29th Jun 2005 07:01
Hunting PLC29 June 2005 NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THEUNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLICOF SOUTH AFRICA. FOR IMMEDIATE RELEASE 29 JUNE 2005 HUNTING PLC PROPOSED RIGHTS ISSUE Hunting PLC ("Hunting" or the "Company"), an international oil and gas servicesgroup, today announces that it proposes to raise approximately £45.7 million byway of a rights issue to Qualifying Shareholders to finance Hunting's ongoingcapital investment in its existing and new facilities and to take advantage ofacquisition opportunities. The Rights Issue • Rights Issue to raise approximately £45.7 million • 1 New Ordinary Share for every 4 Existing Ordinary Shares Issue price of 180 pence per New Ordinary Share which represents a discount of approximately 31 per cent. to the closing mid market price on 28 June 2005 (being the last Business Day prior to this announcement) • The Rights Issue is fully underwritten by Hoare Govett • The Rights Issue is conditional upon the approval of Shareholders to be sought at an Extraordinary General Meeting • Hunting Family Shareholders, who together hold approximately 27 per cent. of the Existing Ordinary Shares, have irrevocably undertaken not to take up or subscribe to their entitlement to Nil Paid Rights and to vote in favour of the Resolution at the EGM • All of the Directors intend to vote in favour of the Resolution at the EGM Commenting on the proposed Rights Issue, Dennis Proctor, Hunting's ChiefExecutive, said: "Hunting is well placed to take advantage of the increased activity in theupstream and midstream oil and gas industry. Significant further business islikely to be obtained from existing and new customers by investing inadditional capacity and services. In addition, a number of potentialacquisitions have been identified to expand the product and service offeringof Hunting Energy. This investment is consistent with Hunting's strategy ofdeveloping its existing operations as an oil and gas service provider andgenerating additional shareholder value." Enquiries: Hunting PLC 020 7321 0123Dennis ProctorDennis Clark Close Brothers 020 7655 3100Andrew CunninghamJack Newall Hoare Govett 020 7678 8000Andrew FosterBertie Whitehead Hogarth Partnership 020 7357 9477Andrew JaquesEdward Westropp This summary should be read in conjunction with the full text of the followingannouncement. Appendix I contains the definitions of certain terms used in thissummary and the full announcement. This announcement does not constitute, or form part of, an offer to sell, or thesolicitation of an offer to subscribe for or buy any of the New Ordinary Sharesto be issued or sold in connection with the Rights Issue. Any decision to investin the New Ordinary Shares should only be made on the basis of information inthe Prospectus which will contain further details relating to the Rights Issueand Hunting and which is expected to be issued shortly. In addition, theProspectus will contain a notice convening the EGM. The Directors of Hunting are the persons responsible for the informationcontained in this announcement. To the best of the knowledge and belief of theDirectors (who have taken all reasonable care to ensure that such is the case),the information in this announcement is in accordance with the facts and doesnot omit anything to affect the import of such information. Close Brothers Corporate Finance Limited ("Close Brothers"), which is regulatedin the United Kingdom by The Financial Services Authority, is acting exclusivelyfor Hunting and for no one else in relation to the Rights Issue and will not beresponsible to anyone other than Hunting for providing the protections affordedto customers of Close Brothers or for providing advice in relation to the RightsIssue or on any matter referred to herein. Hoare Govett Limited ("Hoare Govett"), which is regulated in the United Kingdomby The Financial Services Authority, is acting as corporate broker andunderwriter to Hunting in relation to the matters described in this document andis not acting for any other person and will not be responsible to any otherperson for providing the protections afforded to customers of Hoare Govett norfor advising them on the contents of this document or any other matter inrelation to the Rights Issue. The contents of this announcement have been approved by Close Brothers for thepurposes of section 21(2)(b) of the Financial Services and Markets Act 2000. The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law and therefore persons in suchjurisdictions into which this announcement is released, published or distributedshould inform themselves about and observe such restrictions. THIS ANNOUNCEMENT DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER TO SELL