Renegade Petroleum (TSX-V:RPL
), a Calgary-based firm engaged in the exploration, development, and production of oil and natural gas in Canada and the United States, announced plans today to combine with Alexander Energy TSX-V:ALX, StockForum
According to the news release, the business combination will create a high-growth entity primarily geared toward light oil. The newly formed combined company is intended to maintain a Saskatchewan focused, and concentrated, asset base of high netback, low decline oil assets.
Considering the combined company’s strong financial position and significant financial flexibility, it will allow the newly formed entity to offer investors with consistent per share growth.
The combination will be enabled by way of a plan of arrangement as outlined under the Business Corporation’s Act (Alberta) and will end up with the combined company carrying on its business under the name of Spartan Energy and will trade on the TSX under the symbol “SPE”.
According to the news release, “Pursuant to the Arrangement Agreement, Alexander has agreed to acquire all of the issued and outstanding common shares of Renegade (the "Renegade Shares") on the basis of holders of Renegade Shares ("Renegade Shareholders") receiving 2.25 common shares (0.5625 of a common share post-completion of the Alexander 4:1 share consolidation) of Alexander (the "Alexander Shares") for each Renegade Share held.”
It detailed further, “Based on Alexander's five day weighted average trading price of $0.69, the implied price per Renegade Share is $1.55, representing a 65% premium to the five day weighted average trading price of the Renegade Shares of $0.94.”
Spartan will be led by the current management team and board of Alexander, with Rick McHardy coming in to head up the combined company as president and CEO.
Rick McHardy, Alexander president and CEO, commented, “This transaction will establish a significant presence for Spartan in southeast Saskatchewan and will position the company for continued growth and success. This is the second high quality acquisition since the recapitalization of Alexander just two months ago, and a key strategic step in our growth towards becoming an oil-focused intermediate producer in the coming years.
Renegade Interim CEO, Andrew Greenslade, commented, “The combined company represents an exciting opportunity for Renegade Shareholders to retain their exposure to the upside inherent in these assets, and participate in a larger, more liquid, light oil focused entity with a substantial platform for growth.”
Renegade was in the news recently when the company announced a $58 million capital budget a week ago
Shares jumped 24.00% on the news to $1.24 per share.
Currently there are 203.9m outstanding shares with a market cap of $252.8 million.