TIDMRSE
RNS Number : 6358A
Riverstone Energy Limited
26 September 2022
Riverstone Energy Limited
REL Portfolio Companies, Hammerhead and DCRD to merge
London, UK (26 September 2022).
Riverstone Energy Limited ("REL") is pleased to announce that
two of its portfolio companies, Hammerhead Resources Inc., a
Calgary-based energy company ("Hammerhead"), and Decarbonization
Plus Acquisition Corporation IV (Nasdaq: DCRD, DCRDW, DCRDU), a
special purpose acquisition company ("DCRD"), have announced today
that Hammerhead and DCRD have entered into a definitive agreement
to complete a business combination that values Hammerhead at an
enterprise value of C$1.39 billion, which is approximately 2.2x
DCRD's projected 2024 EBITDA for Hammerhead.
REL invests in Hammerhead, alongside Riverstone Global Energy
and Power Fund V, L.P. ("Fund V"). REL holds an approximate 17%
interest in Hammerhead today at a 0.53x Gross MOIC as of 30 June
2022, representing a carrying value of $156 million against total
invested capital of $295 million. At the agreed pre-money
transaction value and at an assumed $10.00/share trading price,
REL's interest in Hammerhead, including prior distributions, is
$177 million, or 0.60x Gross MOIC. Hammerhead is the largest
investment of REL, based on invested capital, and its unrealized
value represents 18% of REL's net asset value as of 30 June 2022.
Riverstone Holdings LLC and its affiliates ("Riverstone") acts as
investment manager for both REL and Fund V, and Riverstone also
holds a minority interest in Fund V.
REL holds an interest in DCRD through a 5% position in the
sponsor of DCRD (the "Sponsor"). The Sponsor is controlled by
Riverstone, and the Sponsor holds Class B ordinary shares of DCRD
("founder shares"), which were acquired for $25,000 and represent
20% of the equity ownership of DCRD, as well as warrants to
purchase Class A ordinary shares of DCRD for $11.50 per share
("warrants"), which were acquired for $12.7 million. The trading
price of DCRD at close of business on 23 September 2022 is $10.03
per share. REL has invested a total of $639,497 in the Sponsor.
That investment is currently marked at cost. Through that interest
and prior to the arrangements discussed below, REL indirectly owns
396,456 founder shares and 638,247 warrants. The balance of the
interests in the Sponsor are held by Riverstone professionals and
other persons associated with Riverstone.
Assuming the approval by each of the Hammerhead shareholders and
the DCRD shareholders, the transaction will result in the formation
of a publicly traded upstream oil and gas company ("NewCo") with an
identified investment program to decarbonize its oil and gas
operations through the development of a carbon capture and
sequestration ("CCS") program. NewCo's CCS program is estimated to
require approximately C$240 million of capital between 2023 and
2029, and, by 2029, is expected to reduce NewCo's Scope 1 and Scope
2 emissions by approximately 79% of 2021 values, even after an
anticipated doubling in production volumes. NewCo's assets will
include a large, consolidated block of acreage in the prolific
Montney trend in Western Canada, spanning over 100,000 net acres in
Alberta. NewCo's planned production and EBITDA growth is expected
by DCRD to be in excess of 40% and 50%, respectively, from an
expected 31,500-32,500 boe/d and C$375-425 million in 2022 to over
an expected 46,000-48,000 boe/d and C$625-675 million in 2024.
Closing of the transaction is likely to occur in Q1 2023,
subject to approval of the shareholders of each of Hammerhead and
DCRD and other customary closing conditions. Closing of the
transaction is not subject to a minimum cash condition and the
parties believe that Hammerhead's existing balance sheet with
expected leverage, prior to any proceeds from DCRD's cash in trust,
of 0.6x LTM EBITDA at year-end 2022 is expected to provide the
liquidity necessary to execute on Hammerhead's business plan. NewCo
is expected to be listed on the Nasdaq Capital Market ("Nasdaq")
and trade under the ticker symbol "HHRS".
At closing, REL is expected to receive 15 million shares of HHRS
(representing 12% pro forma ownership of HHRS assuming no
redemptions by existing DCRD shareholders), which will be freely
tradeable subject to customary lockup provisions and applicable
blackout periods. Accordingly, REL's current privately held
interest in Hammerhead will be replaced by a holding of publicly
traded securities in HHRS which will be valued by REL by reference
to HHRS's prevailing share price.
In connection with implementing the transaction under the
applicable Fund V governing documents, the Sponsor and the other
holders of the founder shares and warrants (collectively, the
"Sponsor Group") agreed to make certain adjustments to their
ownership in the DCRD economics. Pursuant to those adjustments, the
Sponsor Group have agreed that the Sponsor Group will assign and
transfer to Fund V vehicles all of its warrants and 55% of its
founder shares, including the proportionate amount allocable to
REL. Fund V does not currently have any ownership interest in DCRD.
Following these transfers, REL will hold an indirect interest,
through the Sponsor, in 178,405 founder shares and no warrants.
