14th Jun 2006 07:38
Expro International Group PLC14 June 2006 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA 14 June 2006 Expro International Group PLC Proposed acquisition of Power Well Services for $674.5 million and 5 for 14 Rights Issue at 500 pence per New Share to Qualifying Shareholders to raise £127.6 million (net of expenses) Expro International Group PLC (the "Company", the "Group" or "Expro") todayannounces the acquisition of PWS, a leading supplier of well testing and otherflow management products and services to the global oil and gas industry for$674.5 million (£366.0 million), on a cash-free debt-free basis (the "Acquisition").PWS's operations include a global well testing business and a regional fluids analysis business, as well as choke equipment supply and related services to theland well market in the USA. PWS is a portfolio company of First Reserve Corporation,the oldest and largest private equity firm focused exclusively on investing in the energy industry. The consideration payable by the Company in relation to the Acquisitioncomprises the allotment and issue to the owners of PWS of 9,155,961 ConsiderationShares (representing US$115.0 million (£62.4 million)), with the balance to bepaid in cash. The Company proposes to raise approximately £127.6 million (net of expenses) byway of a rights issue (the "Rights Issue") to Qualifying Shareholders, theproceeds of which will be used towards payment of the cash balance of theconsideration for the Acquisition as described above. The remainder of the cashbalance of the consideration is to be financed through new Group bankfacilities. The Board believes that the Acquisition represents a significant opportunity forthe Group to accelerate its growth and enhance its market position consistentwith its continuing strategy. The Acquisition will significantly increase theGroup's geographic spread and critical mass by bringing into the Groupcomplementary businesses with a largely different geographic spread, therebycreating a leading global provider of exploration and production well testingand clean-up services. The Acquisition will also expand the Group's portfolio ofproducts and services into choke equipment supply and services. The Acquisition is expected to be earnings enhancing for the Company during thefirst full financial year after the issue of the New Shares and ConsiderationShares. (1) --------------------------(1) Before the amortisation of additional intangible assets recognised as partof the business combination under IFRS 3. Graeme Coutts, Chief Executive, commented: "The Company has had an excellent year both in terms of its financial performance as well as continuing to deliver on our strategic objectives. I am therefore delighted to announce the proposed Acquisition of PWS, a global business which is highly complementary to Expro's and which will significantly enhance our market position and global offering. Our strategy has been to develop market-leading businesses based on technology innovation, and this proposed Acquisition will further that strategy. The Company's existing well testing activities and those of PWS are geographically complementary, and PWS's strong presence in several key markets and key customer relationships will provide enhanced growth opportunities for the Company's other services. The Acquisition is a significant opportunity for the Company, at a time when the outlook for the upstream service sector is particularly positive." The Directors of Expro have received financial advice from JPMorgan CazenoveLimited and from Simmons & Company International Limited in relation to theAcquisition and from JPMorgan Cazenove Limited in relation to the Rights Issue. This summary should be read in conjunction with the full text of the followingannouncement. Appendix I sets out the expected timetable of principal events. Appendix II sets out definitions of terms used in this announcement. Enquiries: Expro International Group PLC +44 1189 591341Graeme Coutts, Chief Executive OfficerMichael Speakman, Finance Director JPMorgan Cazenove +44 20 7588 2828Financial adviser and corporate broker to Expro)Julian OakleyBarry Weir Weber Shandwick +44 20 7067 0700(Public relations adviser to Expro)Rachel TaylorStephanie Badjonat There will be an analysts' meeting at 9.30 a.m. (London time) today at theoffices of Weber Shandwick at Fox Court, 14 Gray's Inn Road, London WC1X 8WS. This announcement shall not constitute an offer of, or the solicitation of anyoffer to acquire New Shares or to take up entitlements to Nil Paid Rights in anyjurisdiction in which such an offer or solicitation is unlawful. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply withthese restrictions may constitute a violation of the securities laws of anysuch jurisdiction. Any purchase of, or application for, securities in the RightsIssue should only be made on the basis of information contained in theProspectus expected to be published today and any supplement thereto. This announcement is not an offer of securities for sale in the United States.Securities may not be offered or sold in the United States absent registrationor an exemption from registration. The New Shares, the Nil Paid Rights and theFully Paid Rights have not been, nor will they be, registered under the USSecurities Act of 1933, as amended, or under the securities laws of any state inthe United States or under the applicable securities laws of any ExcludedTerritory. Subject to certain exceptions, the New Shares, the Nil Paid Rightsand the Fully Paid Rights may not be offered or sold in the United States or inany Excluded Territory, or to or for the benefit of any national, resident orcitizen of any Excluded Territory. A circular to Shareholders relating to the Acquisition and a prospectus relatingto the Rights Issue are expected to be published today. The Circular givesfurther details of the Acquisition and contains a notice of an extraordinarygeneral meeting of the Company to approve the Acquisition, increase theauthorised share capital of the Company and give power to the Directors to allotand issue the New Shares and the Consideration Shares to be allotted and issuedto the vendors. The Prospectus gives further details of the New Shares, the NilPaid Rights and the Fully Paid Rights to be offered pursuant to the