OR THESOLICITATION OF AN OFFER TO SUBSCRIBE FOR OR BUY ANY SECURITIES, NOR THESOLICITATION OF ANY VOTE OR APPROVAL IN ANY JURISDICTION, NOR SHALL THERE BE ANYSALE, ISSUE OR TRANSFER OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT INANY JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW. These written materials are not an offer of securities for sale in the UnitedStates. Securities may not be offered or sold in the United States absentregistration under the US Securities Act of 1933 (the "US Securities Act") or anexemption therefrom. Hunting has not and does not intend to register any of theProvisional Allotment Letters, Nil Paid Rights, Fully Paid Rights or NewOrdinary Shares under the US Securities Act. The Provisional Allotment Letters,Nil Paid Rights, Fully Paid Rights and New Ordinary Shares will not be offeredor sold to the public in the United States. HUNTING PLC PROPOSED RIGHTS ISSUE 1. Introduction The Board announces today that Hunting proposes to raise approximately £45.7million by way of a rights issue of up to 25,373,332 New Ordinary Shares at aprice of 180 pence per New Ordinary Share on the basis of 1 New Ordinary Sharefor every 4 Existing Ordinary Shares. The Rights Issue has been fullyunderwritten by Hoare Govett. In view of its size, the Rights Issue isconditional upon, amongst other things, the approval of Shareholders which is tobe sought at an Extraordinary General Meeting, details of which will be set outin the Prospectus relating to the Rights Issue which is expected to be issuedshortly. 2. Summary information about Hunting Hunting is a leading provider of services to the upstream and midstream oil andgas industry including the transportation, marketing and storage of oil and gasin Western Canada, the supply of oil country tubular goods ("OCTG")internationally, shipbroking, oil and gas exploration and equipment supply.Hunting's principal operations are located in strategic geographic locations inNorth America, Western Europe and South East Asia. The Group has a number ofstrong market share positions within certain of its service and product markets,including oil and gas transportation in Western Canada, tanker broking, drillrod manufacture, mud motors and propane distribution. The Group also owns thepatents to in excess of 30 proprietary products including certain connections,pressure release systems, thread compounds and mud motors. Hunting operates through a number of subsidiaries including Gibson Energy,Hunting Energy, Gibson Shipbrokers, Tenkay Resources and Hunting Energy France. Gibson Energy is one of the largest independent providers of marketing andtransportation services to the Canadian oil and gas industry for liquid energyproducts including crude oil, diluent, liquid petroleum gas, propane, asphaltand natural gas. Gibson Energy has five core businesses comprising marketing,propane and natural gas liquid operations, pipeline and terminal services, trucktransportation, and the supply of asphalt and specialist products derived fromoil. Gibson Energy utilises strategically located assets and facilities tocombine lower value energy products into higher value blends to maximise itsasset utilisation. Hunting Energy is one of the world's leading suppliers of OCTG with advancedmanufacturing techniques for connections and accessories to complement down-holeproducts used by upstream oil and gas companies. Hunting Energy has facilitiesin North America, the North Sea and South East Asia and supplies its productsand services to customers on a worldwide basis. Hunting Energy provides itscustomers with vertically integrated service and product offerings combining theprovision of tubulars, connectors, protectors, other accessories and servicecapability. Gibson Shipbrokers operates in the international energy and shipping markets byarranging transport for crude oil and other petroleum products, offshore, drycargo and bunker broking services. Gibson Shipbrokers also provides researchconsultancy services, publishing market and technical analysis on the shippingand energy industries. Gibson Gas, a wholly owned subsidiary of GibsonShipbrokers, provides speciality liquefied petroleum gas product brokerage. Tenkay Resources is an oil and gas exploration and production company with oiland gas reserves principally in the southern United States and offshore in theGulf of Mexico. Tenkay Resources is a minority, non-operating, equity partnerwith a share in over seventy oil and gas production wells and facilities.Exploration success has enabled Tenkay Resources to continue to increase itsreserves. Hunting Energy France provides petrochemical equipment and serves the French andinternational energy industries. Hunting has three other businesses: FieldAviation Canada modifies, repairs and overhauls regional aircraft for NorthAmerican and international customers; Hunting Specialised Products manufacturesand provides pipeline services and industrial coatings in the UK and US; andAero Sekur, based in Italy, provides defence and safety products includingparachutes and deception camouflage. Hunting's strategy is to continue to develop its existing operations as an oiland gas service provider with particular focus on its two core platforms, GibsonEnergy, its midstream operation, and Hunting Energy, its upstream operation. 