«1 The Boards of Directors of Lambros Overseas S.A. corporate registration no. 1019400, and OJSC Alliance Group, corporate registration no. ...»
that the pre-amalgamation undertakings made by AOC as set out under the ”Preamalgamation undertakings” section on page 13 are not breached before the day of the registration of the Amalgamation;
subject to what Alford and/or Alliance Group could reasonably have foreseen or had 4.
knowledge of, that no event occurs which is outside the control of Alliance Group and Alford, which will materially adversely affect the results, liquidity or profit of AOC; and subject to what Alford and/or Alliance Group could reasonably have foreseen or had 5.
knowledge of, that the Amalgamation is not, in whole or in part, made impossible, made materially more difficult or negatively affected to a considerable extent by legislation, decisions of the courts, decisions by public authorities or other circumstances outside the control of AOC, Alford and Alliance Group in Sweden, Bermuda or Russia.
13 Alliance Group and Alford reserve the right to waive, in whole or in part, the conditions to the Transaction other than the requirement for Shareholder approval of the Amalgamation under Bermuda law. The Transaction may, however, only be withdrawn with reference to condition 3 to 5 if the non-satisfaction of such conditions is of material importance to Alford’s acquisition of the Shares.
No further actions needed by Shareholders to receive the Cash Consideration
Provided that the SGM approves the Amalgamation with at least a 75 per cent. majority of the votes cast, and that a quorum of two (2) persons at least holding or representing by proxy more than one third of the issued Shares are present, the Amalgamation will be implemented without further action from the Shareholders and the Cash Consideration will be paid to the Shareholders via SEB.
Amalgamation implementation, settlement of the Cash Consideration and impact of delisting AOC The Amalgamation is expected to be completed on or about 11 December 2013. Upon Approval of the Amalgamation at the SGM, the record date for settlement of the Cash Consideration (the “Cash Consideration Record Date”) will be confirmed and notified to the market in due course and well in advance of settlement. Within approximately 10 days following Approval, provided that all other conditions to the Transaction have been satisfied or waived, as appropriate, the Amalgamation will be registered with the Bermuda Registrar of Companies, which will issue a certificate of amalgamation confirming implementation of the Amalgamation. As a result of the Amalgamation, Alford and AOC will be amalgamated and continue as one company under the name Alliance Oil Company Ltd. Following registration of the Amalgamation, all of the Shares will be cancelled and the SDRs will be delisted from NASDAQ OMX Stockholm and deregistered from Euroclear Sweden AB.
All shareholders who are entered in AOC’s register of members, kept at AOC’s registered office in Bermuda, on the Cash Consideration Record Date, are entitled to receive the Cash Consideration.
SEB will be responsible for on-payment of the Cash Consideration to holders of SDRs who are entered in the register of SDR holders kept by Euroclear Sweden AB on the Cash Consideration Record Date. Settlement of the Cash Consideration is expected to occur on or around 18 December 2013.
Last day of trading of the SDRs in AOC The last day of trading of the SDRs in AOC is expected to occur around 10 December 2013.
Right to postpone settlement of the Cash Consideration
Introductions and registrations for the SGM of AOC A notice convening the holders of SDRs to an SGM, which will be held on 2 December 2013 at
3.00 p.m. CET at Nalen, Regeringsgatan 74, Stockholm, Sweden, was announced on 4 November 2013 (the “Notice”) and is available on AOC’s website: www.allianceoilco.com. Shareholders in Sweden will be sent an information brochure summarizing the Amalgamation.
4 Notice of any such extension or deferral will be announced by Alliance Group by means of a press release.
Alliance Group and its affiliated companies will be permitted and intend to vote in favour of the Transaction at the SGM in respect of all of the Shares beneficially held through SDRs on their behalf.