RightsIssue, the Company's business, the industry in which the Company operates and anindication of the size of the Enlarged Group. JPMorgan Cazenove is acting as Sponsor, Bookrunner and financial adviser toExpro. J.P. Morgan Securities Ltd. is acting as Underwriter in relation to theRights Issue. JPMorgan Cazenove, which is regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for the Company and no one else inconnection with the Acquisition and the Rights Issue, and will not beresponsible to anyone other than the Company for providing the protectionsafforded to its clients or for providing advice in relation to the Acquisition,the Rights Issue or any other matters referred to in this announcement. Simmons& Company International, which is regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for the Company and no oneelse in connection with the Acquisition and will not be responsible to anyoneother than the Company for providing the protections afforded to its clients orfor providing advice in relation to the Acquisition or any other mattersreferred to in this document. Any reproduction or distribution of this announcement in whole or in part, andany disclosure of its contents or use of any information herein for any purposeother than in considering an investment in the New Shares offered hereby, isprohibited. Certain statements in this announcement are forward-looking statements. By theirnature, forward-looking statements involve a number of risks, uncertainties orassumptions that could cause actual results or events to differ materially fromthose expressed or implied by the forward-looking statements. These risks,uncertainties or assumptions could adversely affect the outcome and financialeffects of the plans and events described herein. Forward-looking statementscontained in this announcement regarding past trends or activities should not betaken as a representation that such trends or activities will continue in thefuture. You should not place undue reliance on forward-looking statements, whichspeak only as of the date of this announcement. Except as required by law, theCompany is under no obligation to update or keep current the forward-lookingstatements contained in this announcement or to correct any inaccuracies whichmay become apparent in such forward-looking statements. No statement in this announcement is intended to be a profit forecast and nostatement in this announcement should be interpreted to mean that earnings perOrdinary Share for the current or future financial years would necessarily matchor exceed the historical published earnings per Ordinary Share. Prices andvalues of, and income from, shares may go down as well as up and an investor maynot get back the amount invested. It should be noted that past performance is noguide to future performance. Persons needing advice should consult anindependent financial adviser. Any statement to the effect that the Acquisitionis expected to be earnings enhancing for the Company should not be interpretedto mean that the earnings per share in the first full financial year ofownership, or in any subsequent period, will necessarily be greater than thosefor any completed financial period. Where US Dollar amounts in this document are followed by a pounds Sterlingcomparison such amounts have been converted, for informational purposes only,into pounds Sterling using an exchange rate of 1.8430, being the mid-market rateas at 4.00 p.m. on 9 June 2006, as published in the Financial Times on 10 June2006. This is not a prospectus but an advertisement. Investors should not purchase anyof the securities referred to in this document except on the basis of theinformation in the Prospectus expected to be published today and any supplementthereto. The Prospectus will be available at the offices of Expro InternationalGroup PLC at Reading Bridge House, Reading, Berkshire RG1 8PL. Introduction Expro today announces the acquisition of PWS, a leading supplier of well testingand other flow management products and services to the global oil and gasindustry, for $674.5 million (£366.0 million), on a cash-free debt-free basis.PWS's operations include a global well testing business and a regional fluidsanalysis business, as well as choke equipment supply and related services to theland well market in the USA. The consideration payable by the Company in relation to the Acquisitioncomprises the allotment and issue to the owners of PWS of 9,155,961 OrdinaryShares (representing US$115 million (£62.4 million)), with the balance to bepaid in cash. The Company proposes to raise approximately £127.6 million (net of expenses) byway of a rights issue to Qualifying Shareholders, the proceeds of which will beused towards payment of the cash balance of the consideration for theAcquisition as described above. The remainder of the cash balance of theconsideration is to be financed through new Group bank facilities. The Rights Issue Price of 500 pence per New Share represents a discount of 29.3per cent. to yesterday's implied ex-dividend middle market closing price of707.4 pence per Ordinary Share and a discount of 23.4 per cent. to the RightsIssue TERP. The Rights Issue has been fully underwritten by J.P. MorganSecurities Ltd. at the request of its affiliate JPMorgan Cazenove in order toprovide certainty as to the amount of equity capital to be raised. The RightsIssue is expected to result in the issue of 26,170,121 New Shares (representingapproximately 35.7 per cent. of the current issued share capital of the Company,and approximately 24.1 per cent. of the Company's issued share capital, asenlarged by the Rights Issue and issue of Consideration Shares). The Acquisition is conditional, inter alia, upon certain regulatory consentsbeing obtained. In view of its size relative to the Company, the Acquisition isalso conditional upon Shareholder approval. Shareholder approval will also besought to increase the authorised share capital of the Company, to allot the NewShares in connection with the Rights Issue and to allot the Consideration Sharesin connection with the Acquisition. A circular containing notice of an Extraordinary General Meeting of the Company,at which resolutions seeking the above approvals will be proposed, and aprospectus containing further information on the Rights Issue are expected to