Royal Helium Ltd. (TSXV: RHC) ("
Royal") and
Imperial Helium Corp. (TSXV: IHC) ("
Imperial" or
"
IHC") are pleased to announce that they have
entered into an agreement dated May 2, 2022 (the
"
Arrangement Agreement") to effect the arm's
length acquisition of Imperial by Royal through a plan of
arrangement (the "
Arrangement"). Under the terms
of the Arrangement, Imperial Shareholders (as defined herein) will
receive 0.614 of a Royal common share (each whole share, a
"
Royal Share") for each Imperial common share
("
Imperial Share") held, which equates to a 10.01%
premium to Imperial shareholders based on the closing price for
Imperial and Royal on April 29, 2022.
Strategic Highlights
and Benefits of the Arrangement
The board of directors and executive management
teams of both Royal and Imperial believe that the Arrangement will
provide significant benefits to the shareholders of both companies.
The Arrangement:
- represents an
attractive opportunity for Imperial Shareholders to own shares in a
larger, more liquid publicly traded entity at an exchange ratio
that implies a 10.01% premium to the current trading price of
Imperial Shares;
- allows Imperial
Shareholders to participate in the exploration and development
growth upside with Royal's 1 million+ acre helium land base
comprised of over 10 separate potential helium fairways that has
seen over $20 million of capital investment to date in the form of
magnetic surveys, seismic surveys, geoscience and exploration
drilling;
- creates a
larger entity with increased access to capital to enable the
financing of ongoing exploration, development and processing plant
expenditures;
- represents the
accretive acquisition of two ready-to-produce helium wells to bring
on production along with Royal's Climax wells;
- increases
Royal's near-term production assets and expected early cash
flow;
- creates a
logical consolidator of additional helium exploration and
development opportunities with Imperial Shareholders expected to
realize the benefit of being early shareholders;
- creates an
entity with significant indicative helium capacity enabling the
expedition of offtake discussions and increased opportunity to
monetize assets;
- materially
reduces Royal and Imperial's aggregate general and administrative
costs;
- creates an
entity of a scale that is expected to be more relevant to
international investors with the combination creating one of the
largest diversified helium companies listed on a Canadian exchange;
and
- reduces the
exploration risk of Imperial Shareholders by offering upside
exposure to all of Royal's exploration lands.
Andrew Davidson, President and Chief Executive
Officer of Royal Helium Ltd. states, "We are excited to have
entered into this agreement with Imperial. The Steveville property,
along with all of the other properties that Imperial has been
targeting, make an accretive addition to Royal's near-term Climax
field as well as adding to the expansive properties currently held
by Royal. This acquisition would allow Royal to initiate production
and significant cash flow from multiple fields near term,
accelerate its production profile and enhance future growth for all
shareholders."
Kyler Hardy, Co-Chairman of Imperial Helium
Corp. commented, "Imperial sees this agreement as an opportunity to
be a part of a bigger and stronger helium exploration and
development company. Following Royal's successful exploration
campaign at Climax, they have completed some tremendous work to
make helium production in Canada a near term reality and the
addition of the Steveville property will further assist in
achieving this goal. The combined company will be very well
positioned to offer stable supply of helium to the world's largest
market at a time when existing supplies are challenged by
geopolitical events."
Summary of the Arrangement
Pursuant to the Arrangement Agreement, Royal has
agreed to acquire all of the issued and outstanding Imperial Shares
(including Imperial Shares issuable on the vesting and conversion
of preferred shares of Imperial) by way of a statutory plan of
arrangement under the Business Corporations Act (British Columbia)
(the "BCBCA") and the terms of a final order of
the Supreme Court of British Columbia (the
"Court") under Section 291 of the BCBCA. Pursuant
to the terms of the Arrangement, shareholders of Imperial (the
"Imperial Shareholders") will receive 0.614 (the
"Exchange Ratio") of a Royal Share, for every
Imperial Share held. Imperial Shareholders will retain a meaningful
stake in the combined entity and exposure to the continued success
of the combined company.
