM quoted emerging independent oil and gas company with a strategy of utilising the significant technical and commercial expertise that exists within its experienced team, led by its Executive Chairman Tom Cross, to exploit the exploration and production opportunities that exist in its known and preferred areas of the UKCS and the Netherlands.

Lochard is an AIM quoted independent oil and gas production, appraisal and development company focused on the UKCS. Lochard’s principal asset is its 10 per cent. interest in the Athena field.

The Lochard Directors, who have been so advised by CIBC World Markets plc, consider the terms of the Acquisition to be fair and reasonable. In providing its advice, CIBC World Markets plc has taken into account the commercial assessments of the Lochard Directors. In addition, the Lochard Directors consider the terms of the Acquisition to be in the best interests of Lochard and Lochard Shareholders, as a whole.

Accordingly, the Lochard Directors intend to recommend unanimously that Lochard Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or in the event that the Acquisition is to be implemented by means of a Takeover Offer, to accept or procure the acceptance of, the Takeover Offer).

Whilst none of the Lochard Directors are directly interested in any Lochard Shares, Jamie Brooke, a non-executive Director of Lochard, is also an employee of Henderson Global Investors Limited. Funds managed by Henderson Global Investors Limited and Henderson Alternative Investment Advisor Limited are interested in 93,926,577 Lochard Shares, representing approximately 31.4 per cent. of the issued ordinary share capital of Lochard. Parkmead has received irrevocable undertakings from Henderson Global Investors Limited and Henderson Alternative Investment Advisor Limited to vote, or procure the vote, in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting in respect of such 93,926,577 Lochard Shares, representing approximately 31.4 per cent. of the issued ordinary share capital of Lochard.

Parkmead has also received irrevocable undertakings to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting from certain other Lochard Shareholders in respect of a further 22,111,287 Lochard Shares, representing approximately 7.4 per cent. of the issued ordinary share capital of Lochard.

In addition, Parkmead has obtained a letter of intent from Palm Global LLP in respect of 3,900,000 Lochard Shares representing approximately 1.3 per cent. of the issued ordinary share capital of Lochard to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting.

Parkmead has therefore received irrevocable undertakings, or letters of intent, in respect of 119,937,864 Lochard Shares representing, in aggregate, 40.1 per cent. of the existing issued ordinary share capital of Lochard.

This Announcement follows the announcement by Lochard on 3 September 2012 that it had decided to proceed with a ‘formal sale process’ in accordance with Note 2 on Rule 2.6 of the Code. The formal sale process has now been successfully concluded with the Announcement of the Acquisition. The end of the formal sale process means that the data room which was open to participants will be closed from 7.00am on 23 May 2013. Other potential offerors, however, can still announce competing offers for Lochard.

The Parkmead Consideration Shares to be issued pursuant to the Acquisition are expected to represent approximately 11.1 per cent. of the issued share capital of Parkmead as enlarged by the Acquisition.

The Parkmead Consideration Shares will rank pari passu in all respects with the Parkmead Shares in issue on the Effective Date and will be entitled to all dividends and/or other distributions declared or paid by Parkmead by reference to a record date on or after the Effective Date.

The Panel has consented to Lochard entering into a break fee arrangement with Parkmead as a participant in Lochard’s formal sale process pursuant to Note 2 on Rule 21.2 of the Code. As such, Lochard has agreed to pay Parkmead a break fee of £145,267 (subject to adjustment for VAT) if a Competing Offer is announced prior to the Acquisition lapsing or being withdrawn and such Competing Offer becomes or is declared unconditional in all respects or otherwise becomes effective.

The Acquisition is conditional on, inter alia, certain approvals by Lochard Shareholders and the sanction of the Scheme by the Court. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares held by the Scheme Shareholders present and voting in person or by proxy. It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting together with the Forms of Proxy, will be posted as soon as practicable and, in any event, within 28 days of this Announcement. Subject to the satisfaction or, where relevant, waiver of all relevant Conditions, the Scheme is expected to become effective in July 2013.

Commenting on the Acquisition, Clive Carver, Chairman of Lochard, said:

“Since the current board was formed, the Lochard Directors have believed that the future of Lochard would be best served by becoming part of a larger entity. We are therefore delighted to have found in Parkmead a company whose management team have a successful track-record of building an E&P company and creating value for shareholders.

The Lochard Directors believe Parkmead is of a size and quality that will enable it to continue to source and fund exciting exploration prospects and development opportunities at a time when obtaining funding for smaller exploration companies remains difficult. The cash flow from Athena will assist the combined entity in pursuing further growth.”

Commenting on the Acquisition, Tom Cross, Executive Chairman of Parkmead, said:

“This is the most exciting and important deal for Parkmead to date. The acquisition of Lochard will increase Parkmead’s production by over 400 per cent. and therefore provides it with a significantly enhanced cash flow profile. The combination of Parkmead and Lochard will create a stronger and more diverse portfolio of assets, balanced across the UKCS and the Netherlands.

Furthermore, the addition of Lochard’s production will enable Parkmead to deliver its ambitious growth plans. This follows the acquisition of DEO Petroleum plc, first production from the Netherlands, successful horizontal appraisal drilling at the Platypus field and the major award of 25 blocks across the UKCS, all achieved by Parkmead within the last 12 months.”

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