Summary and highlights
· The board of directors of Egdon Resources plc (LON:EDR) have announced that they have reached agreement with Petrichor Partners, LP with regard to the terms of a recommended all cash acquisition by Petrichor of the entire issued and to be issued ordinary share capital (other than those shares already owned by or on behalf of Petrichor) of Egdon.
· Under the terms of the Acquisition, which will be effected by a scheme of arrangement under the Companies Act and therefore be subject to shareholder approval and Court approval (and the Conditions and further terms set out in Appendix 1 to this announcement and to be set out in the Scheme Document), Egdon Shareholders who are on the register of members of Egdon at the Scheme Record Time will be entitled to receive:
4.5 pence for each Egdon Share (“Cash Consideration”)
· The Acquisition values the entire issued and to be issued share capital of Egdon at approximately £26.64 million on a fully diluted basis and the price of 4.5 pence per Egdon Share represents a premium of approximately:
o 96 per cent. to the Closing Price of 2.3 pence per Egdon Share on 16 May 2023 (being the last Business Day before the commencement of the Offer Period);
o 92 per cent. to the volume-weighted average price of 2.35 pence per Egdon Share for the one-month period ended 16 May 2023 (being the last Business Day before the commencement of the Offer Period); and
o 78 per cent. to the volume-weighted average price of 2.53 pence per Egdon Share for the three-month period ended 16 May 2023 (being the last Business Day before the commencement of the Offer Period).
· If, on or after the date of this announcement and before the Effective Date, any dividend, distribution or other return of capital or value is announced, declared, made or paid by Egdon or becomes payable by Egdon in respect of the Egdon Shares, Petrichor reserves the right to reduce the consideration payable under the terms of the Acquisition of the Egdon Shares by an amount up to the amount of such dividend and/or distribution and/or other return of capital or value, in which case any reference in this announcement to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. Any exercise by Petrichor of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme or the Acquisition. In such circumstances, Egdon Shareholders would be entitled to receive and retain any such dividend and/or other distribution and/or return of capital or value.
· It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.
Recommendation
· The Egdon Directors, who have been so advised by VSA Capital as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Egdon Directors, VSA Capital has taken into account the commercial assessments of the Egdon Directors. VSA Capital is providing independent financial advice to the Egdon Directors for the purposes of Rule 3 of the Takeover Code.
· Accordingly, the Egdon Directors intend to recommend unanimously that Scheme Shareholders vote in favour of the Scheme at the Court Meeting and that Egdon Shareholders vote in favour of the Resolution to be proposed at the General Meeting as the Egdon Directors who hold Egdon Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 14,648,773 Egdon Shares in aggregate, representing approximately 2.69 per cent. of Egdon’s issued share capital on 16 May 2023 (being the last Business Day before the date of this announcement).
Irrevocable undertakings
· Petrichor has received irrevocable undertakings from each of the Egdon Directors that hold Egdon Shares to vote in favour of the resolutions relating to the Acquisition at the Meetings (or in the event that the Acquisition is implemented by a Takeover Offer, to accept such Takeover Offer), in respect of a total of 14,648,773 Egdon Shares, representing, in aggregate, approximately 2.69 per cent. of the ordinary share capital of Egdon in issue on 16 May 2023 (being the last Business Day before the date of this announcement).
· Petrichor has also received irrevocable undertakings from Harbour Energy plc and Union Jack Oil plc in respect of a total of 62,733,333 Egdon Shares to vote in favour of the resolutions relating to the Acquisition at the Meetings (or in the event that the Acquisition is implemented by a Takeover Offer, to accept such Takeover Offer), representing, in aggregate, approximately 11.53 per cent. of the ordinary share capital of Egdon in issue on 16 May 2023 (being the last Business Day before the date of this announcement).
· In total, therefore, Petrichor has received irrevocable undertakings, including those irrevocable undertakings from the Egdon Directors who own Egdon Shares, in respect of, in aggregate, 77,382,106 Egdon Shares, representing approximately 14.23 per cent. of the issued ordinary share capital of Egdon on 16 May 2023 (being the last Business Day before the date of this announcement).
· Further details of these irrevocable undertakings are set out in Appendix 3 to this announcement.
Background to and reasons for the Acquisition
· Petrichor, a partnership of which the general partner is HEYCO International, Inc., is a wholly owned subsidiary of HEYCO Energy Group, Inc.. The ultimate parent company of HEYCO Energy Group, Inc. and Petrichor is Explorers Petroleum Corp, which is controlled by George Yates. HEYCO Group is an upstream energy portfolio group that delivers strategy, sophisticated technology, and capital to oil and gas exploration projects in the United States and Europe.