Following the Arrangement, each outstanding
warrant to purchase an Imperial Share (the "Imperial
Warrants") outstanding shall receive upon the exercise of
such Imperial Warrant, in lieu of each Imperial Share to which such
holder was theretofore entitled upon such exercise, and for the
same aggregate consideration payable therefor, the fraction of a
Royal Share represented by the Exchange Ratio that the holder would
have been entitled to receive as a result of the transactions
contemplated by the Arrangement if, immediately prior to the
effective time of the Arrangement, such holder had been the
registered holder of the number of Imperial Shares to which the
holder was theretofore entitled upon the exercise of such Imperial
Warrant. Pursuant to the Arrangement, outstanding stock options to
acquire Imperial Shares will be exchanged for options to acquire
Royal Shares, at numbers and exercise prices adjusted for the
Exchange Ratio, and exercisable for a period of 30 days following
closing.
The Arrangement Agreement contains
representations and warranties for the benefit of each of Royal and
Imperial, conditions relating to Imperial Shareholder, Court and
regulatory approvals, material adverse changes and compliance with
the Arrangement Agreement as are in each case customary in
comparable transactions of this nature.
Completion of the Arrangement is subject to a
number of conditions being satisfied or waived by one or both of
Royal and Imperial at or prior to closing of the Arrangement,
including approval of the Imperial Shareholders, together with any
requisite minority approvals, the receipt of all necessary
regulatory and Court approvals and the satisfaction of certain
other closing conditions customary for a transaction of this
nature.
Details of this arm's-length Arrangement will be
disclosed in a management information circular of Imperial, which
will be mailed to Imperial Shareholders and will also be available
on SEDAR at www.sedar.com. A copy of the Arrangement Agreement
will also be available on SEDAR at www.sedar.com.
It is expected that the special meeting of
Imperial Shareholders (the "Meeting") to approve
the proposed Arrangement will be held in the second half of June
2022 and, if approved at the Meeting, it is expected that the
Arrangement would close shortly thereafter.
Currently, Royal has 142,741,726 shares
outstanding, and will have 203,843,231 shares outstanding once the
Arrangement is completed.
There are no finders fees payable in conjunction
with the Arrangement.
Governance
At closing, the board of directors of Royal will
be increased to include one additional member from Imperial's board
of directors and will be led by Royal's current Chairman, Andrew
Davidson. Further, incumbent senior officers, management and
employees of Royal shall be retaining their current positions after
closing.
Shareholder Approvals, Support
Agreements and Closing
Implementation of the Arrangement will be
subject to the approval of Imperial Shareholders at a special
meeting to be held in the second half of June 2022, by a majority
of not less than two-thirds of the votes cast by Imperial
Shareholders.
Management, insiders and directors of Imperial
holding approximately 16% of the outstanding Imperial Shares on a
diluted basis including outstanding performance shares have entered
into support agreements under which they have agreed, among other
things, to vote in favour of the Arrangement.
The Arrangement Agreement provides for
non-solicitation covenants on the part of Imperial with respect to
alternative transactions, subject to its ability to consider,
pursuant to the fiduciary obligations of the Imperial board of
directors, a proposal for an alternative transaction that meets
specified criteria and the right of Royal to match any such
proposal, and for the payment of certain fees by Imperial if the
Arrangement Agreement is terminated. The Arrangement Agreement
includes break fee of $1,000,000 payable by Imperial to Royal
pursuant to the terms of the Arrangement Agreement.
Fairness Opinion
Haywood Securities Inc. has provided the board
of directors of Imperial with an opinion to the effect that, as of
the date of the Arrangement Agreement, the consideration to be
received by the Imperial Shareholders under the Arrangement is
fair, from a financial point of view, to such Imperial
Shareholders.
Advisors
Cormark Securities Inc. is acting as the
exclusive financial advisor to Royal with respect to the
Arrangement. Bennett Jones LLP is acting as Royal's legal
advisor.
Eight Capital is acting as financial advisor to
Imperial. Borden Ladner Gervais LLP is acting as Imperial's legal
advisor.