bedespatched to shareholders today. Reasons for the Acquisition Expro believes that the Acquisition represents a significant opportunity for theGroup to accelerate its growth and enhance its market position consistent withits continuing strategy. The Acquisition will significantly increase the Group'sgeographic spread and critical mass by bringing into the Group complementarybusinesses with a largely different geographic spread, thereby creating aleading global provider of exploration and production well testing and clean-upservices. The Acquisition will also expand the Group's portfolio of products andservices into choke equipment supply and services. The combination of the Group and the PWS Group will create a stronger welltesting and related services business with an enhanced international footprint,similar in size to Schlumberger's Well Testing business, the principalcompetitor in this area. PWS's Well Testing business complements the Group's global subsea offering.Expro believes that there will be opportunities to provide existing Exproproducts into new geographic territories currently served by PWS and to providecertain of PWS's services into the Expro integrated service offering. PWS hasoperations in approximately thirty countries, is active in the key markets ofthe Middle East, Brazil and Norway and has good relationships with the nationaloil companies in these regions. Expro believes that this established networkwill benefit from the introduction of Expro's high-value technology portfolio,particularly in Cased Hole services. The Acquisition will also expand the Group's product and service portfoliothrough the addition of Power Chokes. Power Chokes is a leading provider ofchokes (and related services) used for severe drilling, workover, stimulation,well control, under balanced drilling and production operation applications,with a particular focus in the US land well segment. Expro expects there to beopportunities to market the Power Chokes products on an international basis,particularly to regions with rapidly growing demand for under-balanced orpressure-controlled drilling (such as Oman, Kuwait and Saudi Arabia). PWS's fluids analysis business is complementary to, and will strengthen, theGroup's existing product offering and increase its geographic presence. Exprobelieves that considerable opportunities exist to further promote PWS'stechnology and to utilise shared knowledge and research resources in the future.Expro intends to integrate PWS into the Group's Regional Businesses. TheEnlarged Group will be split for management purposes into western and easternhemispheres and will be populated with management from both groups. Group Strategy Expro is one of the UK's leading international oil field services companies,supplying services and products that are fundamental to the safe, efficient andeconomic exploitation of hydrocarbon reserves. The Group has operations inapproximately fifty countries around the world and provides the global oil andgas industry with a range of high value added, differentiated services focusedon reducing client capital and operating costs in a safe and environmentallyfriendly manner. Throughout the first half of 2005, the results from the implementation ofExpro's growth strategy began to deliver strong financial performance. Theinitial strategic objective was aimed at setting new growth targets for thebusiness. There were three key areas identified for focus. First, managementwere required to re-engineer a loss-making Americas business. Secondly, a fargreater degree of client interaction was required which led to additionalinvestment in people, professional training and a fully integrated sales networkto improve the overall efficiency of Expro's customer care capability. Finally,the importance of technology development was emphasised and appropriatelyresourced. Technology enhancement took shape in two ways, firstly throughorganic projects such as the Joint Industry Partnership for riglessintervention, and secondly through the identification and acquisition ofbusinesses with synergistic growth technologies. To support this strategy in improving market conditions several key structuraland organisational changes were made. Additional management with the appropriatespecialisations were introduced to manage distinct aspects of Expro's business.Emphasis was also placed on separating the geographically dependent Cased HoleServices (''CHS'') and Surface and Environmental Systems (''SES'') from theproject driven Subsurface Systems (''SSS'') and Production Solutions business.Expro is now structured and managed under two distinct business segments-GlobalBusinesses and Regional Businesses. Expro's Global Businesses segment comprises those products and services that aredriven by global customer capital expenditure and where the Group is a providerof leading technology. These businesses are, in the main, highly technicallydifferentiated and require strong project management skills. This businesssegment encompasses the SSS business segment, including Subsea Safety Tools(''SST'') and the Group's major global subsurface Tronic/Matre brand, as well asExpro's Production Solutions business. The Regional Businesses comprise the technologies and services that arepredominantly local, infrastructure-dependent, and driven by client operatingexpenditure. This encompasses Expro's CHS, SES and well testing offerings. Expro's Board continues to believe that Expro operates in a cyclical market andtherefore Expro remains focused on its strategy to deliver a balance betweennear-term and long-term value creation for its shareholders to achieve ''growthbeyond the cycle''. Expro intends to apply its strategy initially to PWSprincipally by: •extending its customer care capability to new markets for the Group, such as the Middle East, Brazil and Norway; •extending existing Expro products and services into new geographic territories currently served by PWS; •including certain of PWS's services into the Group's integrated service offering; and •extending existing PWS choke products and services into new geographic territories. Expro's preliminary results (under IFRS) On 31 May 2006 the Company published its preliminary audited results for thefinancial year ended 31 March 2006, reporting profits before tax of £29.6million (2005: £11.0 