CALGARY, ALBERTA–(Marketwired – March 13, 2017) –
Editors Note: There is a graph associated with this press release.
Total Energy Services Inc. (“Total Energy“) (TSX:TOT) announced today that it has finalized a notice of variation, dated March 13, 2017 (the “Notice of Variation“), in relation to its previously announced waiver of the 66 2/3% minimum tender condition (the “Minimum Tender Condition“) to its offer (the “Total Offer“) to purchase all of the issued and outstanding common shares (the “Savanna Common Shares“) of Savanna Energy Services Corp. (“Savanna“). The Total Offer remains subject to the statutory minimum condition, which requires that more than 50% of the outstanding Savanna Common Shares (excluding Savanna Common Shares held by Total Energy and certain related persons) be tendered to the Total Offer and not withdrawn. The waiver of the Minimum Tender Condition does not affect the consideration offered by Total Energy for Savanna Common Shares or the expiry time of the Total Offer. Total Energy expects that the Notice of Variation will be filed with applicable securities regulatory authorities and mailed to registered Savanna securityholders today. Assuming all other conditions of the Total Offer are satisfied as of the expiry of the initial deposit period, on March 24, 2017, Total Energy expects to take-up and pay for all Savanna Common Shares deposited (and not withdrawn) under the Total Offer at that time and to extend the Total Offer in accordance with applicable Canadian securities laws.
|THE TOTAL OFFER REMAINS OPEN FOR ACCEPTANCE UNTIL 11:59 P.M. (PACIFIC TIME) ON MARCH 24, 2017 UNLESS THE OFFER IS EXTENDED OR WITHDRAWN BY TOTAL ENERGY.|
Total Energy has confirmed with the Savanna shareholders who entered into support agreements with Total Energy in November 2016 (the “Locked-Up Shareholders“) that all of them view the Total Offer as superior to the proposed combination of Savanna and Western Energy Services Corp. (“Western“) announced by Savanna on March 9, 2017 and that all Locked-Up Shareholders will tender their Savanna Common Shares to the Total Offer. Based on public filings and additional information communicated to Total Energy concerning recent purchases made by Locked-Up Shareholders, the number of Savanna Common Shares to be tendered by the Locked-Up Shareholders represents approximately 43.5% of the total number of issued and outstanding Savanna Common Shares.
Information concerning the waiver of the Minimum Tender Condition is set out in the Notice of Variation, which will be available on SEDAR (at www.sedar.com), under Savanna’s issuer profile, when it is filed with Canadian securities regulatory authorities later today. Savanna securityholders are urged to review the Notice of Variation carefully and in its entirety. The Notice of Variation will also be available on Total Energy’s website at www.totalenergy.ca/savannaoffer.
Savanna’s use of 2014 Financial Data for Comparative Purposes
In its Notice of Change to Directors’ Circular, dated March 9, 2017 (the “Savanna Notice of Change“), Savanna presented certain 2014 financial information to suggest that the combined entity resulting from a combination of Savanna and Western would be better positioned to benefit from an industry recovery than Total Energy following a combination with Savanna. In making an assessment of that suggestion, Savanna shareholders should consider the following performance tables showing the comparative performance of Western, Savanna and Total Energy.
Comparative Shareholder Returns
The following comparative shareholder return graph has been prepared by Total Energy’s financial advisor, GMP FirstEnergy, and is based upon share trading data, as reported by the TSX, since Western completed a corporate reorganization and recapitalization transaction on December 22, 2009 and includes cash dividends paid to shareholders of Total Energy, Savanna and Western over the time period noted below.
To view the graph associated with this press release, please visit the following link: http://www.marketwire.com/library/20170313-total_energy_services_march13_graph01.jpg
The foregoing graph illustrates the dramatic underperformance of each of Savanna and Western in generating shareholder returns relative to Total Energy and the Canadian energy services industry over the past seven years. The industry leading track record of Total Energy in the creation of sustainable shareholder returns is also clearly illustrated. The combination of Savanna and Western pursuant to the proposed plan of arrangement between Savanna and Western (the “Western Arrangement“) will result in two heavily indebted companies becoming one under the stewardship of directors and management that have materially and consistently underperformed their industry peers, particularly Total Energy. In contrast, the combination of Total Energy and Savanna will provide Savanna shareholders with the benefit of a board of directors and management team that has consistently provided Total Energy shareholders with industry leading shareholder returns.