· Through Petrichor and other entities, HEYCO Group has invested in and provided technical advice to Egdon for more than two decades (and since 2016 has been a substantial shareholder in Egdon). The acquisition of Egdon adds to HEYCO Group’s expanding portfolio in Europe following the acquisition of a gas field in Northern Spain and the opening of a Madrid office in 2022.
· HEYCO Group believes the timing is right to acquire Egdon and take it private, as HEYCO Group believes that the public market continues to undervalue its assets, including the impressive Wressle development. Bringing Egdon into the HEYCO Group will create efficiencies, economies of scale, and, most importantly, add valuable assets and experienced personnel to its portfolio. Additionally, owning Egdon will allow HEYCO Group to more efficiently deploy capital and human resources to its most valuable projects across the UK, as well as Spain and the United States.
· HEYCO Group believes that fossil fuels remain critical for the UK’s future and that Egdon is strategically positioned for that future with its conventional projects as well as with opportunities for gas storage, hydrogen, geothermal, and renewable generation.
Information relating to Petrichor
· Petrichor, a partnership of which the general partner is HEYCO International, Inc., is a wholly owned subsidiary of HEYCO Energy Group, Inc.. The ultimate parent company of HEYCO Energy Group, Inc. and Petrichor is Explorers Petroleum Corp, which is controlled by George Yates. HEYCO Group is an upstream energy portfolio group that delivers strategy, sophisticated technology, and capital to oil and gas exploration projects in the United States and Europe.
· HEYCO Group’s core strengths are technical knowledge and management experience delivered by a team with proven expertise in geology, geophysics, reservoir engineering, international negotiation, drilling and production, and land and operations management.
· One of the few U.S. independent oil and gas companies with significant exposure in Europe, HEYCO Group has been strategically investing in the continent’s conventional and unconventional plays for more than 20 years. HEYCO Group was part of the group that commenced production at the Avington field in southern England in 2007 and is the parent company of a current UK licence holder.
· Headquartered in Dallas, Texas, and with offices in Roswell, New Mexico, and Madrid, Spain, HEYCO Group is privately owned by members of the Yates family of Southeastern New Mexico who have been active in the oil and gas industry since the 1920s. Chairman and CEO George Yates is the grandson of pioneer oilman Martin Yates, who with his partners discovered the first commercial oil well on state lands in New Mexico in 1924. For several decades, HEYCO Group operated in the Permian Basin, specifically in the Delaware Basin, with lease positions in all of the noteworthy horizontal plays.
Timetable and Conditions
· It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (although Petrichor reserves the right to effect the Acquisition by way of a Takeover Offer, subject to the consent of the Panel).
· The terms of the Acquisition will be put to the Scheme Shareholders at the Court Meeting and to the Egdon Shareholders at the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Shareholders, present and voting (and entitled to vote) at the Court Meeting, whether in person or by proxy, representing 75 per cent. or more in value of the Scheme Shares held by those Scheme Shareholders (or the relevant class or classes thereof). In addition, at the General Meeting to implement the Scheme, the Resolution must be passed by Egdon Shareholders representing at least 75 per cent. of the votes validly cast on the Resolution, whether in person or by proxy. The General Meeting will be held immediately after the Court Meeting. A copy of the Scheme Court Order must be delivered to the Registrar of Companies for registration, upon which the Scheme will become Effective.
· The Acquisition will be on the terms and subject to the Conditions set out in Appendix 1 to this announcement and to be set out in the Scheme Document, which will also set out further details of the Acquisition. It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Meetings, together with the Forms of Proxy, will be published within 28 days of the date of this announcement (or such later date as may be agreed by Petrichor and Egdon with the consent of the Panel). An expected timetable of principal events will be included in the Scheme Document.
· The Acquisition is expected to become Effective in the third calendar quarter of 2023, subject to satisfaction (or, where applicable, waiver) of the Conditions and the further terms set out in Appendix 1.
Comments on the Acquisition
Commenting on the Acquisition, George M. Yates, Chairman & CEO of HEYCO Group said:
“Mark Abbott and his team have built a very strong enterprise with current production and a number of potential opportunities. As a long-time shareholder, we have held the belief that the public market hasn’t fully recognized Egdon’s full value. The acquisition allows us to more effectively support Egdon by directly infusing capital and leveraging our combined technical and managerial expertise. We are excited to continue supporting Egdon and believe that, together, we can better advance Egdon’s strategic initiatives.”