million) on revenue of £300.7 million (2005: £211.3million), net assets of £109.6 million (2005: £53.2 million) and net debt of£17.1 million (2005: £53.7 million). Information on PWS PWS, headquartered in Houston, Texas, is a business created though a series ofacquisitions since 2004 and is now a leading provider of well testing and otherflow management products and services to the global oil and gas industry. Inaddition, it provides choke equipment supply and services designed for workingin operationally demanding environments in the land well market in the USA. PWShas operations in approximately thirty countries serving a customer base ofmajor international, national and large independent oil and gas companies. PWS was first established in February 2004 when First Reserve acquired PowerChokes, a US oilfield company specialising in choke equipment supply andservices. The Power Chokes products are critical pressure and flow controlcomponents, used in drilling related applications. In August 2004, PWS purchased the well testing assets of Halliburton EnergyServices Inc. in the USA, a business providing equipment for surface welltesting services in the exploration and production markets, cleanup and flowbacktesting for development wells, and subsea safety systems for well testing. Thissurface well testing business was then strengthened through the acquisition andintegration of two further companies: Petrotech ASA, a Norwegian businessacquired in February 2005 which specialised in fluids sampling and analysisservices, and the well testing business of Geoservices SA, a French-basedbusiness acquired in August 2005. The well testing business of Geoservicesoffered additional surface testing equipment and personnel and operated more inthe development market segment as opposed to the exploration and productionsegment. Additionally, it offered a supply of Downhole Test Tools required forPWS to provide an enhanced well test package offering. Finally, in January 2006,PWS acquired Flarestack, a small US supplier of flarestacks, also having apipeline testing capability, to complement its well testing business. As a result of the above acquisitions, PWS's businesses now provideinternational oil and gas companies with a product and service offering acrossthree complementary activities: Power Chokes, Well Testing and Fluids Analysis. Power Chokes Power Chokes is a leading designer and manufacturer of chokes utilised in severedrilling, workover, stimulation, well control, under balanced drilling andproduction operations applications and a provider of related services, with aparticular focus in the US land well segment. Well Testing PWS is a leading provider of well testing services to the offshore, includingdeepwater, and onshore markets and its business includes a severe servicecapability for operating in arctic/desert conditions. Fluids Analysis Petrotech is a provider of specialised fluids sampling, analysis, metering andinterpretation services, offering a range of services from downhole and surfacePVT sampling and wellsite chemistry through to specialised sampling techniquesfor gas/condensate well testing and the provision of multi-phase meteringsystems. The analysis services are provided via its main laboratory or can beperformed on site. PWS's audited financial information (restated for IFRS) PWS reported revenue for the year ended 31 December 2005 (being the date of itslatest audited accounts) of $203.9 million (£110.6 million) with operatingprofits of $19.0 million (£10.3 million). For the period since its creation on 6February 2004 to 31 December 2004, PWS reported revenues of $70.1 million (£38.0million) and operating profit of $6.6 million (£3.6 million). PWS has grownrapidly through the acquisitions it has made and has thereby significantlyincreased both its revenue and operating profits over the periods referred to.PWS's gross assets as at 31 December 2004 were approximately $240.1 million(£130.3 million). PWS's gross assets as at 31 December 2005 were approximately$381.1 million (£206.8 million). Funding and principal terms of the Acquisition Funding of the Acquisition The total consideration payable by the Company in relation to the Acquisition is$674.5 million (£366.0 million) on a cash-free debt-free basis and comprises9,155,961Consideration Shares to be allotted and issued fully paid up to theowners of PWS (representing US$115.0 million (£62.4 million)) and with thebalance to be paid in cash. The cash balance will be financed through a new $550million (£298.4 million) bank facility, together with approximately £127.6million (net of expenses) to be raised by means of a Rights Issue. The Rights Issue is expected to result in the issue of 26,170,121 New Shares(representing approximately 35.7 per cent. of the current issued share capitalof the Company, and approximately 24.1 per cent. of the Company's issued sharecapital, as enlarged by the Rights Issue and the issue of Consideration Shares).The Consideration Shares will be allotted and issued to the owners of PWS oncompletion of the Acquisition and will not entitle them to participate in theRights Issue or receive Expro's final dividend payable in respect of the yearended 31 March 2006. Furthermore, the vendors have agreed that approximately 90 per cent., by number, of the Consideration Shares will be locked up for a period of six months from 14June 2006, with, subject to certain conditions, approximately 45 per cent., bynumber, of the Consideration Shares being released to the relevant vendors after six months and the balance being released from the lock up after 14 June 2007. Principal terms of the Acquisition Under the terms of the Acquisition Agreement, Expro has agreed to purchase PWSby way of a two-step process for an aggregate consideration of $674.5 millionconsisting of $115.0 million in Consideration Shares and $559.5 million in cash(including repayment of PWS debt). The first step will be to acquire PWS's USentities, by way of a reverse merger under Delaware law with Power WellServices, Inc. (the holding company of PWS's US entities). Expro hasincorporated a Delaware subsidiary corporation (''Merger Sub'') to reverse intoPWS in order to effect the merger. Following the merger, the separate corporateexistence of the Merger Sub will cease and Power Well Services, Inc. will be