Twin Butte Energy Ltd. (TBE.TO) said Monday that it has entered into an arrangement agreement to acquire all the outstanding class A shares of Avalon Exploration Ltd. on the basis of 1.1 common shares of Twin Butte for each share of Avalon.
The five day weighted average trading price of the Twin Butte shares ended June 22, was $2.29. So the exchange ratio for the acquisition represents a deemed price of $2.52 per Avalon share.
The total deemed purchase price for the acquisition is about $88.9 million, comprising of the issuance of about 23.3 million Twin Butte shares and assumption about $35.6 million in net debt and estimated transaction costs.
On closure of the transaction, Twin Butte will have about 215.5 million outstanding shares.
Twin Butte said that the acquisition is accretive to the company and will increase its liquids production from 82 to 84 percent.
The acquisition is expected to be completed in late August, subject to customary closing conditions.
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