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As announced by the Company on 23 June 2020, i3 has agreed to acquire all of the issued and outstanding common shares of Toscana Energy Income Corporation ("Toscana" or "TEIC"), a TSX-listed oil and gas company with identifier TSX:TEI.
As announced on 30 March 2020, i3 has purchased the rights and interests in Toscana's CAD$24.8 million senior debt facility and CAD$3.2 million junior debt facility for a total consideration of CAD$3.0 million and CAD$0.4 million, respectively, with the cash consideration being paid 50 per cent. up front and 50 per cent. at 31 December 2020. As at 23 June 2020, the aggregate consideration being paid by i3 for Toscana's debt and equity totals approximately CAD$3.85 million (c.US$2.83 million) and, in light of TEIC's 2019 production and reserves, represents approximately 0.7x Toscana's 2019 Field Netback (revenue minus royalties, opex and transportation) of CAD$5.5 million (c.US$4 million), CAD$3,618/boepd (c.US$2,661/boepd), or CAD$0.83/boe (c.US$0.61/boe).
The Toscana Acquisition is to be consummated via a plan of arrangement, the terms of which have been agreed between i3 and Toscana in an arrangement agreement dated 23 June 2020 (the "Arrangement Agreement"). Under the terms of the Arrangement Agreement, the consideration payable by i3 for all of the issued and outstanding common shares of TEIC will be wholly satisfied by the issue by i3 of 4,399,215 fully paid ordinary shares of £0.0001 each in the capital of the Company ("Ordinary Shares"), which represent 0.63 per cent. of the existing Ordinary Shares in issue and 0.63 per cent. of the enlarged share capital of the Company following the completion of the Toscana Acquisition.
Due to its size and nature, when it was announced on 23 June 2020, the Toscana Acquisition constitutes a reverse takeover of the Company pursuant to the AIM Rules for Companies. As a result, the Toscana Acquisition requires to be approved by i3 Shareholders by way of an ordinary resolution at a general meeting of the Company to be held at 11 Abercrombie Court, Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6FE on 29 October 2020 at 10:00 am, formal notice of which is set out in Part X of the Admission Document (the "General Meeting").
Should the Toscana Acquisition complete:
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i3's Ordinary Shares will be listed on the TSX (in addition to AIM), subject to the approval of the TSX; and
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subject to regulatory due diligence, a current member of the TEIC board, John Festival, will join the board of i3 as a non-executive director. John is a chemical engineer with over 35 years of experience in the Western Canadian Sedimentary Basin's oil and gas sector and has an excellent track record of founding, growing and monetising oil and gas ventures in Canada. He is currently the CEO of Broadview Energy and was the President and CEO of Black Pearl Resources Inc. prior to its acquisition by International Petroleum in December 2018 in a stock and debt transaction valued at CAD$715 million. He was previously the founder and President of BlackRock Ventures Inc., which was established in 2001 and sold to Shell Canada for CAD$2.4 billion in 2006.
Completion of the Toscana Acquisition is also conditional upon, inter alia: (i) at least 66 2/3 per cent. of the votes cast by TEIC's shareholders being voted in favour of the arrangement at a general meeting; (ii) the approval of the Court of Queen's Bench of Alberta, Canada; (iii) the receipt of certain regulatory approvals; and (iv) the satisfaction of certain other closing conditions customary in acquisitions of this nature. If such conditions are not satisfied, or, where applicable, not waived, the Toscana Acquisition will not proceed.
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Linda
Janice Beal, Non-Executive Chairperson (current)
Majid
Shafiq, Chief Executive Officer (current)
Graham
Andrew Heath, Chief Financial Officer (current)
Neill
Ashley Carson, Non-Executive Director (current)
Richard
Millington Ames, Non-Executive Director (current)
John
Larry Festival, Non-Executive Director (proposed)
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