thesole surviving corporation owned by Expro. The second step will be forExploration and Production Services (Holdings) Limited (Expro's UK holdingcompany) to acquire all the limited partner and general partner equity interestsin Power Well Holdings, LP, a Cayman exempted limited partnership, and for theemployee common units, incentive units and common units issued by Power WellHoldings, LP to be ''retired'' prior to the completion of the second step. The Acquisition is conditional, inter alia, upon certain regulatory consentsbeing obtained. In view of its size relative to the Company, the Acquisition isalso conditional upon Shareholder approval. Notice convening an ExtraordinaryGeneral Meeting convened for 3.00 p.m. on 3 July 2006 at which Shareholderapproval will be sought is set out at the end of the Circular. The regulatoryconsent conditions are currently expected to be satisfied by the end of July2006. Principal terms of the Rights Issue The Company proposes to raise approximately £127.6 million (net of expenses) byoffering 26,170,121 New Shares by way of rights to Qualifying Shareholders otherthan, subject to certain exceptions, those Shareholders with a registeredaddress in the United States, Canada, Australia, Japan and South Africa, at 500pence per New Share, payable in full on acceptance, on the basis of: 5 New Shares for every 14 Existing Shares held and registered in their name at close of business on the Record Date and soin proportion for any other number of Existing Shares then held. Wherenecessary, entitlements to New Shares will be rounded down to the nearest wholenumber of New Shares. Fractions of New Shares will not be allotted to QualifyingShareholders and fractional entitlements will be aggregated and, if possible,sold in the market as soon as practicable after the commencement of dealings inNew Shares, nil paid. The net proceeds of such sales (after deduction ofexpenses) will be aggregated and will ultimately accrue for the benefit of theCompany, save that any Qualifying Shareholder will receive any proceeds inrespect of a fractional entitlement of £5 or more. The Rights Issue Price of 500 pence per New Share represents a discount of 29.3per cent. to the implied ex-dividend middle market closing price of 707.4 penceper Ordinary Share on 13 June 2006, the last Business Day before thisannouncement. The Rights Issue has been fully underwritten by J.P. Morgan Securities Ltd. inorder to provide certainty as to the amount of equity capital to be raised. TheRights Issue is conditional, amongst other things, on Shareholders approving theAcquisition and the Acquisition Agreement not having been terminated (and notermination rights existing under it having arisen) before Admission. AfterAdmission, the Rights Issue will proceed even if the Acquisition does not. Inthese circumstances, the Company will consider whether to return the netproceeds of the Rights Issue to Shareholders. Prior to Admission, JPMorganCazenove and/or the Underwriter may terminate the Underwriting Agreement incertain circumstances. In addition to funding the Acquisition, the Rights Issue has been structured ina way that the Company has been advised creates distributable reserves for theCompany approximately equal to the net proceeds of the Rights Issue less the parvalue of the New Shares. The Company currently has sufficient distributablereserves to pay the final dividend for the year ended 31 March 2006. Application has been made to the FSA and to the London Stock Exchange for theNew Shares to be admitted, nil paid, to the Official List and to trading on theLondon Stock Exchange. Subject to certain conditions being satisfied, includingthe passing of the Resolutions at the Extraordinary General Meeting, it isexpected that Admission to the Official List will become effective and thatdealings will commence in the New Shares, nil paid, at 8.00 a.m. on 4 July 2006.A separate application will be made to the FSA and to the London Stock Exchangefor the Consideration Shares to be admitted, fully paid, to the Official Listand to trading on the London Stock Exchange. It is currently expected thatadmission will occur and that dealings will commence in the ConsiderationShares, fully paid, on Completion. The Rights Issue will result in the issue of up to 26,170,121 New Shares(representing approximately 35.7 per cent. of the current issued share capitalof the Company, and approximately 24.1 per cent. of the Company's issued sharecapital, as enlarged by the Rights Issue and the issue of Consideration Shares).The New Shares and the Consideration Shares will, when issued, be in registeredform and rank pari passu in all respects with the Existing Shares, including theright to receive all dividends and other distributions hereafter declared, madeor paid (other than the right to receive the final dividend payable for the yearended 31 March 2006). Financial effects of the Acquisition and Rights Issue The Acquisition is expected to be earnings enhancing for the Company during thefirst full financial year after the issue of the New Shares and ConsiderationShares. (2) --------------------------(2) Before the amortisation of additional intangible assets recognised as partof the business combination under IFRS 3. Current trading and prospects The Expro Group The Company published its Annual Results for the year ended 31 March 2006 on 31May 2006. The following is an extract from the full text of the announcement: ''The general outlook for the oil and gas services sector remains very positive, driven by client confidence and stable commodity prices, resulting in a strong uplift in client capital and operational expenditure. As a late cycle player, Expro is enjoying the benefit of these market conditions. This positive environment is providing good impetus to Expro's strategy, resulting in a positive outlook. Key markets, such as the United Kingdom Continental Shelf, have performed well for the Group and offer continued good prospects. West Africa and a revitalised Americas business are poised to provide further growth. Recruitment and retention of personnel, together with resource and cost management, are particularly challenging issues given the buoyant nature of the global industry. We remain focused on our strategy, including the further development of our customer care