KNOC launches $2.9B hostile bid for Dana Petroleum

Source: Korea National Oil Corp.

Korea National Oil Corporation (KNOC) today announces the terms of a cash offer to be made for the entire issued and to be issued ordinary share capital of Dana. KNOC also announces a cash offer for the Dana Convertible Bonds under which KNOC will offer to acquire the Dana Convertible Bonds. 

The Offers together value the entire issued ordinary share capital of Dana and the Dana Convertible Bonds at approximately £1.87 billion. 

KNOC has received letters of intent in support of the Share Offer from the holders of, in aggregate, approximately 48.62 per cent. of interests in Dana Shares. The letters of intent have been received from Dana Shareholders in respect of a total of 19,624,157 Dana Shares, representing approximately 21.21 per cent. of the existing issued ordinary share capital of Dana; and from the holders of long positions in Dana Shares (held through contracts for difference ("CFDs")) representing long economic interests in 25,370,615 Dana Shares (representing approximately 27.42 per cent. of the existing issued ordinary share capital of Dana). 

Under the terms of the Share Offer, Dana Shareholders will be entitled to receive 1,800 pence in cash for each Dana Share. 

The price of 1,800 pence for each Dana Share represents a premium of approximately: 59 per cent. to 1,135 pence, being the closing mid-market price per Dana Share on 30 June 2010 (being the last Business Day prior to the date of the announcement that Dana had received an approach and the commencement of the Offer Period); and 56 per cent. to 1,151 pence, being the average closing mid-market price per Dana Share for the six months up to and including 30 June 2010 (being the last Business Day prior to the date of the announcement that Dana had received an approach and the commencement of the Offer Period). 

KNOC believes that the Share Offer incorporates a full and fair value for Dana's entire portfolio of production, development and exploration assets and provides Dana Shareholders with an opportunity to realise a compelling value in cash at a significant premium to Dana's pre-bid speculation share price. 

Under the terms of the Convertible Bond Offer, Dana Convertible Bondholders will be entitled to receive £141,509.43 in cash for each £100,000 principal amount of the Dana Convertible Bonds, if the Share Offer becomes or is declared unconditional on or before 17 November 2010. This reflects the adjusted exchange price of the Dana Convertible Bonds which applies in the event of a change of control of Dana. If the Share Offer becomes or is declared unconditional after 17 November 2010, the Dana Convertible Bondholders will be entitled to receive £142,959.43 in cash for each £100,000 principal amount of the Dana Convertible Bonds. 

This reflects the adjusted exchange price of the Dana Convertible Bonds which applies in the event of a change of control of Dana, plus the interest payment that would be due to Dana Convertible Bondholders on 17 January 2011. 

KNOC is a fully state-owned energy company whose objectives are to explore and secure energy sources and to store and distribute petroleum stocks for the Republic of Korea. 

KNOC has an ambitious strategy to grow its production and reserve base and intends to achieve this growth, in part, through the acquisition of oil and gas assets and companies. KNOC already has a well-established track-record of international acquisitions and Dana represents an opportunity for KNOC to expand further its core lines of international business. 

KNOC considers the talented operational management team and employees of Dana to be an important part of the continued development and expansion of the combined business. KNOC does not contemplate material changes to Dana's activities at the operational site level. 

Commenting on the Offers, Dr. Seong-Hoon Kim, Senior Executive Vice President of KNOC, said: 

"We believe that our offer of 1,800 pence per share fully and fairly reflects all of Dana's recently announced and ongoing developments, together with its exploration potential. 

Our view on value is based on a very detailed analysis of Dana and takes into account all of the information available to us, including the recent operational and corporate transaction announcements by Dana. 

It has always been our desire to agree a recommended transaction with the Board of Dana and we are very disappointed that the Board of Dana does not agree that 1,800 pence per share represents a full and fair value for the Company. 

We believe that we have no alternative other than to put our attractive proposal directly to shareholders given the inability to reach a private agreement with the Board of Dana. 

We hope that Dana Shareholders will recognise the merits of our offer in order to bring this process to a successful conclusion."



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