Recommendation of the Imperial
Board
The Arrangement Agreement has been approved by
the board of directors of Royal and Imperial, and the board of
directors of Imperial recommends that the Imperial Shareholders
vote in favour of the Arrangement.
About Royal Helium Ltd.
Royal controls over 1,000,000 acres of
prospective helium land in southwestern and south-east
Saskatchewan. All of Royals' lands are in close vicinity to
highways, roads, cities and importantly, close to existing oil and
gas infrastructure, with a significant portion of its land in close
proximity to existing helium producing locations. With stable,
rising prices and limited, non-renewable sources for helium
worldwide, Royal intends to become a leading North American
producer of this high value commodity.
About Imperial Helium Corp.
Imperial Helium Corp. is focused on the
exploration and development of helium assets in North America,
initially through the anticipated commercialization of its
Steveville, Alberta helium discovery.
For further information, please
contact:
Royal Helium Ltd.Andrew DavidsonPresident and Chief Executive
OfficerTel: 306-229-2655Email: davidson@royalheliumltd.comOr Dean
Nawata, Vice President Tel: 604-561-2821Website:
https://royalheliumltd.com/ |
|
Imperial Helium Corp.Kyler HardyCo-ChairmanTel: 250-877-1394Email:
khardy@cronincapital.ca Website: https://imperialhelium.ca/ |
Forward-Looking Information
This news release contains certain
forward-looking information and statements within the meaning of
applicable Canadian securities laws concerning the proposed
transaction and the business, operations and financial performance
and condition of Royal and Imperial. Forward-looking statements and
forward-looking information include, but are not limited to, the
successful completion of proposed acquisition; synergies and
financial impact of the acquisition; the benefits of the
development potential of the properties of Royal and Imperial; the
future price of helium; the estimation of reserves and resources;
the realization of reserve estimates; the timing and amount of any
estimated future production; costs of production; success of
exploration activities; market volatility and disruptions in many
aspects of Royal's and Imperial's business due to a pandemic virus
outbreak, such as COVID-19, resulting from government policies
restricting mobility assembly, or contact to, employees and
suppliers across the global supply chain; and currency exchange
rate fluctuations. Except for statements of historical fact
relating to Royal and Imperial, certain information contained
herein constitutes forward-looking statements. Forward-looking
statements are frequently characterized by words such as "plan,"
"expect," "project," "intend," "believe," "anticipate", "estimate"
and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements are
based on the opinions and estimates of the management of Royal or
Imperial at the date the statements are made, and are based on a
number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. Many of these assumptions are based on
factors and events that are not within the control of Royal or
Imperial and there is no assurance they will prove to be
correct.
Factors that could cause actual results to vary
materially from results anticipated by such forward-looking
statements include: risks of the helium exploration and development
industry; the spread of COVID-19 and its variants and the impact of
government policies to ameliorate COVID-19 and its variants;
failure of plant, equipment or processes to operate as anticipated;
changes in market conditions; risks relating to operations;
fluctuating helium prices and currency exchange rates; changes in
project parameters; and the possibility of project cost overruns or
unanticipated costs.
These factors are discussed in greater detail in
Royal's most recent annual information form, and the most recent
management's discussion and analysis for each of Royal and
Imperial, which are filed on Royal's and Imperial's respective
SEDAR profiles and provide additional general assumptions in
connection with these statements. Royal and Imperial caution that
the foregoing list of important factors is not exhaustive.
Investors and others who base themselves on forward-looking
statements should carefully consider the above factors as well as
the uncertainties they represent and the risk they entail. Royal
and Imperial believe that the expectations reflected in those
forward-looking statements are reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this presentation should not
be unduly relied upon.
Although Royal and Imperial have attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such
statements.
Neither Royal or Imperial undertakes any
obligation to update forward-looking statements if circumstances or
management's estimates or opinions should change except as required
by applicable securities laws. The reader is cautioned not to place
undue reliance on forward-looking statements.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
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