3. Selected financial information on Hunting The selected historical financial information presented below as at and for thefinancial years ended 31 December 2002, 31 December 2003 and 31 December 2004,has been prepared in accordance with UK GAAP. The information presented hereinhas been extracted without material adjustment from the annual reports ofHunting for the three years ended 31 December 2002, 31 December 2003 and 31December 2004. Year ended 31 December 2002 2003 2004 Before exceptional items(1) £ million £ million £ millionTurnover Oil and gas marketing and distribution 638.1 939.6 1,002.9 Oilfield services and other 233.9 168.6 159.9 tubular products Exploration and other activities 79.3 87.2 92.3 -------- -------- -------- Total 951.3 1,195.4 1,255.1 -------- -------- -------- Gross profit 79.2 82.5 93.6Total operating profit 24.4 25.2 30.8Net interest (charge) (5.3) (4.1) (5.6)Profit on ordinary activities beforetaxation 19.1 21.1 25.2Taxation (7.4) (7.3) (9.5)Profit after taxation 11.7 13.8 15.7 Total assets 487.2 495.5 475.9Net current assets 128.9 120.3 85.8Total net debt (97.6) (126.6) (130.6)Shareholders' funds 196.7 164.8 117.9 Basic earnings per share pence 4.1 6.4 12.7Dividends per ordinary share pence 3.0 3.5 4.5Employees (average) number 2,186 2,127 2,188 Note (1) In 2004, Hunting incurred exceptional items of £9.8 million. These included a £3.8 million exceptional charge within operating profit which consisted of the costs and anticipated future rental deficit of a UK leasehold property where the previous tenant went into liquidation. Exceptional charges below operating profit of £6.0 million comprise the settlement of a claim on the disposal of a former subsidiary in 2001 and the closure of Hunting Custom Packaging in the US. 4. Background to and reasons for the Rights Issue Since the disposal of almost all of its defence operations, which was largelycompleted in 2001, Hunting has focused on developing its oil and gas servicesoperations. In that period Hunting has made significant capital investment inits facilities and has made a number of acquisitions of businesses involved inthe oil and gas services industry. The principal reasons for the Rights Issue are to enable Hunting to fund ongoingcapital investment in its existing and new facilities and to take advantage ofnew acquisition opportunities. The Board believes that there are a significantnumber of investment and acquisition opportunities available which would enableHunting to continue to grow its business and to enhance shareholder value. Theproceeds of the Rights Issue will provide the Board with greater financialflexibility in order to enable the Group to take advantage of theseopportunities. After careful consideration, the Board has concluded that the Rights Issue isthe optimal means to finance the Group's anticipated investment and development.Whilst the Board considered financing a proportion of this through its existingor additional bank facilities, it concluded that it would not be inShareholders' best interests to further increase the level of the Group'sborrowings. 5. Use of proceeds It is intended that the net proceeds of the Rights Issue will be used to financeHunting's ongoing capital investment in its existing and new facilities and totake advantage of acquisition opportunities. In the meantime, the proceeds willbe used to reduce net debt. The Board has approved plans for capital investment of approximately £38 millionduring 2005 of which approximately 50 per cent. will be invested in capital fornew business and approximately 50 per cent. will be invested in replacingexisting assets. For example, Gibson Energy is investing approximately CAN$20million in additional storage capacity at its new Edmonton facility which isexpected to be completed by October 2005. The Board expects that significantadditional business is likely to be obtained from existing and new customers byinvesting in additional capacity and services. In addition, the Board hasidentified a number of potential acquisitions which would expand the serviceoffering of Hunting Energy. 