IPC Announces Terms of Substantial Issuer Bid
May 12, 2022
NOT FOR DISTRIBUTION IN OR TO, OR TO ANY PERSON LOCATED IN OR RESIDING IN ANY JURISDICTION WHERE THE ISSUANCE, PUBLICATION OR DISTRIBUTION OF THIS DOCUMENT IS PROHIBITED BY LAW. DISTRIBUTION OF THIS DOCUMENT MAY BE CONTRARY TO THE LAW IN CERTAIN JURISDICTIONS.
International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) is pleased to announce the terms of its substantial issuer bid (the Offer) to purchase for cancellation up to CDN$128 million (equivalent to approximately US$100 million and SEK 990 million) of its common shares (Shares), commencing on May 16, 2022 and expiring at 5:00 p.m. (Eastern Standard Time) on June 28, 2022, unless varied or withdrawn. For shareholders who hold Shares directly or indirectly through the Swedish central securities depository system maintained by Euroclear Sweden AB (Euroclear), the Offer will expire at 5:00 p.m. (Central European Time) on June 20, 2022, unless the Offer is varied or withdrawn.
The Offer by IPC is being made by way of “modified Dutch Auction”, which will allow shareholders who choose to participate in the Offer to select a price of not more than CDN$14.00 (equivalent to approximately SEK 108.2) per Share and not less than CDN$12.00 (equivalent to approximately SEK 92.7) per Share (in increments of CDN$0.20 (equivalent to approximately SEK 1.55)) at which they are willing to tender all or part of their Shares to the Offer. Upon expiry of the Offer, IPC will determine the lowest purchase price per Share that will enable it to purchase the maximum number of Shares tendered to the Offer, having an aggregate purchase price not exceeding CDN$128 million. The purchase price under the Offer will be denominated in Canadian dollars and IPC’s obligation to make payment of amounts owing to a depositing shareholder whose Shares are taken up will be made in Canadian dollars.
Shareholders who wish to participate in the Offer will be able to do so through: (i) auction tenders, in which they specify the number of Shares being tendered at a specific price per Share; or (ii) purchase price tenders, in which they agree to have a specified number of Shares purchased at the purchase price to be determined pursuant to the Offer. Shareholders who validly deposit Shares without specifying the method in which they are tendering their Shares will be deemed to have made a purchase price tender.
If Shares with an aggregate purchase price of more than CDN$128 million are tendered, IPC will purchase the Shares on a pro rata basis. All Shares tendered at or below the finally determined purchase price will be purchased, subject to proration, at the same purchase price determined pursuant to the terms of the Offer. All deposited Shares not purchased, including all Shares deposited pursuant to auction tenders at prices in excess of the purchase price, will be returned to shareholders.
The Offer is not conditional upon any minimum number of Shares being tendered. The Corporation expects to fund any purchases of Shares pursuant to the Offer, including related fees and expenses, using the Corporation’s available cash on hand.
At the minimum and maximum of the pricing range of CDN$12.00 to CDN$14.00, the Offer will be for up to between 10.7 million Shares (approximately 7.1% of Shares currently outstanding) and 9.1 million Shares (approximately 6.1% of Shares currently outstanding), respectively. As of May 12, 2022, 150,966,013 common shares of IPC are issued and outstanding and IPC holds no common shares in treasury.
Nemesia S.à.r.l. (Nemesia), an investment company wholly owned by a Lundin family trust, has informed IPC that it does not intend to participate in the Offer. Nemesia beneficially owns, directly or indirectly, or exercises control or direction over, 40,697,533 Shares, representing approximately 27% of the current issued and outstanding Shares.
Shareholders who hold Shares directly or indirectly through Euroclear will receive a corresponding amount in Swedish Krona to the purchase price in Canadian dollars, less an amount on account of Canadian withholding taxes. The corresponding amount in Swedish Krona for the purchase price will be determined at a date promptly following completion of the Offer, as determined by Pareto Securities AB (the Swedish Manager) based on the available market rate on the date the purchase price is converted from Canadian dollars to Swedish Krona. The risk of any fluctuations in such foreign exchange rate, including risks relating to the particular date and time at which funds are converted, will be borne solely by the tendering shareholders who hold Shares directly or indirectly through Euroclear.
All shareholders who sell Shares under the Offer are generally expected to realize deemed dividends for purposes of the Income Tax Act (Canada). The amount of any such deemed dividend received by shareholders who hold Shares directly or indirectly through Euroclear will be subject to Canadian withholding tax at a rate of 25%, irrespective of (i) where such shareholder is resident for tax purposes; and (ii) whether such shareholder is entitled to the benefits of an applicable income tax treaty or convention. The amount of any such deemed dividend received by a shareholder who is a non-resident of Canada and who does not hold Shares directly or indirectly through Euroclear will be subject to Canadian withholding tax at a rate of 25% or such lower rate as may be substantiated under the terms of an applicable income tax treaty or convention. Shareholders are urged to evaluate carefully all information in the Offer Documents (as defined below) and consult their own financial, legal, investment, tax and other professional advisors in respect of the Offer.
The Offer allows the Corporation an opportunity to return up to CDN$128 million of capital to shareholders who elect to tender, while at the same time increasing the proportionate Share ownership of shareholders who elect not to tender to the Offer. The Offer is not expected to restrict the Corporation from pursuing further business and strategic opportunities.
The closing price of the Shares on May 2, 2022 (the last full trading day before IPC announced its intention to make the Offer) on the Toronto Stock Exchange (TSX) and Nasdaq Stockholm in Sweden (Nasdaq Stockholm) was CDN$12.28 and SEK 92.65, respectively. Further, the closing price of the Shares on May 10, 2022 (the last full trading day before the date of the Offer Documents) on the TSX and the Nasdaq Stockholm was CDN$11.78 and SEK 91.70, respectively. During the six months ended May 10, 2022: (i) the closing price of the Shares on the TSX has ranged from a low of CDN$6.32 to a high of CDN$13.15 per Share; and (ii) the closing price of the Shares on Nasdaq Stockholm has ranged from a low of SEK 43.8 to a high of SEK 100.0 per Share.
Details of the Offer, including instructions for tendering Shares, will be included in the formal offer to purchase and issuer bid circular, letter of transmittal, notice of guaranteed delivery and other documents relating to the Offer (collectively, the Offer Documents). The formal offer to purchase and issuer bid circular, letter of transmittal and notice of guaranteed delivery are expected to be mailed to shareholders, filed with the applicable Canadian securities regulatory authorities and made available, without charge, on SEDAR at www.sedar.com and the Corporation’s website at www.international-petroleum.com, on or about May 16, 2022. The