capability and, very importantly, the development of our future technology portfolio. Encouraged by our customers and early results, investment levels in the latter will increase as we strive for technical breakthroughs. Globally, our levels of tendering and enquiry remain high, in part driven by enhanced client interaction. Our order book and market outlook are sufficiently robust to give us confidence that we remain well set to continue to deliver our strategic goals.'' Current trading at the Group remains in line with management's expectations. The PWS Group PWS has performed well during 2006 and has continued to make good progress sinceits year end of 31 December. The current favourable oil and gas services marketconditions are providing strong demand for PWS's services and offer good growthprospects for the current financial year. The Enlarged Group The Board believes that, following completion of the Acquisition, the EnlargedGroup will be well placed to continue to benefit from the improvement in generalmarket conditions. The Board has confidence in the financial and tradingprospects of the Enlarged Group for the year ending 31 March 2007. Dividend policy Expro's policy is to have a sustainable, progressive dividend, conservativelycovered by an appropriate level of earnings and cash. The Board has declared afinal dividend of 7.1 pence per ordinary share, which will be payable to allShareholders on 31 July 2006 in respect of their shareholdings on the registerat 30 June 2006 (other than in respect of any New Shares or Consideration Sharesacquired, or rights entitlement taken up or acquired, in connection with theAcquisition and/or the Rights Issue). The New Shares and the ConsiderationShares will not be eligible to receive the final dividend for the year ended 31March 2006 but will thereafter rank pari passu in all respects with the ExistingShares. Overseas shareholders New Shares will be provisionally allotted to all Qualifying Shareholders,including all Qualifying Shareholders with a registered address in the UnitedStates, Canada, Australia, Japan or South Africa. However, due to securities lawrestrictions in the United States, Canada, Australia, Japan and South Africa,subject to certain exceptions, Qualifying Shareholders with a registered addressin those jurisdictions will not be sent a Provisional Allotment Letter nor willthey have their stock accounts in CREST credited with entitlement to Nil PaidRights as applicable, and Shareholders with a registered address in thosejurisdictions who were on the register of members of the Company at the close ofbusiness on 13 June 2006 have not been, and will not be, sent a copy of theProspectus. Notwithstanding the above, if Qualifying Shareholders provide to theCompany proof satisfactory to the Company that they are able properly andlawfully to receive a copy of the Prospectus and/or either receive a ProvisionalAllotment Letter or have their stock account in CREST credited with theirentitlements to Nil Paid Rights, as applicable, without the contravention of anyregistration or other legal requirement in any jurisdiction, they will be sent aProspectus and/or either be sent a Provisional Allotment Letter or have theirstock account in CREST credited with their entitlements to Nil Paid Rights, asapplicable. Extraordinary General Meeting A circular containing the notice convening an Extraordinary General Meeting ofthe Company relating to the Acquisition and a prospectus relating to the RightsIssue are expected to be published today and sent to Shareholders. The purposeof the meeting is to seek Shareholders' approval (i) for the Acquisition, (ii)for an increase in the authorised share capital of the Company and (iii) toauthorise the Directors, pursuant to section 80 of the UK Companies Act, toallot relevant securities up to a maximum aggregate nominal amount of£4,000,000. Financial Advice The Directors of Expro have received financial advice from JPMorgan Cazenove andSimmons & Company International in relation to the Acquisition and from JPMorganCazenove in relation to the Rights Issue. Enquiries: Expro International Group PLC +44 1189 591341Graeme Coutts, Chief Executive OfficerMichael Speakman, Finance Director JPMorgan Cazenove +44 20 7588 2828(Financial adviser and corporate broker to Expro)Julian OakleyBarry Weir Weber Shandwick +44 20 7067 0700(Public relations adviser to Expro)Rachel TaylorStephanie Badjonat This announcement shall not constitute an offer of, or the solicitation of anyoffer to acquire New Shares or to take up entitlements to Nil Paid Rights in anyjurisdiction in which such an offer or solicitation is unlawful. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes shouldinform themselves about and observe any such restrictions. Any failure to complywith these restrictions may constitute a violation of the securities laws of anysuch jurisdiction. Any purchase of, or application for, securities in the RightsIssue should only be made on the basis of information contained in theProspectus expected to be published today and any supplement thereto. This announcement is not an offer of securities for sale in the United States.Securities may not be offered or sold in the United States absent registrationor an exemption from registration. The New Shares, the Nil Paid Rights and theFully Paid Rights have not been, nor will they be, registered under the USSecurities Act of 1933, as amended, or under the securities laws of any state inthe United States or under the applicable securities laws of any ExcludedTerritory. Subject to certain exceptions, the New Shares, the Nil Paid Rightsand the Fully Paid Rights may not be offered or sold in the United States or inany Excluded Territory, or to or for the benefit of any national, resident orcitizen of any Excluded Territory. A circular to Shareholders relating to the Acquisition and a prospectus relatingto the Rights Issue are expected to be published today. The Circular givesfurther details of the Acquisition and contains a notice of an extraordinarygeneral meeting of the Company to approve the Acquisition, increase theauthorised share capital of the Company and give power to the Directors to allotand issue the New Shares and the new Ordinary Shares to be allotted and issuedto the vendors. The Prospectus gives further details