6. Current trading and prospects The momentum that Hunting experienced in the second half of 2004 has continuedin the first half of 2005. Current rig activity in the United States is at itshighest level for nineteen years. Canada expects to set another record year indrilling and the Board believes that international rig activity will be upapproximately 12 per cent. year-on-year. Accordingly, Hunting's order books arestrong, profit margins have improved and Hunting's customers expect the strongactivity levels to continue throughout the rest of the year and into 2006. Gibson Energy's marketing activities are benefiting from the wide differentialsbetween heavy and light crude prices. Its truck transportation group is enjoyingstrong activity in crude and liquefied petroleum gas hauling throughout WesternCanada. Hunting Energy's performance is driven by increased drilling activitiesworldwide. Tenkay Resources and Gibson Shipbrokers have high commodity pricesand strong markets supporting their performance. It is anticipated that the improved trading conditions will continue for theremainder of 2005 and into 2006. Subject to exchange rate and commodity pricemovements, Hunting's performance for the current financial year should be inline with the Board's expectations. Furthermore, the Board continues to view thefuture beyond the current financial year with confidence. 7. Principal terms of the Rights Issue The Company proposes to raise approximately £45.7 million by way of the RightsIssue. The Issue Price of 180 pence per New Ordinary Share represents a discountof approximately 31 per cent. to the closing middle market price of 260 penceper Ordinary Share on 28 June 2005 (being the last Business Day prior to thisannouncement). The Company proposes to offer up to 25,373,332 New Ordinary Shares, in aggregateby way of rights, to Qualifying Shareholders (other than certain OverseasShareholders) at 180 pence per share, payable in full on acceptance on the basisof: 1 New Ordinary Share for every 4 Existing Ordinary Shares held by Qualifying Shareholders (other than certain Overseas Shareholders) onthe Record Date for the Rights Issue and so in proportion for any other OrdinaryShares then held, and otherwise on the terms and conditions which will be setout in the Prospectus and, in the case of Qualifying non-CREST Shareholders only(other than certain Overseas Shareholders), the Provisional Allotment Letter,which are expected to be issued shortly. The New Ordinary Shares will, when issued and fully paid, rank equally in allrespects with the Existing Ordinary Shares. Fractional entitlements to NewOrdinary Shares will be disregarded. Holdings of Existing Ordinary Shares incertificated and uncertificated form will be treated as separate holdings forthe purpose of calculating entitlements under the Rights Issue. The Rights Issue is conditional upon the following: (a) the passing of the Resolution to be proposed at the EGM; (b) the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated; and (c) Admission having become effective. 8. Intentions of the Directors All of the Directors, except for Richard Hunting, intend to take up their rightsto subscribe for New Ordinary Shares pursuant to the Rights Issue in full.Richard Hunting intends to dispose of sufficient of his Nil Paid Rights so as toenable him (before allowing for payment of expenses or tax liabilities) tosubscribe for his remaining entitlement of New Ordinary Shares. All of theDirectors intend to vote in favour of the Resolution at the EGM. 9. Hunting Family Shareholders The Company and Hoare Govett have received irrevocable undertakings from theHunting Family Shareholders agreeing, inter alia, not to take up or subscribefor their entitlement to Nil Paid Rights pursuant to the Rights Issue (the"Hunting Family Entitlement"), not to transfer any of their Ordinary Sharesprior to the latest time for acceptance and payment in full under the RightsIssue and to vote in favour of the Resolution at the EGM. The Hunting FamilyShareholders together hold 27,423,172 Existing Ordinary Shares, representingapproximately 27 per cent. of the Existing Ordinary Shares. Hoare Govett hasagreed with the Company and the Hunting Family Shareholders to use allreasonable endeavours to procure placees for the Hunting Family Entitlement or,failing which, shall subscribe itself for the Hunting Family Entitlement. 