Commenting on the Acquisition, Mark Abbott, Managing Director of Egdon said:
“We have a high regard for Petrichor and the HEYCO Group and they have been very supportive of Egdon over many years, helping us to get to the stage of profitability that we have reached today. There is a good deal of mutual respect between our groups and we are pleased that Egdon will continue its activities in safe hands. After considering all strategic options and recognising the challenges, the recommended acquisition provides shareholders with an opportunity to realise a cash exit at an attractive premium.”
APPENDIX 1
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE ACQUISITION
PART A: CONDITIONS TO THE SCHEME AND THE ACQUISITION
1. The Acquisition will be conditional upon the Scheme becoming unconditional and becoming Effective, subject to the provisions of the Takeover Code, by no later than 11:59 p.m. on the Long Stop Date.
Scheme approval
2. The Scheme will be conditional upon:
(A) (i) its approval by a majority in number representing not less than 75 per cent. in value of Scheme Shareholders who are on the register of members of Egdon (or the relevant class or classes thereof) at the Voting Record Time, present and voting (and entitled to vote), whether in person or by proxy, at the Court Meeting and at any separate class meeting which may be required (or any adjournment thereof); and (ii) such Court Meeting (and any separate class meeting which may be required) being held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between Petrichor and Egdon with the consent of the Panel (and that the Court may allow if required));
(B) (i) the Resolution being duly passed at the General Meeting (or any adjournment thereof); and (ii) such General Meeting being held on or before the 22nd day after the expected date of the General Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between Petrichor and Egdon with the consent of the Panel (and that the Court may allow if required)); and
(C) (i) the sanction of the Scheme by the Court (with or without modification (but subject to any such modification being acceptable to Petrichor and Egdon)) and the delivery of the office copy of the Scheme Court Order to the Registrar of Companies; and (ii) the Scheme Court Hearing being held on or before the 22nd day after the expected date of the Scheme Court Hearing to be set out in the Scheme Document in due course (or such later date as may be agreed between Petrichor and Egdon with the consent of the Panel (and that the Court may allow)).
3. In addition, Petrichor and Egdon have agreed that, subject as stated in Part B of this Appendix 1 and to the requirements of the Panel, the Acquisition will be conditional upon the following Conditions and, accordingly, the Court Order shall not be delivered to the Registrar of Companies unless such Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:
North Sea Transition Authority Approval
a) the receipt of written confirmation from the North Sea Transition Authority (the NSTA), informing Petrichor that it does not intend, as a consequence of the Acquisition, to revoke any of the relevant licences or to require a further change of control of Egdon under any of the relevant licences (the NSTA Condition);
Third Party clearances
b) other than in respect of the NSTA Condition, all necessary and material notifications, filings, applications or submissions having been made in connection with the Acquisition and all appropriate waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and/or regulatory obligations in any jurisdiction having been complied with in each case in respect of the Acquisition and all Authorisations deemed reasonably necessary by Petrichor in any jurisdiction for or in respect of the Acquisition and, except pursuant to Chapter 3 of Part 28 of the Companies Act, the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, Egdon or any other member of the Egdon Group by any member of the HEYCO Group, in each case which is material in the context of HEYCO Group or the Egdon Group as a whole, having been obtained in terms and in a form reasonably satisfactory to Petrichor from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Egdon Group or the HEYCO Group has entered into contractual arrangements and all such Authorisations necessary to carry on the business of any member of the Egdon Group in any jurisdiction, in each case which is material in the context of HEYCO Group or the Egdon Group as a whole, having been obtained and all such Authorisations remaining in full force and effect at the time at which the Acquisition becomes otherwise unconditional and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;
c) other than in respect of the NSTA Condition, no Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision or order or change to published practice (and in each case, not having withdrawn the same) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:
i. make the Acquisition, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Egdon Group by any member of the HEYCO Group void, illegal and/or unenforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prevent, prohibit, or materially restrain, restrict, impede, challenge, delay or otherwise materially interfere with the implementation of, or impose additional material conditions or obligations with respect to, the Acquisition or the acquisition of any shares or other securities in, or control or management of, any member of the Egdon Group by any member of the HEYCO Group or require material adverse amendment of the Scheme;
ii. require, prevent or materially delay the divestiture or materially alter the terms envisaged for any proposed divestiture by any member of the HEYCO Group or by any member of the Egdon Group of all or any material part of their businesses, assets or property or impose any material limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof);
iii. impose any material limitation on, or result in a material delay in, the ability of any member of the HEYCO Group directly or indirectly to acquire or hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Egdon (or any member of the Egdon Group) or on the ability of any member of the Egdon Group or any member of the HEYCO Group directly or indirectly to hold or exercise effectively any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise management control over, any member of the Egdon Group;
