The acquisition of Tanganyika shares will be funded through Sinopec International Petroleum Exploration and Production Corporation’s (SIPC’s) internal resources and is not conditional upon any financing arrangements. SIPC is a wholly owned subsidiary of China Petrochemical Corporation (Sinopec) and undertakes overseas investments and operations in the upstream oil and gas sector. Sinopec is a producer and supplier of oil products and major petrochemical products.
The agreement provides for, among other things, customary board of directors support, non-solicitation and right to match provisions in favor of SIPC and the payment to SIPC of a termination fee of C$65 million if the acquisition is not completed in certain specified circumstances.
The obligation of SIPC to take up and pay for shares pursuant to the offer is also subject to the receipt of certain approvals from the government of China. SIPC has agreed to pay a break-up fee of C$65 million in the event that all approvals required to be obtained by SIPC from the Chinese government in order to complete the offer are not obtained on or before December 24, 2008, and Tanganyika elects to terminate the support agreement.
In connection with the offer, all of the directors, officers and certain other shareholders representing, collectively, approximately 16.2% of Tanganyika’s 65.61 million fully diluted outstanding shares outstanding have entered into lock-up agreements with SIPC pursuant to which they have agreed to, among other things, tender all of their Tanganyika shares to the offer.
The Tanganyika board of directors, after consulting with its financial and legal advisers, has unanimously determined that the offer is fair and in the best interest of Tanganyika shareholders and has recommended acceptance of the offer.
Zhou Baixiu, president of SIPC, said: This transaction is an important component of the Sinopec Group’s strategy to become a diversified global resource provider. We believe that our strong technical experience and our local relationships will serve to maximize the underlying value of these very attractive assets, and we are excited about this opportunity. We look forward to working with the Tanganyika team to build upon the solid foundation which they have created.
