awe merger proposal, page-18

ASX Announcement
16 December 2013
AWE Rejects Non-Binding Conditional
Senex Scrip Proposal
AWE Limited (ASX: AWE) (the “Company”) advises that
the Board of AWE has considered
and rejected a non-binding and conditional scrip ba
sed takeover proposal from Senex
Energy Limited ("Senex"). The Board determined that
Senex’s proposal was not in the best
interests of AWE shareholders and accordingly was n
ot appropriate to pursue.
Following the meeting of the AWE Board, AWE verball
y advised Senex of this decision on
15 December 2013. Subsequently, Senex has written t
o AWE to formally withdraw its offer.
Senex had proposed that it would issue 1.9 Senex sh
ares for every 1 AWE share, which
would have resulted in the equity in the merged gro
up being held 53% by Senex
shareholders and 47% by AWE shareholders. Based on
the closing price of Senex shares
on 12 December 2013 of $0.76, the takeover offer im
plied a price for AWE shares of $1.44
(Senex’s six month VWAP is $0.72 implying an AWE pr
ice of $1.37). Senex’s proposal was
conditional on the conclusion of due diligence and
subject to a 90% minimum acceptance
condition, introducing material completion risk.
Senex had also advised the Company that it had been
active in the market acquiring AWE
shares. The Board of AWE determined that it could n
ot allow its existing shareholders to
sell shares without knowledge of the proposal and h
ence made the decision to place the
Company in a trading halt.
Due consideration was given to the proposal from Se
nex by the Board of AWE which
sought and obtained external legal and financial ad
vice. The Board considered the proposal
not to be in the best interests of AWE shareholders
, taking into account:
•
AWE's view that the offer significantly undervalue
d AWE shares without an
appropriate premium for control; and
•
The relative market valuations of the companies. U
nder Senex's takeover proposal,
AWE would contribute a substantially greater share
of 2P reserves (70%), total
production (80%), sales revenue (67%) and EBITDAX (
67%)
1
, however AWE
shareholders would receive only 47% of the merged g
roup equity.
While the Board of AWE recognises the potential to
add shareholder value through material
M&A transactions, it remains confident of the Compa
ny's ability to create further value for
shareholders through the ongoing commercialisation
of AWE's existing portfolio of
opportunities, which are primarily near term develo
pment in nature. AWE has recently
advised the market that it is aiming to double prod
uction and triple cash flow by 2017
2