Notice of attendance at the SGM shall be made either by email to: firstname.lastname@example.org, via regular mail to; SEB, Issuer Agent Department, RB6, SE-106 40 Stockholm, by fax, no. +46 8 763 62 50 or by telephone, no. +46 8 763 55 60, no later than 26 November 2013 at 5.00 p.m. CET.
When giving notice of participation, the Shareholders shall state their names, as well as the name of any accompanying advisor, address, telephone number and personal identification number and/or company registration number as well as its holding of SDRs representing Shares. Only Shareholders registered in their own name with Euroclear Sweden AB on Tuesday 26 November 2013 and who have notified SEB are entitled to attend and vote at the meeting. Shareholders whose SDRs are registered in the names of nominees must temporarily re-register the SDRs in their own name in order to be entitled to participate. SDR holders wishing to re-register must inform the nominee well in advance of Tuesday 26 November 2013. Shareholders who wish to participate by way of proxy must submit a dated form of proxy. The original proxy must be sent to SEB at the above address well in advance of the SGM. If the proxy is issued by a legal entity, a certified copy of the certificate of registration, or an equivalent certificate of authority, shall be attached to the proxy.
Any Shareholders who hold their interest in Shares through SDRs who do not vote in favour of the Amalgamation at the SGM are entitled, if they do not consider the Cash Consideration to represent a fair price for their Shares, to apply to the Court in Bermuda under Section 106 of the Companies Act 1981 of Bermuda (as amended) for an appraisal of the fair value of their Shares. See further “Dissenting Shareholder Rights” in section 8, page 48. Such dissenting Shareholders are advised to obtain the advice of counsel before proceeding, and the following does not constitute legal advice. In brief, dissenting Shareholders will likely be required to exchange their SDRs for registered Shares before the SGM, not vote in favour if the Amalgamation at the SGM and apply to the Bermuda court for appraisal within one (1) month of the giving of the Notice of SGM.
15 Summary of Fairness Opinion 4 BofA Merrill Lynch has provided the Independent Directors with an opinion that the value of the Cash Consideration to be received by the holders of Ordinary Shares and Preference Shares is fair, from a financial point of view, to such holders. In providing their advice, BofA Merrill Lynch has taken into account the commercial assessments of the Independent Directors as well as their consideration of the Company's bye-laws with respect to the provisions relating to the Preference Shares.
16 Recommendation from the Independent Directors of AOC 5 Two of the directors of AOC, Arsen Idrisov (a beneficiary of Alliance Group) and Isa Bazhaev (Managing Director of one of Alliance Group’s subsidiaries), have absented themselves from all deliberations of the board in connection with the Transaction. Accordingly, the Transaction has been considered only by the Independent Directors: Eric Forss, Raymond Liefooghe, Fred Boling, Claes Levin and Fernando Martinez-Fresneda.
The Independent Directors have, together with their financial and legal advisors, evaluated the Transaction, and the Independent Directors have determined that it is in the interest of the Shareholders that the Transaction is presented to them for resolution at the SGM.
The Independent Directors unanimously recommend that the Shareholders vote in favour of the Transaction. The recommendation was announced 31 October 2013 by AOC in a press release. In making their recommendation, the Independent Directors have considered a number of factors, including the considerations described in the section “Background to and reasons for the recommendation by the Independent Directors.” BofA Merrill Lynch and Carnegie have acted as financial advisors to the Company in connection with the Transaction, and BofA Merrill Lynch has provided the Independent Directors with an opinion that the value of the Cash Consideration to be received by the holders of Ordinary Shares and Preference Shares is fair, from a financial point of view, to such holders. In providing their advice, BofA Merrill Lynch has taken into account the commercial assessments of the Independent Directors as well as their consideration of the Company's bye-laws with respect to the provisions relating to the Preference Shares.
The Independent Directors have confirmed that they intend to irrevocably undertake to vote in favour of the Transaction at the SGM and in respect of their own beneficial holdings of 264,718 of SDRs representing Ordinary Shares (representing approximately 0.2 per cent. of the total number of votes in AOC as of 30 September 2013).
