Canadian Natural to acquire CPPIB-backed Laricina Energy

Laricina Energy Ltd, a Calgary-based development-stage oil sands company, has entered into a pre-acquisition agreement with Canadian Natural Resources Ltd.

Canadian Natural, a Calgary-based senior oil and natural gas producer, agreed to buy Laricina’s issued and outstanding common shares for $0.0815 per unit. It also agreed to assume up to $48 million of the company’s debt.

Canada Pension Plan Investment Board and CPPIB Credit Investments agreed to tender their shares to the offer. CPPIB and its credit affiliate hold an 88.6 percent interest in Laricina.

The deal is the result of a strategic review launched by the company in February.

CPPIB invested in Laricina in 2010. The company was at the time backed by U.S. energy private equity firm Lime Rock Partners, which exited in 2016.

PRESS RELEASE

Laricina Energy Ltd. Announces Acquisition by Canadian Natural Resources Limited

CALGARY, July 26, 2018 /CNW/ – Laricina Energy Ltd. (“Laricina” or the “Company”) is pleased to announce that it has entered into a pre-acquisition agreement (“Agreement”) with Canadian Natural Resources Limited (“Canadian Natural”) pursuant to which Canadian Natural has agreed to make an offer to shareholders of Laricina to purchase all of the issued and outstanding common shares of the Company (the “Common Shares”) for $0.0815 per share (the “Offer”).

The Offer is the result of the extensive formal strategic alternative process launched by the Company in February of this year. Laricina engaged Peters & Co. Limited (“Peters & Co.”) as its financial advisor to advise the Company in connection with the strategic alternative process.

Laricina has also entered into a third supplemental indenture (“Third Supplement”) pursuant to which the change of control payment for the Company’s issued and outstanding 12.5% senior secured notes, as described in the indenture (collectively, the “Notes”) has been waived in respect of transactions resulting from the strategic alternative process that meet certain requirements, including the Offer.

All dollar amounts are in Canadian Dollars unless otherwise noted.

HIGHLIGHTS

The Offer is for cash consideration of $0.0815 per Common Share for all of the issued and outstanding Common Shares.

The Offer has been unanimously recommended by the board of directors of Laricina (the “Directors”).

The Offer is not subject to any financing condition.

Canadian Natural is a senior oil and natural gas producer and is not an existing shareholder of Laricina.

The initial deposit period will remain open for at least 35 days following commencement of the Offer.

Canadian Natural has agreed to satisfy all indebtedness under the Notes up to a maximum amount of $48,000,000.

CPPIB Credit Investment Inc., and CPP Investment Board (USRE II) Inc. (together, the “CPPIB Shareholders”) have entered into pre-tender agreements with Canadian Natural to tender their Common Shares to the Offer.

FURTHER INFORMATION

The Offer is to be completed by way of a takeover bid under applicable Canadian securities laws pursuant to which Canadian Natural will offer to purchase all the issued and outstanding Common Shares of Laricina for cash consideration of $0.0815 per Common Share.

Board of Directors Recommendation

The Directors consider the terms of the Offer to be fair and reasonable and in the best interests of Laricina and its shareholders and, accordingly, unanimously recommend that the shareholders of Laricina accept and tender their Common Shares to the Offer.

The determination of the Directors was made after receiving legal advice and upon careful and thoughtful review of the Offer and consideration of the advice given by Peters & Co., in its capacity as financial advisor to Laricina in respect of the Offer. Peters & Co. has provided the Directors with its verbal opinion that, subject to the assumptions, qualifications and limitations contained therein, the consideration to be received by holders of Common Shares pursuant to the terms of the Offer is fair, from a financial point of view, to the holders of Common Shares.

The CPPIB Shareholders have entered into pre-tender agreements with Canadian Natural (together, the “Pre-Tender Agreements”) under which the CPPIB Shareholders have agreed to tender their beneficial shareholdings in the Company to the Offer, which, in the aggregate, represent approximately 88.6% of the issued and outstanding Common Shares. The Pre-Tender Agreements are subject to customary termination provisions and will terminate automatically if the Agreement is terminated.

Transaction Process & Timeline

Further details regarding the terms and conditions of the Offer, as provided for in the Agreement, and the process for tendering Common Shares will be set out in a takeover bid circular, which is expected to be mailed to shareholders on or about August 8, 2018. The tendering process will remain open for a period of at least 35 days following commencement of the Offer. The Directors’ circular is expected to be mailed concurrently with the takeover bid circular.

Take up and payment for the Common Shares is subject to a minimum tender condition that requires at least 90% of the Common Shares to be deposited and not withdrawn pursuant to the Offer (the “Minimum Condition”). If the Minimum Condition is satisfied, both parties shall use reasonable commercial to ensure Canadian Natural acquires the balance of the Common Shares, by way of compulsory acquisition in accordance with applicable corporate laws, as soon as practicable after completion of the Offer.

The transaction is subject to customary closing conditions, including all necessary regulatory approvals.

The Offer is not subject to any financing condition. As is customary, Canadian Natural has confirmed that it has sufficient funds available to make the Offer and to purchase all of the Common Shares deposited pursuant to the Offer and to pay all related fees and expenses, as required by securities laws or otherwise in connection with the transactions contemplated by the Agreement.

The Agreement provides for, amongst other things, a customary Directors support condition, a non-solicitation covenant in respect of any competing offers from third parties, a customary “fiduciary out” provision that entitles the Directors to support a superior proposal for the Company’s outstanding Common Shares, a “right to match” in favour of Canadian Natural and a provision which provides for the payment by Laricina to Canadian Natural of a break fee of $2.1 million in the event that the Agreement terminates under certain circumstances.

Concurrent with the Offer, and on the date the Common Shares are taken-up by Canadian Natural, Canadian Natural has agreed to satisfy all obligations and indebtedness under the Notes up to a maximum amount of $48,000,000.

Copies of the Agreement and, once mailed, the takeover bid circular and the Directors’ circular will be posted on the Company’s website.

This news release is considered a “deposit period news release” for the purposes of National Instrument 62-104 – Take-over Bids and Issuer Bids.

Advisors

Peters & Co. is acting as independent financial advisor to Laricina in respect of the Offer. Blake, Cassels & Graydon LLP is acting as the Company’s legal counsel and Borden Ladner Gervais LLP is acting as counsel to the independent directors of the Company.

ABOUT LARICINA

Laricina a Calgary-based private development-stage oil sands corporation focused on the acquisition, development and commercialization of in situ hydrocarbon resources in Canada’s Athabasca oil sands region. A small complement of employees and consultants are continuing the business of the Company under a scaled-back business plan with an emphasis on cost control.

ABOUT CANADIAN NATURAL

Canadian Natural is a senior oil and natural gas producer, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa.

For further information: Enquiries, Laricina Energy Ltd., Diane Koenig, Executive Vice President, (403) 750-0810, Laricina Energy Ltd., East Tower, Fifth Avenue Place, 800, 425 – 1st Street SW, Calgary, AB T2P 3L8