Savanna Energy Services Corp.
TSX : SVY

Savanna Energy Services Corp.

March 15, 2017 07:30 ET

Savanna Announces Increase to Purchase Price for Acquisition of Savanna by Western Energy Services Corp. and Reiterates Rejection of the Total Offer

CALGARY, ALBERTA--(Marketwired - March 15, 2017) - Savanna Energy Services Corp. ("Savanna") (TSX:SVY) is pleased to announce that Western Energy Services Corp. ("Western") (TSX:WRG) has increased the consideration payable pursuant to its previously announced acquisition of common shares of Savanna (the "Savanna Shares") to include the payment of $0.21 in cash per Savanna Share in addition to the 0.85 of a common share of Western (the "Western Shares") payable for each outstanding Savanna Share (the "Revised Western Offer"). In connection with the Revised Western Offer, Savanna and Western have entered into an amending agreement (the "Amending Agreement") dated March 14, 2017 which revises certain terms of the original arrangement agreement between Savanna and Western dated March 8, 2017 (the "Arrangement Agreement"). The acquisition of Savanna Shares will be completed pursuant to a court approved plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").

The Revised Western Offer represents a premium to the Total Offer (as defined below) of 14.8% based on the volume weighted average trading price of the Western Shares and the common shares of Total Energy Services Inc. ("Total") on the Toronto Stock Exchange (the "TSX") for the ten day period ended March 14, 2017.

Pursuant to the Revised Western Offer, the new consideration reflects a price of $2.30 per Savanna Share based on the volume weighted average trading price of Western Shares on the TSX for the ten day period ended March 14, 2017 of $2.46. This represents a premium of 14.3% over Savanna's volume weighted average trading price on the TSX for the same period of $2.01.

The consideration payable pursuant to the Total Offer reflects a price of $2.00 per Savanna Share based on the volume weighted average trading price of common shares of Total on the TSX for the ten day period ended March 14, 2017 of $13.85. This represents a 0.5% discount over Savanna's volume weighted average trading price on the TSX for the same period of $2.01.

Chris Strong, President and Chief Executive Officer of Savanna, stated: "This amendment with Western adds the certainty of cash value to what was already an excellent transaction for Savanna shareholders. The original transaction with Western was financially, strategically and operationally superior to the hostile offer from Total, and provided our shareholders a significantly greater ownership interest in what would be the second largest drilling contractor and second largest service rig contractor in Canada. The Revised Western Offer, which includes a firm $0.21 in cash per Savanna Share, equivalent to a 10.1% increase in purchase price, is clearly superior to Total's hostile offer. We look forward to completing this transaction."

The Amending Agreement also provides for an increase in the reciprocal non-completion fee by $5 million to $20 million. The other material terms and conditions of the Arrangement Agreement are not being amended.

The completion of the Arrangement is subject to customary conditions for a transaction of this nature, which include court and regulatory approvals (including the TSX), the approval of 66 2/3% of the votes cast by Savanna shareholders represented in person or by proxy at a meeting of Savanna shareholders to be called to consider the Arrangement and a majority of the votes cast by Savanna shareholders after excluding the votes cast by those persons whose votes may not be included under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and the approval of a majority of the votes cast by Western shareholders represented in person or by proxy at a meeting of Western shareholders to be called to approve the issuance of Western Shares pursuant to the Arrangement in accordance with the rules of the TSX.

A copy of the Amending Agreement will be filed on Savanna's SEDAR profile and will be available for viewing at www.sedar.com.

RECOMMENDATION OF THE BOARD OF DIRECTORS

Based upon verbal fairness opinions from Peters & Co. Limited and Cormark Securities Inc. and the recommendation of the Special Committee of the board of directors of Savanna (the "Savanna Board"), and after consulting with its financial and legal advisors, among other things, the Savanna Board has unanimously approved the Arrangement and unanimously determined that the Arrangement is fair to the Savanna shareholders and is in the best interests of Savanna and its shareholders. The Savanna Board unanimously recommends that Savanna shareholders vote in favour of the Arrangement.

All of the directors and officers of Savanna and certain other shareholders, holding an aggregate of 13.1% of the issued and outstanding Savanna Shares, have entered into voting support agreements with Western pursuant to which they have agreed to, among other things, support the Arrangement and vote their Savanna Shares in favour of the Arrangement, subject to the terms of the voting support agreements.

Shareholders are encouraged to review Savanna's news releases dated March 9, 2017 and March 13, 2017 for a summary of the benefits of the Arrangement to Savanna shareholders.

REJECTION OF TOTAL OFFER

The Savanna Board, on the recommendation of the Special Committee of the Savanna Board, has unanimously determined that Savanna shareholders should continue to reject the offer from Total to purchase all of the Savanna Shares on the basis of 0.13 common shares of Total and $0.20 in cash for each Savanna Share.

FINANCIAL ADVISORS

Peters & Co. Limited is acting as financial advisor to Savanna in respect of the Arrangement and has provided the Savanna Board with its verbal opinion that, subject to certain customary assumptions, qualifications and limitations, the consideration to be received by holders of Savanna Shares pursuant to the terms of the Arrangement is fair, from a financial point of view, to the holders of Savanna Shares.

Cormark Securities Inc. has provided the Savanna Board with its verbal opinion that, subject to certain customary assumptions, qualifications and limitations, the consideration to be received by holders of Savanna Shares pursuant to the terms of the Arrangement is fair, from a financial point of view, to the holders of Savanna Shares.

About Savanna

Savanna is a leading contract drilling and oilfield services company operating in North America and Australia providing a broad range of drilling, well servicing and related services with a focus on fit for purpose technologies and industry-leading Aboriginal relationships.

Cautionary Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking statements and information relating to the proposed acquisition of Savanna by Western pursuant to a plan of arrangement and the filing of the Amending Agreement. These forward-looking statements and information are based on certain key expectations and assumptions made by Savanna. Completion of the Arrangement is subject to a number of conditions which are typical for transactions of this nature. Assumptions have been made with respect to the satisfaction of all conditions precedent under the Arrangement Agreement. Although Savanna believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information as Savanna cannot give any assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy any of the conditions to completion of the Arrangement, the emergence of a superior proposal in respect of either party or the failure to obtain approval of the Savanna shareholders or Western shareholders may result in the termination of the Arrangement Agreement.

Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive. Additional information on these and other risks that could affect completion of the Arrangement will be set forth in the Information Circular, which will be available on SEDAR at www.sedar.com. Other risk factors that could affect Savanna's operations or financial results are included in Savanna's annual information form and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Savanna does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Contact Information

  • Savanna Energy Services Corp.
    Chris Strong
    President and Chief Executive Officer
    (403) 267-6728

    Savanna Energy Services Corp.
    Dwayne LaMontagne
    Executive Vice President and Chief Financial Officer
    (403) 214-5959

    Media contact:
    Trevor Zeck
    Longview Communications Inc.
    (604) 694-6037

    Shareholder inquiries:
    D.F. King Canada
    (Toll Free): (800) 622-1678