iv. other than pursuant to the implementation of the Scheme, require any member of the HEYCO Group or the Egdon Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Egdon Group owned by any third party which is material in the context of the Egdon Group or the HEYCO Group, in either case taken as a whole;
v. require, prevent or materially delay a divestiture or materially alter the terms envisaged for any proposed divestiture by any member of the HEYCO Group of any shares or other securities (or the equivalent) in any member of the Egdon Group which is material in the context of the Egdon Group taken as a whole or in the context of the Acquisition (as the case may be);
vi. result in any member of the Egdon Group ceasing to be able to carry on business under any name under which it presently carries on business;
vii. impose any limitation on the ability of any member of the HEYCO Group or any member of the Egdon Group to conduct, integrate or co-ordinate all or any material part of their respective businesses with all or any material part of the business of any other member of the HEYCO Group and/or the Egdon Group;
viii. otherwise adversely affect any or all of the business, assets, profits, or financial or trading position of any member of the Egdon Group or any member of the HEYCO Group;
ix. no undertakings or assurances being sought from Petrichor, any member of the HEYCO Group or any member of the Egdon Group by any Third Party, except on terms satisfactory to Petrichor;
x. no temporary restraining order, preliminary or permanent injunction, preliminary or permanent enjoinment, or other order threatened or issued and being in effect by a court or other Third Party which has the effect of making the Acquisition or any acquisition or proposed acquisition of any shares or other securities or control or management of, any member of the Egdon Group by any member of the HEYCO Group, or the implementation of either of them, void, voidable, illegal and/or enforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prohibiting, preventing or materially restraining, restricting, delaying or otherwise interfering with the consummation or the approval of the Acquisition or any matter arising from the proposed acquisition of any shares or other securities in, or control or management of, any member of the Egdon Group by any member of the HEYCO Group,
and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any Egdon Shares or otherwise intervene having expired, lapsed or been terminated;
Confirmation of absence of adverse circumstances
d) except as Disclosed, there being no provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Egdon Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject or any event or circumstance which, as a consequence of the Acquisition or the proposed acquisition by any member of the HEYCO Group of any shares or other securities in Egdon or because of a change in the control or management of any member of the Egdon Group or otherwise, would or might reasonably be expected to result in any of the following (in any case to an extent which would reasonably be expected to be material in the context of the Egdon Group taken as a whole):
i. any monies borrowed by, or any other indebtedness, actual or contingent of, or any grant available to, any member of the Egdon Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;
ii. the rights, liabilities, obligations, interests or business of any member of the Egdon Group or any member of the HEYCO Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Egdon Group or any member of the HEYCO Group in or with any other firm or company or body or person (or any agreement or arrangement relating to any such business or interests) being or likely to become terminated or materially and adversely modified or affected or any material onerous obligation or liability arising or any material adverse action being taken or arising thereunder;
iii. any member of the Egdon Group ceasing to be able to carry on business under any name under which it presently carries on business to an extent which is material in the context of the Egdon Group taken as a whole or in the context of the Acquisition;
iv. any assets or interests of, or any asset the use of which is enjoyed by, any member of the Egdon Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any member of the Egdon Group otherwise than in the ordinary course of business;
v. the creation, save in the ordinary and usual course of business, or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Egdon Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen), becoming enforceable;
vi. the business, assets, value, financial or trading position or profits, prospects or operational performance of any member of the Egdon Group being materially prejudiced or materially and adversely affected;
vii. the creation or acceleration of any material liability (actual or contingent) by any member of the Egdon Group other than trade creditors or other liabilities incurred in the ordinary course of business; or
viii. any liability of any member of the Egdon Group to make any severance, termination, bonus or other payment to any of its directors or other officers;
No material transactions, claims or changes in the conduct of the business of the Egdon Group
e) except as Disclosed, no member of the Egdon Group having since 31 July 2022:
i. save as between Egdon and its wholly owned subsidiaries or between such wholly owned subsidiaries, issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of Egdon Shares out of treasury;
ii. recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than to Egdon or one of its wholly owned subsidiaries;
iii. save as between Egdon and its wholly owned subsidiaries or between such wholly owned subsidiaries, merged with (by statutory merger or otherwise) or demerged from or acquired any body corporate, partnership or business or acquired or disposed of, or, other than in the ordinary course of business, transferred, mortgaged or charged or created any security interest over, any assets or any right, title or interest in any asset (including shares and trade investments) or authorised, proposed or announced any intention to do so;