of the New Shares, the NilPaid Rights and the Fully Paid Rights to be offered pursuant to the RightsIssue, the Company's business, the industry in which the Company operates and anindication of the size of the Enlarged Group. JPMorgan Cazenove is acting as Sponsor, Bookrunner and financial adviser toExpro. J.P. Morgan Securities Ltd. is acting as Underwriter in relation to theRights Issue. JPMorgan Cazenove, which is regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for the Company and no one else inconnection with the Acquisition and the Rights Issue, and will not beresponsible to anyone other than the Company for providing the protectionsafforded to its clients or for providing advice in relation to the Acquisition,the Rights Issue or any other matters referred to in this announcement. Simmons& Company International, which is regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for the Company and no oneelse in connection with the Acquisition and will not be responsible to anyoneother than the Company for providing the protections afforded to its clients orfor providing advice in relation to the Acquisition or any other mattersreferred to in this document. Any reproduction or distribution of this announcement in whole or in part, andany disclosure of its contents or use of any information herein for any purposeother than in considering an investment in the New Shares offered hereby, isprohibited. Each offeree of the New Shares, the Nil Paid Rights or the FullyPaid Rights by accepting delivery of this document agrees to the foregoing. Certain statements in this announcement are forward-looking statements. By theirnature, forward-looking statements involve a number of risks, uncertainties orassumptions that could cause actual results or events to differ materially fromthose expressed or implied by the forward-looking statements. These risks,uncertainties or assumptions could adversely affect the outcome and financialeffects of the plans and events described herein. Forward-looking statementscontained in this announcement regarding past trends or activities should not betaken as a representation that such trends or activities will continue in thefuture. You should not place undue reliance on forward-looking statements, whichspeak only as of the date of this announcement. Except as required by law, theCompany is under no obligation to update or keep current the forward-lookingstatements contained in this announcement or to correct any inaccuracies whichmay become apparent in such forward-looking statements. No statement in this announcement is intended to be a profit forecast and nostatement in this announcement should be interpreted to mean that earnings perOrdinary Share for the current or future financial years would necessarily matchor exceed the historical published earnings per Ordinary Share. Prices andvalues of, and income from, shares may go down as well as up and an investor maynot get back the amount invested. It should be noted that past performance is noguide to future performance. Persons needing advice should consult anindependent financial adviser. Any statement to the effect that the Acquisitionis expected to be earnings enhancing for the Company should not be interpretedto mean that the earnings per share in the first full financial year ofownership, or in any subsequent period, will necessarily be greater than thosefor any completed financial period. Where US Dollar amounts in this document are followed by a pounds Sterlingcomparison such amounts have been converted, for informational purposes only,into pounds Sterling using an exchange rate of 1.8430, being the mid-market rateas at 4.00 p.m. on 9 June 2006, as published in the Financial Times on 10 June2006. This is not a prospectus but an advertisement. Investors should not purchase anyof the securities referred to in this document except on the basis of theinformation in the Prospectus expected to be published today and any supplementthereto. The Prospectus will be available at the offices of Expro InternationalGroup PLC at Reading Bridge House, Reading, Berkshire RG1 8PL. Appendix I EXPECTED TIMETABLE FOR THE RIGHTS ISSUE 2006 Announcement 14 JuneDespatch of Circular and Prospectus and Announcement of Rights Issue 14 June Record date for the entitlements under the Rights Issue 6.00 p.m. on 28 June Latest time and date for receipt of electronic proxy 8.00 p.m. on 30 Juneappointments via the CREST system Latest time and date for receipt of Forms of Proxy 3.00 p.m on 1 July Extraordinary General Meeting 3.00 p.m. on 3 July Despatch of Provisional Allotment Letters (to Qualifying 3 Julynon-CREST Shareholders only) Dealings in New Shares, nil paid, commence on the 8.00 a.m. on 4 JulyLondon Stock Exchange Nil Paid Rights credited to stock accounts in CREST 8.00 a.m. on 4 July(Qualifying CREST Shareholders only) Existing Shares marked "ex-rights" by the London Stock 8.00 a.m. on 4 JulyExchange Nil Paid Rights and Fully Paid Rights enabled in CREST as soon as practicable after 8.00 a.m. on 4 July Recommended latest time for requesting withdrawal of Nil Paid 4.30 p.m. on 19 JulyRights or Fully Paid Rights from CREST (i.e. if your Nil Paid Rights or Fully Paid Rights are in CREST and you wish to convert them into certificated form) Latest time and date for depositing renounced Provisional 3.00 p.m. on 20 JulyAllotment Letters, nil paid or fully paid, into CREST or for dematerialising Nil Paid Rights or Fully Paid Rights into a CREST stock account Latest time and date for splitting Provisional Allotment 3.00 p.m. on 21 JulyLetters, nil paid or fully paid Latest time and date for acceptance and payment in full and 11.00 a.m. on 25 Julyregistration of renounced Provisional Allotment Letters Dealings in New Shares, fully paid, commence on the 8.00 a.m. on 26 JulyLondon Stock Exchange and New Shares credited to CREST stock accounts uncertificated holders only) Announcement of the results of Rights Issue through On or about 26 Julya regulatory information service Expected completion of the Acquisition and issue of by end JulyConsideration Shares Despatch of definitive share certificates for New Shares in by 4 Augustcertificated form * In order to ensure that electronic proxy appointments via the CREST system arereceived in time, CREST Shareholders should ensure