Penn West and Petrofund agree to merge and form the largest conventional oil & gas trust and create a growth oriented exploration company
Sunday April 16, 9:47 pm ET
The trusts together will form the largest conventional oil & gas trust in North America, with a large, high quality asset base, extensive growth prospects and a strong balance sheet.
Penn West and Petrofund Unitholders will also receive shares in a new, growth oriented exploration company.
CALGARY, April 16 /CNW/ - Penn West Energy Trust ("Penn West") and Petrofund Energy Trust ("Petrofund") are pleased to announce that they have entered into an arrangement agreement (the "Arrangement") that provides for the combination of Penn West and Petrofund to create the largest conventional oil and gas trust in North America (the "Combined Trust") with an enterprise value of more than $11 billion. The Combined Trust will operate under the Penn West name and will be led by the senior management team of Penn West including William Andrew as President and Chief Executive Officer and David Middleton as Executive Vice President and Chief Operating Officer.
Under the terms of the Arrangement, each Petrofund unit will be exchanged for 0.6 of a Penn West unit on a tax-deferred basis in Canada and the US. Petrofund unitholders will also receive a one-time special distribution of $1.00 per Petrofund unit, payable immediately prior to the closing of the Arrangement. Including the special distribution, the consideration to be received by the Petrofund unitholders represents a 3.6% premium based on the closing prices on April 13th of Petrofund and Penn West on the TSX, or a 6.3% premium based on the 20-day average unit prices. On completion of the merger, existing Penn West unitholders will own approximately 71 percent and Petrofund unitholders will own approximately 29 percent of the Combined Trust. In addition to the existing Penn West listing on the Toronto Stock Exchange, an application will be made to inter-list the trust units of Penn West on the New York Stock Exchange prior to the Arrangement closing. Petrofund's trust units are currently listed on the Toronto and American Stock Exchanges.
In addition, unitholders in both Trusts will receive common shares in a new publicly-listed, growth oriented exploration company ("Exploreco"), which will contain assets contributed from both Penn West and Petrofund. Each Penn West unitholder will receive 0.2 of a common share in Exploreco for each Penn West unit held and each Petrofund unitholder will receive 0.12 of a common share in Exploreco for each Petrofund unit held. The senior management team of Petrofund, including Jeffrey Newcommon as President and Chief Executive Officer and Glen Fischer as Chief Operating Officer, will lead Exploreco.
The Arrangement is subject to regulatory approval and the approval of at least 66 2/3 percent of both the Penn West and Petrofund unitholders. It is expected that the unitholder meetings related to the unitholder approvals will be held in late June 2006, with the Arrangement to close shortly thereafter. An Information Circular, prepared jointly by the trusts, will be mailed to unitholders of both Penn West and Petrofund in late May 2006. The Boards of Directors of both trusts have unanimously approved the combination, have agreed to vote their units in favour of the deal, and have received satisfactory fairness opinions from their respective financial advisors.