iv. save as between Egdon and its wholly owned subsidiaries or between such wholly owned subsidiaries, made, authorised, proposed or announced an intention to propose any change in its loan capital;
v. issued, authorised, proposed or announced an intention to authorise or propose the issue of, or made any change in or to the terms of, any debentures or (save in the ordinary course of business and save as between Egdon and its wholly owned subsidiaries or between such wholly owned subsidiaries) incurred or increased any indebtedness or become subject to any contingent liability to an extent which is material in the context of the Egdon Group or in the context of the Acquisition;
vi. entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary, any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) (otherwise than in the ordinary course of business) which is of a long term, unusual or onerous nature, or which involves or could reasonably be expected to involve an obligation of a nature or magnitude which is, in any such case, material in the context of the Egdon Group or in the context of the Acquisition, or which is or is reasonably likely to be materially restrictive on the business of any member of the Egdon Group to an extent which is or is likely to be material to the Egdon Group taken as a whole or in the context of the Acquisition;
vii. entered into any licence or other disposal of intellectual property rights of any member of the Egdon Group which are material in the context of the Egdon Group and outside the normal course of business;
viii. entered into, varied, authorised or proposed the entry into or variation of, or announced its intention to enter into or vary the terms of or made any offer (which remains open for acceptance) to enter into or vary the terms of, any contract, commitment, arrangement or any service agreement with any director or senior executive of the Egdon Group save for salary increases, bonuses or variations of terms in the ordinary course;
ix. proposed, agreed to provide or modified in any material respect the terms of any share plan, incentive scheme, or other benefit relating to the employment or termination of employment of any employee of the Egdon Group which, taken as a whole, are material in the context of the Egdon Group taken as a whole;
x. entered into, implemented or effected, or authorised, proposed or announced its intention to implement or effect, any joint venture, asset or profit sharing arrangement, partnership, composition, assignment, reconstruction, amalgamation, commitment, scheme or other transaction or arrangement (other than the Scheme) otherwise than in the ordinary course of business which is material in the context of the Egdon Group taken as a whole or in the context of the Acquisition;
xi. purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the matters mentioned in sub-paragraph i above, made any other change to any part of its share capital to an extent which (other than in the case of Egdon) is material in the context of the Egdon Group;
xii. waived, compromised or settled any claim otherwise than in the ordinary course of business which is material in the context of the Egdon Group taken as a whole or in the context of the Acquisition;
xiii. made any material alteration to its articles of association or other constitutional documents;
xiv. (other than in respect of a member which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding up (voluntary or otherwise), dissolution, reorganisation or for the appointment of any administrator, receiver, manager, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;
xv. been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;
xvi. entered into any material contract, commitment, agreement or arrangement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this condition;
xvii. terminated or varied the terms of any material agreement or arrangement between any member of the Egdon Group and any other person in a manner which would or might be expected to have a material adverse effect on the financial position of the Egdon Group taken as a whole;
xviii. except in relation to changes made or agreed as a result of, or arising from changes to legislation, made or agreed or consented to any significant change to the following in a way that is material in the context of the Egdon Group taken as a whole or in the context of the Acquisition:
a. the terms of the governing documents constituting the pension scheme(s) established by any member of the Egdon Group for its directors, employees or their dependants;
b. the contributions payable to any such scheme(s) or to the benefits which accrue, or to the pensions which are payable, thereunder;
c. the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or
d. the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued, made, agreed or consented to, to an extent which is in any such case material in the context of the Egdon Group taken as a whole; or
xix. having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of Egdon Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code;
No material adverse change
f) since 31 July 2022 and except as Disclosed:
i. there having been no adverse change and no circumstance having arisen which would be expected to result in any adverse change or deterioration in the business, assets, financial or trading position or profits or operational performance of any member of the Egdon Group to an extent which is material to the Egdon Group taken as a whole or in the context of the Acquisition or in the obligations of any member of the HEYCO Group in connection with the Acquisition;
ii. no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against any member of the Egdon Group or to which any member of the Egdon Group is or may become a party (whether as claimant or defendant or otherwise) having been threatened, announced or instituted by or against, or remaining outstanding in respect of, any member of the Egdon Group which, in any such case, might be expected to have a material adverse effect on the Egdon Group taken as a whole or in the context of the Acquisition;