Background to and reasons for the recommendation by the Independent Directors Cash Consideration for Ordinary Shares In evaluating the Transaction, the Independent Directors have considered several factors deemed to be relevant. These factors include AOC’s current position, its future potential to realise value as well as the evolving risks to that value.
The Independent Directors are pleased with the historic track-record of the Company’s upstream and downstream volume growth, as well as EBITDA and earnings growth, achieved since the merger of AOC with West Siberian Resources in 2008. The Independent Directors also recognise the potential for future value creation from current upstream projects as well as from the Company’s substantial refinery modernisation programme, due to be completed in 2014. The Independent Directors also believe, however, that there are a number of risks to realising additional value, including geological complexity in the Timan-Pechora region, changes in domestic gas tariffs and taxation for independent oil and gas producers, fiscal risks for Russian refiners and market risk in the Company’s domestic market for refined products.
The Independent Directors note that the Cash Consideration for the Ordinary Shares of SEK 60 represents a modest premium of 4 per cent. to the closing price of the relevant SDRs on 30 October 2013 (being the last trading day before announcement of the Transaction) and believe that the premium level needs to be considered against the background of the SDR price increasing over 48 per cent. to the closing price on 24 July 2013, which is the last date prior to press 17 speculation about a potential third party acquisition of a significant stake in the Company or its assets. The Independent Directors have based their assessment of the offer from Alliance Group on their views on the fundamental value of the Company, including the commercial prospects and risks facing AOC.
In arriving at their decision to recommend the Transaction, the Independent Directors have also taken into account Alliance Group’s significant shareholding in AOC and its limiting effect on the Company’s ability to attract an alternative offer.
In light of these considerations, the Independent Directors consider the terms of Alliance Group’s offer to be fair and reasonable and believe that the Transaction represents an opportunity for all of AOC’s independent Shareholders to realise cash value for their investment at a fair price that reflects the future prospects of the Company.
Cash Consideration for Preference Shares
The Independent Directors believe that the Cash Consideration for the Preference Shares, including the payment of accrued dividend up to completion of the Transaction, is fair and reasonable, reflecting the fundamental debt-like characteristics of preference shares as well as the trading performance of the Preference Shares. In arriving at their recommendation to the holders of the Preference Shares, the Independent Directors have considered the Company’s bye-laws with respect to the provisions relating to the Preference Shares.
18 Information on AOC 6 The following is a summary description of AOC. The information given in this description is based on publicly available information primarily gathered from AOC’s 2010, 2011 and 2012 annual reports and other public disclosure and has been reviewed by AOC’s Board of Directors. The financial information has been prepared in accordance with IFRS (the financial years 2010, 2011 and 2012) and IAS 34 (the interim accounts Q2 2012 and 2013), respectively.
AOC is an independent and vertically integrated oil and gas company with both upstream and downstream operations in Russia and upstream operations in Kazakhstan. AOC’s upstream operations include crude oil exploration and production in the Timan-Pechora, Volga-Urals and Tomsk regions of Russia and the Atyrau region of Kazakhstan, as well as upstream gas operations in the Tomsk region; its downstream operations include oil refining as well as transportation, marketing and sale of refined petroleum products primarily in the Russian Far East.
AOC is an exempted company limited by shares incorporated under the laws of Bermuda. AOC was incorporated on 1 September 1998 for an unlimited duration, with corporate registration number 25413. The Ordinary Shares were initially listed in 2000 on NASDAQ OMX First North (former Nya Marknaden of the Stockholm Stock Exchange) under the name Vostok Oil Limited, subsequently the name was changed to West Siberian Resources Ltd. and in 2007 the Ordinary Shares were delisted from NASDAQ OMX First North and listed its Ordinary Shares on NASDAQ OMX Stockholm. After a merger with NK Alliance, the name was changed to Alliance Oil Company Ltd.
Key strategic historical milestones for AOC and its acquired companies: