Kimmeridge, an energy sector-focused alternative asset manager, has proposed a strategic combination with SilverBow Resources, aiming to create a key Eagle Ford shale operator.
The offer, which includes a substantial equity investment, values US oil and gas producer SilverBow at close to $2.1bn, including debt.
Under the proposal, Kimmeridge would contribute its Kimmeridge Texas Gas assets, valued at $1.1bn, in exchange for 32.4 million SilverBow shares at $34 each.
Additionally, Kimmeridge plans to invest $500m of new equity at the same share price, receiving 14.7 million shares.
Upon completion of the proposed transaction, Kimmeridge and its affiliates would hold a majority stake in the combined entity, with approximately 50.3 million shares, including their existing 3.3 million share position in SilverBow.
Kimmeridge has confirmed it has the necessary capital to finance the $500m equity investment, which would be utilised to reduce SilverBow's long-term debt.
In a press statement, Kimmeridge said: “Kimmeridge has received highly confident letters from Barclays, RBC Capital Markets and other lenders with respect to the debt consideration required to facilitate the transaction.”
Kimmeridge's control of the combined company would constitute a supermajority, including the shares it currently owns, with the remainder held by public shareholders.
In a press statement, SilverBow said: “Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the SilverBow Board of Directors will carefully review and consider the proposal to determine the course of action that it believes is in the best interest of the Company and all of its shareholders. SilverBow shareholders do not need to take any action at this time.”
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