RE: CA RNS21 Mar 2023 07:48
Part 3
The Fund has estimated that, if the Prax offer fails meaning that Hurricane continues as an independent company and depending on P6 well performance, shareholders in Hurricane would only ultimately receive between 5p and 8.5p. By contrast, this takeover offer provides growth potential which the Fund believes will deliver a far more capable and commercial management that is motivated to ensure that the contingent consideration of 6.48p per share is paid to Hurricane shareholders, resulting in Hurricane shareholders receiving 12.5p per share. Crystal Amber also believes that Hurricane's tax losses will provide Prax with significant incentives to purchase production assets, all of which will deliver existing Hurricane shareholders with what is effectively royalty income through to December 2026.
This outcome should also be seen in context. Firstly, the share prices of several of Hurricane Energy's peer group have fallen by 40% over recent months, Secondly, had Crystal Amber not succeeded in blocking the proposed and unnecessary debt restructure, which would have resulted in shareholders owning just five per cent of the company, this exit results in shareholders achieving a return 19 times greater, as a result of the then proposed 95% dilution to shareholders not being approved by the Court. Thirdly, over the last 12 months, it is widely acknowledged that the fiscal regime has become much more onerous, making the North Sea far less attractive region in which to invest. As a result, Crystal Amber is supportive of the offer from Prax and for the above reasons the Fund has agreed to provide an irrevocable undertaking to vote in favour of the Acquisition. Crystal Amber believes that Hurricane will be a very good investment for Prax. The purchase has been structured so that existing Hurricane shareholders will benefit financially from the success of Prax.
Sign In
Follow the stocks