iii. no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Egdon Group having been threatened, announced or instituted or remaining outstanding by, against or in respect of any member of the Egdon Group, in each case which might reasonably be expected to have a material adverse effect on the Egdon Group taken as a whole;
iv. no contingent or other liability having arisen, increased or become apparent to Petrichor which might be likely to affect adversely the business, assets, financial or trading position, profits, prospects or operational performance of any member of the Egdon Group to an extent which is material to the Egdon Group taken as a whole or in the context of the Acquisition; and
v. no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Egdon Group, which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which
is material and likely to have an adverse effect on the Egdon Group taken as a whole or in the context of the Acquisition;
vi. no member of the Egdon Group having conducted its business in material breach of any applicable laws or regulations to an extent which might reasonably be expected to have a material adverse effect on the Egdon Group taken as a whole;
No discovery of certain matters regarding information, liabilities and environmental issues
g) since 31 July 2022 and except as Disclosed, Petrichor not having discovered:
i. that any financial, business or other information concerning the Egdon Group publicly announced or disclosed to any member of the HEYCO Group at any time by or on behalf of any member of the Egdon Group or to any of their advisers is misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make that information not misleading and which is, in any case, material in the context of the Egdon Group taken as a whole or in the context of the Acquisition;
ii. that any member of the Egdon Group is subject to any liability (actual or contingent) and which is material in the context of the Egdon Group or in the context of the Acquisition;
iii. any information which affects the import of any information disclosed to Petrichor at any time by or on behalf of any member of the Egdon Group which is material in the context of the Egdon Group;
iv. any past or present member of the Egdon Group has not complied in the context of the Egdon Group taken as a whole with all applicable legislation, regulations or other requirements of any jurisdiction or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any liability including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Egdon Group which in any case is material in the context of the Egdon Group taken as a whole or in the context of the Acquisition;
v. there has been a disposal, discharge, spillage, accumulation, release, leak, emission or the migration, production, supply, treatment, storage, transport or use of any waste or hazardous substance or any substance likely to impair the environment (including any property) or harm human health which (whether or not giving rise to non-compliance with any law or regulation), would be likely to give rise to any liability (whether actual or contingent) on the part of any member of the Egdon Group which in any case is material in the context of the Egdon Group taken as a whole or in the context of the Acquisition;
Anti-corruption, sanctions and criminal property
h) except as Disclosed, since 31 July 2022, Petrichor not having discovered:
i. any:
a. past or present member, director, officer or employee of the Egdon Group; or
b. person that performs or has performed services on behalf of the Egdon Group,
has at any time engaged in an activity, practice or conduct which would constitute an offence under the UK Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation;
ii. any asset of any member of the Egdon Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition);
iii. any past or present member, director, officer or employee of the Egdon Group, or any other person for whom any such person may be liable or responsible, has engaged in any business with, made any investments in, or made any payments or assets available to or received any funds or asset from:
a. any government, entity, or individual with which US persons or European Union persons (or persons operating in those territories) are prohibited from engaging in activities, doing business or from receiving or making available funds or economic resources, by US or European Union laws or regulations, including the economic sanctions administered by the United States Office of Foreign Assets Control or HM Treasury & Customs; or
b. any government, entity or individual targeted by any of the economic sanctions of the United Nations, United States or the European Union or any of its member states;
iv. a member of the Egdon Group has engaged in any behaviour which would cause the HEYCO Group to be in breach of any law or regulation on completion of the Acquisition, including the economic sanctions administered by the United States Office of Foreign Assets Control, HM Treasury & Customs or any government, entity or individual targeted by any of the economic sanctions of the United Nations, United States or the European Union or any of its member states;
v. any past or present member of the Egdon Group or any person that performs or has performed services for or on behalf of any such company is or has at any time engaged in any activity, practice or conduct (or omitted to take any action) in contravention of the UK Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977, as amended or any other applicable anti-corruption legislation;
vi. any member of the Egdon Group is ineligible to be awarded any contract or business under section 23 of the Public Contracts Regulations 2006 or section 26 of the Utilities Contracts Regulations 2006 (each as amended); or
vii. any past or present member of the Egdon Group has engaged in any activity or business with, or made any investments in, or made any payments to any government, entity or individual covered by any of the economic sanctions administered by the United Nations or the European Union (or any of their respective member states) or the United States Office of Foreign Assets Control or any other governmental or supranational body.
