Hunter Group ASA enters into definitive agreement to acquire Dwellop AS
Oslo, 2 May 2017
This stock exchange announcement is made pursuant to the Continuing Obligations of the Oslo Stock Exchange section 3.4 (extended announcement). Reference is made to previous announcements concerning the contemplated acquisition of Dwellop AS (the "Transaction") as first announced on 20 March 2017, and latest the announcement of 24 April 2017 regarding completion of the extraordinary general meeting of Hunter Group ASA (formerly: Badger Explorer ASA) ("Hunter Group" or the "Company"), at which the Company's shareholders granted the Board of Directors an authorisation to issue consideration shares in connection with the completion of the Transaction.
The Company has today signed a definitive agreement (the "Agreement") to acquire 100% of the outstanding shares in Dwellop AS ("Dwellop") for a purchase price of NOK 185,000,000, whereof NOK 60,000,000 shall be settled in cash at completion of the Transaction and NOK 125,000,000 shall be settled by issuance of 192,307,692 new shares in the Company at a subscription price of NOK 0.65 per share (the "Consideration Shares"). The Transaction is expected to take place towards the end of May 2017.
Parties to the transaction, transaction structure and consideration
Prior to the Transaction, Dwellop is owned by its management and key employees (the "Sellers"). Hunter Group has entered into an agreement with the Sellers to acquire 100% of the outstanding shares of Dwellop and issue the Consideration Shares to the Sellers. Completion of the Transaction is subject to none of the parties being in material breach of the Agreement.
The Agreement otherwise contains terms customary in the Norwegian market, including representation and warranties and indemnities given by the Sellers.
The cash consideration will be paid at completion using the Company's existing cash reserves.
The Consideration Shares will be issued on completion of the Transaction using the authorisation granted to the Board of Directors of the Company issued on 24 April 2017. The Sellers have undertaken not to transfer or sell their Consideration Shares for 36 months following completion of the Transaction.
The Consideration Shares will be issued on a separate ISIN awaiting approval of an information document, which is expected to be published in the beginning of June 2017. The Consideration Shares will otherwise have the same rights as the Company's ordinary shares.
Members of the Dwellop management team are Sellers under the Agreement. There are no other agreements entered into, or that are planned to be entered into, in connection with the Transaction for the benefit of senior employees or members of the Board of Directors of the Company or for the senior employees or board of directors of Dwellop.
Significance of the transaction for Hunter Group
The acquisition of Dwellop represents an important milestone for Hunter Group under the new oil service consolidation strategy. The Company believes that products and technologies facilitating enhanced oil recovery ("EOR") at low costs will continue to be attractive going forward as it will increase oil companies' returns on existing assets. Dwellop is refining its business model to make EOR initiatives even more attractive for its clients. Hunter Group is already actively supporting Dwellop's management team in strengthening its position in the well intervention market, both through organic growth initiatives and add-on M&A opportunities. The Transaction is structured to align the interests of the Company's shareholders, Dwellop's management team and the Sellers. Due to Dwellop's strong business and product portfolio, the company will be organized as a standalone portfolio company of Hunter Group and will be developed as a separate business going forward. In addition to evaluating add-on acquisition opportunities to Dwellop in the well intervention segment, Hunter Group is also pursuing other strategic oil services investment opportunities to build a larger company in line with the communicated strategy.
Additional information about Dwellop
Dwellop is an independent systems and technology provider delivering topside handling equipment for well intervention, workover and plugging & abandonment (P&A) operations. A large part of the business is focused on the design and manufacturing of high quality mechanical and structural wireline, coil tubing and pipe handling equipment for the global well intervention market. Dwellop's business model covers both sale and rental of equipment and systems to E&P companies, service providers and vessel/rig owners, and the company has a broad product portfolio for safe and cost efficient well intervention operations.
During the last three years, Dwellop has been successful in establishing the company as a pioneer within modular workover rigs and surface handling equipment to the well intervention market. With a leading position in this attractive market niche, Dwellop is in a unique position to grow in a recovering market. The company is currently involved in several advanced discussions with clients for modular rig projects intended for well intervention and P&A operations. The company is headquartered in Stavanger, Norway. Dwellop's history dates back to 1989 and currently the company has 37 employees. In 2016, Dwellop generated NOK 209 million in revenues, NOK 46.5 million in EBITDA and NOK 38.2 million in net income.
As at the date of this announcement, Dwellop's board of directors consists of six individuals. The board members and current term of office are set out in the table below. After the completion of the Transaction, Hunter Group will own 100% of Dwellop and will change the board composition of the company.
|Name||Position||Served since||Term expires|
|Helge Hustoft||Board Member||2014||2018|
|Sigmund Prestegård||Board Member||2016||2018|
|Stein Diesen||Board Member||2016||2018|
|Geir Berge||Board Member||2016||2018|
|Torstein Slåtto Thomassen||Board Member||2016||2018|
As at the date of this announcement, Dwellop's management team consists of six individuals. The management team is presented in the table below:
|Helge Hustoft||Chief Executive Officer||2007|
|Arne Rødeseike||VP Well Intervention Systems||2009|
|Martin Lingsten||VP Workover Rigs||2007|
|Endre M. Gaard||VP Business Development||2014|
|Geir Berge||Procurement Manager||2014|
|Bitten Børresen Sterri||Finance Manager||2012|
As at the date of this announcement, Dwellop's share capital is NOK 5,000,000, divided into 5,000,000 shares, each share having a par value of NOK 1.
Please find below certain key financial figures (all in NOK million):
|Year ended 31 December|
|In NOK million||2016||2015||2014|
|Profit (loss) before tax||47.6||24.1||-11.2|
|Profit (loss) for the period||38.3||18.6||-11.2|
For further information about Dwellop, please refer to www.dwellop.no.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
For further information, please contact:
Vegard Urnes at +47 905 85 432