- No intention to increase consideration to be paid from $5.00 per STEP Share
- No indication of a competing transaction from any third party
- No intention by ARC to support any alternative transaction to acquire STEP Shares
- If vote were held today the transaction would be unsuccessful
CALGARY, AB, Dec. 13, 2024 /CNW/ – On November 4, 2024, STEP Energy Services Ltd. (“STEP“) announced the execution of a definitive arrangement agreement (the “Arrangement Agreement“) with 2659160 Alberta Ltd. and the limited partnerships comprising ARC Energy Fund 8 (a private equity fund advised by ARC Financial Corp.) (collectively, “ARC“) to take STEP private (the “Arrangement“) in an all-cash transaction at $5.00 per common share of STEP (“STEP Shares“). Since this announcement, approximately 40 million STEP Shares have traded and over 60% of these trades occurred at prices in excess of $5.00 per STEP Share. ARC believes that much of this trading is attributable to the actions of opportunistic, event-driven investors amassing ownership in STEP with a view to extracting an increase in the cash consideration to be paid per STEP Share from ARC.
ARC has made a compelling offer to the shareholders of STEP and ARC has no intention of increasing the consideration to be paid from $5.00 per STEP Share. The consideration to be paid resulted from extensive negotiations between ARC and the special committee of independent directors of the STEP board of directors (the “Board“) over a period of several months. The Arrangement has been unanimously approved by the Board (with one director who is a managing director of ARC, abstaining), which received a formal valuation and fairness opinion from its independent valuator in connection therewith, and is also recommended by Institutional Shareholder Services Inc.
The meeting of STEP shareholders (the “STEP Meeting“) is scheduled for December 19, 2024. Based on proxies submitted, if the vote were to be held today it would fail based on achieving less than a majority of the minority shareholder approval. ARC has advised STEP that ARC is prepared to waive STEP’s obligation to hold the STEP Meeting, thus allowing STEP to cancel the STEP Meeting at any time. ARC will continue to fulfil its contractual obligations under the Arrangement Agreement but ARC will allow the Arrangement to fail if a majority of the minority shareholders do not vote in favour of the Arrangement. In this circumstance, ARC, together with the limited partnerships comprising ARC Energy Fund 6, will continue to own in excess of 56% of the issued and outstanding shares of STEP and STEP will continue to be a reporting issuer listed on the Toronto Stock Exchange. ARC does not intend to make another proposal to take STEP private, or to support any alternative transaction to acquire the STEP Shares. ARC is not aware of any competing transaction from a third party.
SHAREHOLDER QUESTIONS AND VOTING ASSISTANCE
Shareholders who have questions or need assistance in voting should contact Laurel Hill Advisory Group by telephone at 1-877-452-7184 (North American Toll Free) or 1-416-304-0211 (Outside North America), or by email at assistance@laurelhill.com.
SOURCE ARC Financial Corp.