Comparative Stewardship Record
The following table further illustrates the inefficient capital allocation and stewardship records of each of Savanna and Western relative to Total Energy, as well as the vulnerability a combined Savanna and Western entity would have to continued challenging industry conditions as a result of their substantial debt levels.
|Comparative Capital Stewardship Record – Snapshot|
|Property, plant & equipment (“PP&E”) at January 1, 2014, million $||$||783.2||$||1,185.3||$||382.3|
|Goodwill at January 1, 2014, million $||88.7||10.6||4.1|
|Total capital assets||871.9||1,195.9||386.4|
|2014 EBITDA, million $||173.2||158.8||105.5|
|2014 EBITDA per $1.00 of capital assets at January 1, 2014, $||$||0.20||$||0.13||$||0.27|
|Cumulative PP&E/Goodwill impairment write-downs from September 30, 2005 to December 31, 2016, million $||$||157.0||$||1,039.1||$||–|
|Total debt at December 31, 2016, million $||264.8||243.4||46.9|
|EBITDA 2016, million $||3.6||39.2||14.0|
|Total debt to EBITDA, December 31, 2016, times||73.8||6.2||3.3|
|(1)||EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to net income (loss) before income taxes plus finance costs plus depreciation expense plus impairment expense plus loss on asset decommissioning minus finance income. EBITDA is not a recognized measure under IFRS. The EBITDA calculations included in this table have been provide to permit Total Energy to respond to certain statements made by Savanna on page 7 of the Savanna Notice of Change. Management of Total Energy believes that in addition to net income (loss), EBITDA is useful supplemental measure as it provides an indication of the results generated by Total Energy’s primary business activities prior to consideration of how those activities are financed, amortized or how the results are taxed in various jurisdictions as well as the cash generated by Total Energy’s primary business activities without consideration of the timing of the monetization of non-cash working capital items. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of Total Energy’s performance. Total Energy’s method of calculating EBITDA may differ from other organizations and, accordingly, EBITDA may not be comparable to measures used by other organizations.|
About Total’s Offer to Savanna Shareholders
Full details of the Total Offer are contained in the offer to purchase and associated take-over bid circular, dated December 9, 2016 (the “Original Offer and Circular“), as amended, varied and supplemented (as applicable) by the notice of change and variation dated March 1, 2017 (the “First Notice of Change“) and the Notice of Variation. Following filing of the Notice of Variation with Canadian securities regulatory authorities, all of those documents will be available under Savanna’s profile at www.sedar.com and on Total Energy’s website at www.totalenergy.ca/savannaoffer. Securityholders of Savanna are urged to read the Original Offer and Circular, the First Notice of Change, the Notice of Variation, the Letter of Transmittal that accompanied the Original Offer and Circular, the amended Letter of Transmittal that accompanied the First Notice of Change and the Notice of Guaranteed Delivery for the Offer (collectively, the “Offer Documents“) and to consider the important information set out in those documents. Copies of the Offer Documents may be obtained free of charge at www.sedar.com (under Savanna’s profile) and may also be obtained free of charge upon request from the Corporate Secretary of Total Energy, at 2550, 300 – 5th Avenue S.W. Calgary, Alberta T2P 3C4, or from Laurel Hill Advisory Group (“Laurel Hill“) at the numbers and email address shown below under the heading “Advisors to Total Energy”.
Advisors to Total Energy
Total Energy has engaged GMP FirstEnergy to act as its financial advisor and dealer manager. Bennett Jones LLP is acting as Canadian legal advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as United States legal advisor in connection with the Offer.
Laurel Hill has been retained as information agent for the Offer. Savanna shareholders may contact Laurel Hill by telephone at 1-877-452-7184 (Toll Free in North America) or 1-416-304-0211 (Collect Outside North America) or by email at email@example.com.
Computershare Investor Services Inc. (“Computershare“) has been retained as the depositary for the Offer. Shareholders of Savanna may contact Computershare by telephone at 1-800-564-6253 (Toll free in North America), or at 1-514-982-7555 (Collect Outside of North America), or by e-mail at firstname.lastname@example.org.
About Total Energy
Total Energy is a growth oriented energy services corporation involved in contract drilling services (Chinook Drilling), rentals and transportation services (Total Oilfield Rentals) and the fabrication, sale, rental and servicing of natural gas compression (Bidell Gas Compression) and process equipment (Spectrum Process Systems).
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
This news release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the applicable securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
Total Energy has filed with the U.S. Securities and Exchange Commission (“SEC“) a Registration Statement (the “Registration Statement“), which includes the Original Offer and Circular, the First Notice of Change and the Notice of Variation, relating to its offer to Savanna shareholders. TOTAL URGES INVESTORS AND SECURITYHOLDERS TO READ THE REGISTRATION STATEMENT, THE ORIGINAL OFFER AND CIRCULAR, THE FIRST NOTICE OF CHANGE AND THE NOTICE OF VARIATION AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC AND CANADIAN SECURITIES REGULATORY AUTHORITIES, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors may obtain a free copy of the Original Offer and Circular, the First Notice of Change and the Notice of Variation and other documents filed by Total Energy with the Canadian securities regulators at www.sedar.com (under the issuer profile for Savanna) and with the SEC at the SEC’s website at www.sec.gov. The Original Offer and Circular, the First Notice of Change and the Notice of Variation and other documents may also be obtained free of charge from Total’s website at www.totalenergy.ca/savannaoffer or upon request made to Total at 2550, 300 – 5th Avenue S.W., Calgary, Alberta T2P 3C4.
Securityholders should be aware that Total Energy may purchase Savanna Common Shares otherwise than under the Offer, such as in open market purchases.