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— Arbitrage —
Verenex Energy Inc. |VNX.T Deal value C$500 million Spread 03/16/09 C$0.79, or 8.6% The acquisition of Verenex Energy Inc. by CNPC International Ltd. requires approval by Libyan government, which might opt to buy Verenex itself. CNPCI, controlled by the People's Republic of China, is acquiring Verenex for C$500 million ($393 million). The deal hinges on the approval of the Libyan General People's Congress, which oversees dealings with state-controlled National Oil Corp.
CNPCI is acquiring Calgary, Alberta-based Verenex for its oil production in Libyan under a 2005 exploration agreement. Under that agreement, which is not public, Verenex shares 50% of the rights to the field in a joint venture with PT Medco Energi Internasional Tbk. NOC has rights to the remaining production profits. The merger agreement requires Libyan approval for a bonus payment of no more than C$46.69 million, or 10% of the overall deal value. The Verenex sale to CNPCI was the result of an auction and NOC consented to the release of nonpublic information and facilitated the process, a source says. The NOC might, after seeing the resulting price, decide it wants to buy in Verenex's 25% of the project to relicense the field rights. Normally, the right to buy in production would apply only to a change of control at the asset level, sources say. This is a holding company transaction, but since Verenex had to sell off its French assets with the CNPCI deal because of a contractual trigger, the holding company now owns only the Libyan rights, which complicates the NOC right-of-first-refusal definition. It seems that even if Libya blocks the deal, it would do so to acquire Verenex itself and at the same price, although probably over a longer time frame. Forsys Metals Corp. |FSY.T Deal value C$540 million Spread 03/16/09 C$3.41, or 95% Forsys Metals Corp. pushed back the closing date of its C$540 million sale to George Forrest International Afrique SPRL to allow the buyer time to restructure the deal financing. Forsys is a uranium mining company based in Toronto with operations in Namibia. GFIA is the African arm of Belgium-based Forrest Group, which operates cement, mining and civil engineering units from the Democratic Republic of Congo. The deal, which was supposed to close around March 12, is part of a broader investment by GFIA in Namibia. The deal was not conditioned on financing, and GFIA had indicated to Forsys that it had funds available to complete the deal. GFIA, however, notified Forsys the night of March 12 that it needed more time to restructure the deal to include a preferred equity financing. A C$11.4 million reverse termination fee was boosted to C$20 million. Those funds must be put into escrow, and Forsys can tap them for general operating purposes with written approval from GFIA, which will have "input into Forsys' operations" before the close. The new termination fee is in keeping with the original C$10 million fee for a four-month option. Forsys did not gain stricter terms in the amended agreement, such as a tighter MAC. |
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