OilVoice - Mosaic Oil Recommends Proposed Acquisition by AGL

Mosaic Oil Recommends Proposed Acquisition by AGL

Wednesday, July 14, 2010

Mosaic Oil NL has entered into a scheme implementation deed with AGL Energy Limited ('AGL') in relation to the proposed acquisition by AGL of all the issued shares in Mosaic.

Under the proposed acquisition, Mosaic shareholders will receive consideration of:
• $0.15 cash per fully paid share; or
• 1.01 AGL share for every 100 fully paid Mosaic shares.

This acquisition values the total issued shares in Mosaic at approximately A$130 million. The cash consideration of $0.15 per share represents premiums of:
• 92% to Mosaic's closing price of $0.078 per share on 30 June 2010, being the day prior to announcing receipt of the incomplete and non binding proposal from AGL; and
• 86% to the thirty day volume weighted average price of Mosaic shares to 30 June of $0.081 per share.

Today's announcement follows preliminary and non-binding discussions between Mosaic and AGL which occurred earlier in 2010. Following these discussions, AGL increased its offer terms to the level announced on 1 July 2010.

The proposed acquisition will be implemented via a scheme of arrangement ('Scheme'). The scheme implementation deed attached to this announcement sets out the other key elements of the proposed acquisition.

Under the scheme implementation deed, Mosaic retains flexibility to engage in discussions with third parties until 4 August 2010 in relation to possible competing proposals. After this time, customary exclusivity provisions will apply. A break fee of approximately A$1.3 million would be payable to AGL but only where a competing proposal is completed within six months of announcing such proposal.

Chairman of Mosaic Mr David Herlihy said:
'The proposed acquisition of Mosaic will enable shareholders to realise value for their Mosaic shares at a substantial premium to recent trading levels. The Board is pleased with this offer from AGL which we believe adequately reflects the fundamental value of the portfolio of oil and gas assets that Mosaic has put together over several years.'

'Further, Mosaic shareholders may be eligible for capital gains tax rollover relief if they choose the AGL scrip alternative. The Board has carefully considered all possible options, and consulted widely with our shareholders and advisers.'

The Board of Mosaic unanimously recommends that Mosaic shareholders vote in favour of the Scheme at the scheme meeting, and each Director intends to vote their shares in favour of the Scheme, in the absence of a superior proposal and subject to an independent expert concluding that the Scheme is in the best interests of Mosaic shareholders.

'The price offered represents a significant premium to Mosaic's volume weighted average share price in the month leading up to the Proposal,' said Mosaic Chief Executive Officer Alex Parks. 'This premium reflects how far Mosaic has come in building its value in a difficult economic climate, and is a testimony to the staff and management's dedicated efforts.'

A scheme booklet containing information related to the proposed acquisition, details of the scheme meeting and reasons for the Directors' recommendation is expected to be dispatched to Mosaic shareholders in early September. The shareholder meeting to approve the Scheme is expected to take place in early October.

Mosaic is being advised by UBS AG, Australia Branch as financial adviser and Chang, Pistilli & Simmons as legal adviser.

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