PART B: WAIVER OF CONDITIONS AND FURTHER TERMS OF THE ACQUISITION AND THE SCHEME
1. Subject to the requirements of the Panel in accordance with the Takeover Code, or if required, by the Court, Petrichor reserves the right to waive, in whole or in part, all or any of the above Conditions, except Conditions 2(A), 2(B) and 2(C) which cannot be waived.
2. Conditions 3(a) to 3(h) (inclusive) must each be fulfilled, determined by Petrichor to be or to remain satisfied or (where applicable) be waived by Petrichor by no later than 11.59 p.m. on the date immediately preceding the date of the Court hearing to sanction the Scheme, failing which the Acquisition will lapse.
3. The Acquisition will lapse if the Scheme does not become effective by 11.59 p.m. on the Long Stop Date (or such later date as may be agreed between Petrichor and Egdon).
4. If Petrichor is required by the Panel to make an offer for Egdon Shares under the provisions of Rule 9 of the Takeover Code, Petrichor may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.
5. The Acquisition will lapse if, before the Court Meeting, it is referred by the Competition and Markets Authority to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 pursuant to section 33 of the Enterprise Act 2002 (as amended).
6. Petrichor reserves the right to elect to implement the Acquisition by way of takeover offer(s) (as defined in section 974 of the Companies Act) as an alternative to the Scheme. In such event, the Acquisition will be implemented on the same terms (subject to appropriate amendments and those required by, or deemed appropriate by, Petrichor under applicable law, so far as applicable) as those which would apply to the Scheme. Further, if sufficient acceptances of such offer(s) are received and/or sufficient Egdon Shares are otherwise acquired, it is the intention of Petrichor to apply the provisions of Part 28 of the Companies Act to acquire compulsorily any outstanding Egdon Shares to which such offer(s) relate.
7. Under Rule 13.5(a) of the Takeover Code, Petrichor may not invoke a Condition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the Condition are of material significance to Petrichor in the context of the Acquisition. Conditions 2(A), 2(B) and 2(C) are not subject to this provision of the Takeover Code.
8. The Acquisition will be subject, inter alia, to the Conditions and certain further terms which are set out in this Appendix 1 and those terms which will be set out in the Scheme Document and such further terms as may be required to comply with the provisions of the Takeover Code.
9. Petrichor shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or treat as fulfilled any of Conditions 3(a) to 3(h) (inclusive) by a date earlier than the latest date for the fulfilment of that Condition, notwithstanding that the other Conditions may at an earlier date have been waived or fulfilled and that there are, at such earlier date, no circumstances indicating that any Condition may not be capable of fulfilment.
10. Egdon Shares will be acquired by Petrichor with full title guarantee, fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights attaching to them, including the right to receive and retain all dividends and distributions (if any) declared, made or paid after the date of this announcement. If after the date of this announcement and prior the Effective Date, any dividend and/or other distribution and/or other return of value is declared, made or paid in respect of Egdon Shares, Petrichor shall be entitled to reduce the amount of consideration payable for such Egdon Shares under the terms of the Acquisition by an amount equivalent to such dividend, other distribution or return of value in which case any reference in this announcement to the consideration payable under the terms of the Acquisition shall be deemed to be a reference to the consideration as so reduced.
11. Any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements. Further information in relation to Overseas Shareholders will be contained in the Scheme Document.
12. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.
13. The Acquisition will be governed by English law and subject to the jurisdiction of the English courts and to the Conditions set out above.
14. The Acquisition is subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange, the AIM Rules and the FCA.
APPENDIX 2
BASES AND SOURCES
In this announcement, unless otherwise stated or the context otherwise requires, the following bases and sources have been used.
1. As at close of business on 16 May 2023 (being the last Business Day before the date of this announcement) there were 543,983,031 Egdon Shares in issue. The legal entity identifier for the Egdon Shares is 213800WWGH4S9GYSPL77.
