Reabold Resources (AIM:RBD), an AIM-listed UK onshore oil and gas investor, has made a recommended all-share offer for Union Jack Oil, combining two companies with overlapping interests in UK onshore licences including the Wressle and West Newton assets.
The offer is structured entirely in Reabold shares, with shareholders to receive 0.051 new Reabold shares for each Union Jack share they own, for an implied price of 4.19p.
The terms value Union Jack's entire issued and to-be-issued share capital at approximately £6.14 million on a fully diluted basis — a premium of around 25% to the 3.35p closing price on 12 June, before the possible offer was disclosed. On completion, the enlarged group would have a combined market capitalisation of approximately £17.8 million, with Union Jack shareholders owning around 34%.
Union Jack's board, advised by Gneiss on financial terms, has recommended the offer as fair and reasonable, having concluded that no alternative funding proposal is currently available on acceptable terms.
Significantly, Union Jack's directors warned that without the transaction, the company will in the short term be unable to meet its licence commitments, which under licence terms could result in the forfeiture of key assets.
Both companies already hold positions across certain shared UK onshore licences, and the enlarged group is expected to eliminate corporate overhead, improve access to equity and debt markets, and increase working interests in key development projects.
