Petroleum Africa
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Friday, August 21, 2009
Mart Resources, Inc. announced yesterday that it has entered into an arrangement agreement
(the “Arrangement Agreement”) for the sale of all of the issued and outstanding securities of Mart to Westfield Exploration and Production Limited (the “Purchaser”), a private African Company and a wholly owned indirect subsidiary of Westoil Limited. The Arrangement Agreement supersedes the letter of intent between Mart and Westoil Limited, which was announced in Mart’s news release of May 27, 2009.
Mart Resources holds assets in Nigeria’s Umusadege Field where it is partnered with indigenous companies Midwestern Oil & Gas (operator) and Suntrust Oil Co. It also holds interests in the Qua Iboe Field which was awarded to Network E&P under the country’s Marginal Field Allocation Program in 2004.
Under the terms of the Arrangement Agreement, the Purchaser has agreed, subject to the
satisfaction of certain conditions, to acquire all of the issued and outstanding securities of Mart
by way of a plan of arrangement under the provisions of the Business Corporations Act (Alberta)
(the “Arrangement”). Under the terms of the Arrangement, holders of outstanding common
shares of Mart (“Mart Shares”) are to receive C$0.14 per Mart Share; holders of outstanding
purchase warrants to acquire Mart Shares (“Purchase Warrants”) are to receive C$0.005 per
Purchase Warrant and holders of outstanding broker warrants to acquire Mart Shares (“Broker
Warrants”) are to receive C$0.001 per Broker Warrant; and all options to acquire Mart Shares
are to be cancelled without payment of any consideration.
The Arrangement Agreement has been reviewed and approved by the special committee of
independent directors of Mart’s board of directors (the “Board”) and has been unanimously
approved by the Board following the receipt of a verbal fairness opinion (with a written opinion to
follow) of Research Capital Corporation, financial advisor to Mart. The fairness opinion states
that the consideration to be received by holders of Mart’s common shares and holders of Mart’s
common share purchase warrants pursuant to the Arrangement is fair, from a financial point of
view. Each member of the Board has indicated that he intends to vote all of his Mart securities
in favour of the Arrangement. The Board will recommend that holders of Mart’s common shares
and holders of Mart’s common share purchase warrants vote in favour of the Arrangement.
The Arrangement Agreement contains customary provisions prohibiting Mart from soliciting any
other acquisition proposal for the securities or assets of Mart or entering into any agreements
relating to an alternative acquisition transaction. Those restrictions are subject to certain
exceptions, which include, but are not limited to, allowing the Board to accept and recommend
to securityholders a superior proposal if it is required to do so in accordance with its fiduciary
duties. The Purchaser also has the right to match any such superior proposal. Mart has agreed
to pay a break fee of US$2.5 million to the Purchaser under certain circumstances including if
(i) Mart accepts a superior proposal that is not matched by the Purchaser; (ii) the Board elects
2 not to proceed with the transaction for any reason; or (iii) if Mart’s securityholders do not
approve the Arrangement by the requisite majority.
The Arrangement is subject to the approval of 66 2/3% of the votes cast by Mart shareholders
and 66 2/3% of the votes cast by Mart securityholders (being shareholders, option holders and
holders of Purchase Warrants and Broker Warrants), voting together as a single class, at a
special meeting of securityholders expected to be held on or about September 25, 2009. Closing of the Arrangement is subject to certain other conditions, including Alberta court and other regulatory approvals and is expected to close shortly after the special meeting. An information circular is expected to be mailed out to Mart shareholders in early September 2009.
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