The purchase price payable under the Transaction represents an approximately 60 percent premium to the volume-weighted average trading price of the StonePoint Common Shares on the TSX Venture Exchange (the "TSXV") for the 20 trading days ended on July 3, 2015, being the last trading day prior to the date of Arrangement Agreement.
Background
Since the fourth quarter of 2014, StonePoint has evaluated a number of potential acquisitions, both corporate and asset-based, while building an initial position in the Valhalla area consisting of five sections (3.0 net) of highly prospective Montney and Dunvegan lands. However, the current capital market environment, with the continued weakness in commodity prices and recent regulatory uncertainty, has significantly impacted the Company’s ability to execute on its strategic plan of acquiring and developing assets in the Deep Basin and Peace River Arch areas of Western Canada. In response, StonePoint has explored strategic alternatives to both preserve and maximize shareholder value, resulting in the proposed Transaction. The Company believes the Transaction offers StonePoint’s shareholders the best opportunity in the current environment to recognize the inherent value in the Company.
The Arrangement Agreement and Approvals
The Transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) and is subject to a number of customary conditions, including the receipt of all applicable approvals, including without limitation the approval by the TSXV and the requisite approvals of shareholders of StonePoint, as well as other customary closing conditions.
Each of the directors and executive officers of StonePoint and certain shareholders of StonePoint, representing in aggregate approximately 24% of the issued and outstanding StonePoint Common Shares (on a non-diluted basis), have committed to vote their StonePoint common shares in favour of the Transaction at the StonePoint special shareholders meeting (the "Special Meeting") to be held to consider the Transaction. The Transaction will require approval of 66 2/3% of the votes cast by StonePoint shareholders in person or by proxy at the Special Meeting as well as approval of the majority of the votes cast by StonePoint shareholders after excluding the votes required to be excluded in determining "majority of the minority" approval in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.
Under the terms of the Arrangement Agreement, StonePoint has also agreed that it will not solicit or initiate any inquiries or discussions regarding any alternative business combination or acquisition proposal, and in certain circumstances StonePoint has agreed to pay a termination fee of C$670,000, including if the Company enters into an agreement with respect to a superior proposal or if the board of directors of the Company withdraws or modifies its recommendation with respect to the proposed Transaction.
Upon closing of the Transaction, StonePoint’s Chairman, President and CEO, Steven VanSickle will become the President and CEO of Endurance and will join the Endurance Board of Directors. Certain current management of StonePoint will also join the management team of Endurance.
Further details with respect to the Transaction will be included in the information circular to be mailed to StonePoint shareholders in connection with the Special Meeting, which is expected to be mailed to shareholders in the second half of July 2015. It is anticipated that the Special Meeting will be held in August 2015 and that closing of the Transaction will occur shortly thereafter.