10. Other information The full terms and conditions of the Rights Issue, including the procedure foracceptance and payment and the procedure in respect of rights not taken up, willbe set out in the Prospectus, which is expected to be issued shortly. TheProspectus shall include, as required by the Prospectus Rules, a list of riskfactors. The Prospectus will also contain a notice convening the ExtraordinaryGeneral Meeting. APPENDIX I Definitions The following definitions apply throughout this announcement: "Admission" admission of the New Ordinary Shares nil paid to (i) the Official List 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 "Admission and the requirements contained in the publication "Admission andDisclosure Disclosure Standards" dated April 2004 containing, amongstStandards" other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's market for listed securities "Aero Sekur" Aero Sekur S.p.A. "Business Day" a day on which the London Stock Exchange is open for the transaction of business "CAN$" Canadian dollar "certificated" a share or other security which is not in uncertificated formor "in (that is, not in CREST)certificatedform" "Close Close Brothers Corporate Finance LimitedBrothers" "CREST" the relevant system (as defined in the Regulations) in respect of which CRESTCo is the operator (as defined in the Regulations) "CRESTCo" CRESTCo Limited "Directors" or the directors of the Company"Board" "Gibson E.A. Gibson Shipbrokers LimitedShipbrokers" "Existing the Ordinary Shares in issue at the date of this announcementOrdinaryShares" "Extraordinary the extraordinary general meeting of the Company to be convenedGeneral Meeting" in relation to the Rights Issueor "EGM" "Field Aviation Field Aviation Company Inc.Canada" "FSMA" the Financial Services and Markets Act 2000 (as amended) "Fully Paid rights to acquire New Ordinary Shares, fully paidRights" "Gibson Gibson Energy LimitedEnergy" "Gibson Gas" Gibson Gas Limited, a wholly owned subsidiary of Gibson Shipbrokers "Group" the Company and its subsidiary undertakings or, where the context requires, some of them "Hoare Govett" Hoare Govett Limited "Hunting" or the Hunting PLC and, where the context requires, all of its"Company" subsidiary undertakings "Hunting the Hunting Energy services division of HuntingEnergy" "Hunting Energy Hunting Energy France SAFrance" "Hunting Hunting Specialised Products LimitedSpecialisedProducts" "Hunting Family those members of the Hunting family who have undertaken not toShareholders" take up their entitlement to Nil Paid Rights pursuant to the Rights Issue "Issue Price" 180 pence per New Ordinary Share "Listing the listing rules made by the UK Listing Authority inRules" accordance with section 74 of FSMA "London Stock London Stock Exchange plcExchange" "New Ordinary 25,373,332 ordinary shares of 25 pence each in the capital ofShares" the Company to be issued pursuant to the Rights Issue "Nil Paid New Ordinary Shares in nil paid form provisionally allotted toRights" Qualifying Shareholders pursuant to the Rights Issue "OCTG" oil country tubular goods "Official the Official List of the UK Listing AuthorityList" "Overseas Qualifying Shareholders with registered addresses in, or whoShareholders" are citizens, residents or nationals of, jurisdictions outside the United Kingdom "Prospectus" the prospectus to be issued by the Company in connection with the Rights Issue "Prospectus the Prospectus Rules to be brought into effect on 1 July 2005Rules" pursuant to Commission Regulation (EC) No. 809/2004 "Provisional renounceable provisional allotment letters to be issued toAllotment Qualifying non-CREST Shareholders (other than certain OverseasLetters" Shareholders) by the Company in respect of the Nil Paid Rights, pursuant to the Rights Issue "Qualifying Qualifying Shareholders holding Shares in certificated formnon-CRESTShareholders" "Qualifying Shareholders on the register of members of the Company as atShareholders" the Record Date "Record Date" means the date falling three Business Days prior to the proposed EGM "Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755) "Resolution" the special resolution set out in the notice of EGM to be contained in the Prospectus "Rights Issue" the proposed issue by way of rights of New Ordinary Shares to Qualifying Shareholders "Shareholders" holders of Ordinary Shares "Shares" or ordinary shares of 25 pence each in the capital of the"Ordinary CompanyShares" "Tenkay Tenkay Resources Inc.Resources" "UK Listing the Financial Services Authority acting in its capacity as theAuthority" competent authority for the purposes of FSMA "uncertificated recorded on the register of members as being held inform" uncertificated form in CREST and title to which, by virtue of the Regulations, may be transferred by means of CREST "Underwriting the conditional agreement dated 29 June 2005 between theAgreement" Company and Hoare Govett relating to the Rights Issue "United Kingdom" the United Kingdom of Great Britain and Northern Irelandor "UK" "United States" the United States, its territories and possessions, any Stateor "US" of the United States and the District of Columbia, and all other areas subject to its jurisdiction This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Hunting