that electronic proxyappointments are received no later than 8.00 p.m. on Friday 30 June 2006 Notes: (i) The dates set out in the expected timetable of events above and mentioned in this announcement may be adjusted by the Company with the agreement of the Bookrunner and the Underwriter), in which event details of the new dates will be notified to the FSA and, where appropriate, to Shareholders. (ii) References to times in this document are to London time. Appendix II The following definitions apply throughout this announcement unless the contextotherwise requires: DEFINITIONS "Acquisition Agreement" the master transaction agreement between Expro, PWS, First Reserve and others "Admission" admission of the New Shares, nil paid, to (i) the Official List of the FSA and (ii) trading on the London Stock Exchange's market for listed securities, becoming effective in accordance with, respectively, the Listing Rules and the Admission and Disclosure Standards "Annual Results" the audited results of the Company for the year ended 31 March 2006 and published by the Company on 31 May 2006 "Bookrunner" JPMorgan Cazenove Limited "Business Days" a day (other than a Saturday or Sunday) on which banks are open for general business in London "Cased Hole" The portion of the wellbore that has had metal casing placed and cemented to protect the openhole from fluids, pressures, wellbore stability problems or a combination of these "certificated" or a share or other security which is not in uncertificated form"in certificated form" (that is, not in CREST) "Circular" the circular issued by the Company in respect of the Acquisition, setting out the basis for the Rights Issue, together with any supplements or amendments thereto "Company" or "Expro" Expro International Group PLC, a public limited company incorporated under the laws of England and Wales "Completion" Completion of the Acquisition Agreement in accordance with its terms "Consideration Shares" Ordinary Shares to be issued to the vendors pursuant to the Acquisition Agreement "CREST Regulations" The Uncertificated Securities Regulations 2001 (SI 2001/3755) "CREST Shareholders" Shareholders holding Ordinary Shares in uncertificated form "CREST" the relevant system (as defined in the CREST Regulations) for the paperless settlement of trades in listed securities in the United Kingdom, of which CRESTCo Limited is the operator (as defined in the CREST Regulations) "Directors" or "Board" The board of directors of the Company as at the date of this announcement "Downhole Test Tools" Well testing apparatus used to perform Drill Stem Testing "$", "US$", "US The lawful currency of the United States of AmericaDollars"or "USD" "Enlarged Group" The Group as enlarged by the Acquisition "Excluded Territory" the United States, Canada, Japan, Australia and South Africa "Existing Shares" the existing Ordinary Shares "Extraordinary the extraordinary general meeting of the Company to be General Meeting" held at the Company's head office at 3.00 p.m. on 3 July 2006 including any adjournment thereof), notice of which is set out at the end of the Circular "FSA" the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 "First Reserve" First Reserve Corporation "Fully Paid Rights" rights to acquire New Shares, fully paid "Group" the Company and its subsidiary undertakings and, where the context requires, other undertakings which have conducted the business now conducted by the Company and such subsidiary undertakings "IFRS" International Financial Reporting Standards "JPMorgan Cazenove" JPMorgan Cazenove Limited "Listing Rules" the listing rules of the FSA, as the context so requires "London Stock Exchange" London Stock Exchange plc "Newco" Aslan Limited (registered number 93526), a company incorporated in Jersey) "New Shares" the 26,170,121 new Ordinary Shares which the Company is proposing to allot and issue pursuant to the Rights Issue "Nil Paid Rights" rights to acquire New Shares, nil paid "Official List" the Official List of the FSA "Ordinary Shares" ordinary shares of 10 pence the Company "PWS" Power Well Services Inc. and Power Well Holdings Luxembourg S.A.R.L. "PWS Group" PWS and its subsidiary undertakings "£", "pence", "Sterling" The lawful currency of the United Kingdom or "pounds Sterling" "Prospectus" the Prospectus issued by the Company in respect of the Rights Issue, together with any supplements or amendments thereto "Provisional Allotment the provisional allotment letter to be issued to Qualifying Letter" or "PAL" non-CREST Shareholders (other than, subject to certain exceptions, Qualifying Shareholders with a registered address in the United States, Australia, Canada, Japan or South Africa) "PVT" Pressure, Volume, Temperature "Qualifying CREST Qualifying Shareholders holding Ordinary Shares inShareholders" uncertificated form "Qualifying Qualifying Shareholders holding Ordinary Shares innon-CREST Shareholders" certificated form "Qualifying Shareholders on the register of members of the Company at theShareholders" close of business on the Record Date "Record Date" close of business on 27 June 2006 "Resolutions" the resolutions set out in the notice convening the Extraordinary General Meeting at the end of the Circular "Rights Issue Price" 500 pence "Securities Act" the US Securities Act of 1933, as amended "Shareholders" holders of Ordinary Shares "Simmons & Company Simmons and Company International Ltd.International" "Sponsor" JPMorgan Cazenove "UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland "uncertificated" recorded on the register of members as being held inor "in uncertificated uncertificated form in CREST and title to which, by virtue ofform" the CREST Regulations, may be transferred by means of CREST "Underwriter" J.P. Morgan Securities Ltd. on behalf of its affiliate JPMorgan Cazenove "Underwriting the conditional underwriting agreement described in paragraphAgreement" 11.1 of Part IX of the Circular "United States" the United States of America, its territories and possessions,or "US" or "USA" any state of the United States and the District of Columbia "Well Testing" A well test is conducted to evaluate the characteristics of a well and to assess the well's ability to produce This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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