2. As at 16 May 2023 (being the last Business Day before the date of this announcement), there were 17,500,000 Egdon Shares and 30,408,000 Egdon Shares that may be issued pursuant to the Egdon Share Plan and the Warrants, respectively.
3. Any references to the issued and to be issued ordinary share capital of Egdon are each based on:
· the 543,983,031 Egdon Shares referred to in paragraph 1 above; and
· the 47,908,000 Egdon Shares that may be issued pursuant to the Egdon Share Plan and the Warrants referred to in paragraph 2 above.
4. Certain figures included in this announcement have been subject to rounding adjustments.
5. Unless otherwise stated, the financial information of Egdon is extracted (without material adjustment) from Egdon’s annual report and financial statements for the 12 months ended 31 July 2022, which were released on 7 November 2022 and Egdon’s interim report for the six months ended 31 January 2023, which was released on 24 April 2023.
6. Volume-weighted average prices have been derived from Refinitiv Eikon and daily trades extracted from the London Stock Exchange website, and have been rounded to the nearest tenth of a penny.
APPENDIX 3
DETAILS OF IRREVOCABLE UNDERTAKINGS
Egdon Directors’ irrevocable undertakings
The following holders of Egdon Shares have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Resolution at the General Meeting in respect of their own beneficial holdings of Egdon Shares:
| Name | Total number of Egdon Shares | Percentage of Egdon Shares in issue on 16 May 2023 (being the last Business Day before the date of this announcement) |
| Mark Abbott | 13,222,617 | 2.431% |
| Kenneth Ratcliff | 198,032 | 0.036% |
| Philip Stephens | 131,703 | 0.024% |
| Walter Roberts | 846,421 | 0.156% |
| Timothy Davies | 50,000 | 0.009% |
| Martin Durham | 200,000 | 0.037% |
| TOTAL | 14,648,773 | 2.693% |
The undertakings from the Egdon Directors will cease to be binding only:
(A) if the Scheme Document (or Offer Document, if applicable) is not dispatched to Egdon Shareholders within 28 days of this announcement (or such longer period as may be agreed by the Panel) provided that if the Acquisition was initially being implemented by way of a Scheme and Petrichor elects to exercise its right to implement the Acquisition by way of a Takeover Offer (with consent of the Panel and in accordance with the terms of the Co-operation Agreement) or vice versa, the time period is to be extended to refer to within 28 days of the issue of the press announcement announcing the change in structure (or such other date for the posting of the Offer Document or Scheme Document (as applicable) as the Panel may require); or
(B) on the earlier of:
(i) the Long Stop Date; or
(ii) the date on which the Acquisition (whether implemented by way of a Scheme or a Takeover Offer) is withdrawn or lapses in accordance with its terms, unless the Acquisition is withdrawn or lapses as a result of Petrichor exercising its right to implement the Acquisition by way of a Takeover Offer in accordance with the Takeover Code rather than by way of a Scheme.
Other Egdon irrevocable undertakings
Harbour Energy plc and Union Jack Oil plc have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Resolution at the General Meeting in respect of their own beneficial holdings of Egdon Shares:
| Name | Total number of Egdon Shares | Percentage of Egdon Shares in issue on 16 May 2023 (being the last Business Day before the date of this announcement) |
| Harbour Energy plc | 45,733,333 | 8.407% |
| Union Jack Oil plc | 17,000,000 | 3.125% |
| TOTAL | 62,733,333 | 11.53% |
The undertakings from Harbour Energy plc and Union Jack Oil plc will cease to be binding only:
(A) if the Scheme Document (or Offer Document, if applicable) is not dispatched to Egdon Shareholders within 28 days of this announcement (or such longer period as may be agreed by the Panel) provided that if the Acquisition was initially being implemented by way of a Scheme and Petrichor elects to exercise its right to implement the Acquisition by way of a Takeover Offer (with consent of the Panel and in accordance with the terms of the Co-operation Agreement) or vice versa, the time period is to be extended to refer to within 28 days of the issue of the press announcement announcing the change in structure (or such other date for the posting of the Offer Document or Scheme Document (as applicable) as the Panel may require); or
(B) on the earlier of:
(i) the Long Stop Date; or
(ii) the date on which the Acquisition (whether implemented by way of a Scheme or a Takeover Offer) is withdrawn or lapses in accordance with its terms, unless the Acquisition is withdrawn or lapses as a result of Petrichor exercising its right to implement the Acquisition by way of a Takeover Offer in accordance with the Takeover Code rather than by way of a Scheme.