Following the completion of the business combination, any proceeds
received by Fund V from its investment in HHRS will first be
applied toward the Sponsor Group (including REL) recovering the
original cost of the transferred interests. Thereafter, proceeds
from the founder shares retained by the Sponsor Group will be
applied, alongside all proceeds received by Fund V, until Fund V
has received total proceeds to provide it with a 1.0x MOIC on its
investment in Hammerhead (including its cost for the transferred
warrants and founder shares) (the "MOIC Threshold"). The founder
shares retained by REL via the Sponsor (but not REL's HHRS shares
attributable to its interest in Hammerhead) are "ringfenced" such
that they may not be sold other than in proportion to Fund V's
sales. After Fund V achieves the MOIC Threshold, the founder shares
retained by the Sponsor Group (including REL) will be freely
tradeable subject to any unexpired lockup provisions and applicable
blackout periods. To the extent Riverstone receives net after-tax
proceeds from Fund V in its capacity as an investor in Fund V in
respect of the founder shares and warrants transferred to Fund V,
Riverstone will remit to REL a proportionate amount (corresponding
to REL's proportionate interest in the Sponsor).
About Riverstone Energy Limited:
REL is a closed-ended investment company which invests in the
energy industry that has since 2020 been exclusively focused on
pursuing and has committed $181 million to a global strategy across
decarbonisation sectors presented by Riverstone's investment
platform. REL's ordinary shares are listed on the London Stock
Exchange, trading under the symbol RSE. REL has 20 active
investments spanning decarbonisation, oil and gas, renewable energy
and power in the Continental U.S., Western Canada, Gulf of Mexico
and Europe.
For further details, see www.RiverstoneREL.com
About Decarbonization Plus Acquisition Corporation IV
Decarbonization Plus Acquisition Corporation IV is a blank check
company formed for the purpose of effecting a merger, amalgamation,
share exchange, asset acquisition, share purchase, reorganization
or similar business combination with a target whose principal
effort is developing and advancing a platform that decarbonizes the
most carbon--intensive sectors. DCRD is sponsored by an affiliate
of Riverstone Holdings LLC.
About Hammerhead Resources
Hammerhead Resources is a Calgary, Canada--based energy company,
with assets and operations in Alberta targeting the Montney
formation. The company was formed in 2009 and has over 85 employees
as of 1 September 2022.
About Riverstone Holdings LLC:
Riverstone is an energy and power--focused private investment
firm founded in 2000 by David M. Leuschen and Pierre F. Lapeyre,
Jr. with approximately US$43 billion of capital raised. Riverstone
conducts buyout and growth capital investments in the E&P,
midstream, oilfield services, power, and renewable sectors of the
energy industry. With offices in New York, London, Houston, Mexico
City, Amsterdam and Menlo Park, Riverstone has committed nearly
US$43 billion to more than 200 investments in North America, Latin
America, Europe, Africa, Asia, and Australia.
For further details, see www.RiverstoneLLC.com
The following information and disclaimers relate to the proposed
business combination between Hammerhead and DCRD. Shareholders in
REL should note that, as such, they will not be entitled to vote on
the proposed business combination nor will they be sent any of the
information or documentation referred to below.
Forward Looking Statements
This press release includes certain statements in respect of the
proposed business combination between Hammerhead and DCRD that may
constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended. Forward-looking statements include, but are
not limited to, statements that refer to projections, forecasts or
other characterizations of future events or circumstances,
including any underlying assumptions. The words "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intends,"
"may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements may include, for example, statements about Hammerhead's
or DCRD's ability to effectuate the proposed business combination
discussed in this press release; the benefits of the proposed
business combination; the future financial performance of NewCo
following the transactions; changes in Hammerhead's strategy,
future operations, financial position, estimated revenues
and losses, projected costs, prospects, plans and objectives of
management; and the anticipated valuation of REL's interest in
NewCo. These forward-looking statements are based on information
available as of the date of this press release, and current
expectations, forecasts and assumptions, and involve a number of
judgments, risks and uncertainties. Accordingly, forward-looking
statements should not be relied upon as representing REL's,
NewCo's, Hammerhead's or DCRD's views as of any subsequent date,
and none of REL, NewCo, Hammerhead or DCRD undertakes any
obligation to update forward-looking statements to reflect events
or circumstances after the date they were made, whether as a result
of new information, future events or otherwise, except as may be
required under applicable securities laws. Neither REL, NewCo nor
DCRD gives any assurance that either NewCo or DCRD will achieve its
expectations. You should not place undue reliance on these
forward-looking statements. As a result of a number of known and
unknown risks and uncertainties, NewCo's actual results or
performance may be materially different from those expressed or
implied by these forward-looking statements. Some factors that
could cause actual results to differ include: (i) the timing to
complete the proposed business combination by DCRD's business
combination deadline and the potential failure to obtain an
extension of the business combination deadline if sought by DCRD;
(ii) the occurrence of any event, change or other circumstances
that could give rise to the termination of the definitive
agreements relating to the proposed business combination; (iii) the
outcome of any legal, regulatory or governmental proceedings that
may be instituted against NewCo, DCRD, Hammerhead or any
investigation or inquiry following announcement of the proposed
business combination, including in connection with the proposed
business combination; (iv) the inability to complete the proposed
business combination due to the failure to obtain approval of
DCRD's shareholders; (v) Hammerhead's and NewCo's success in
retaining or recruiting, or changes required in, its officers, key
employees or directors following the proposed business combination;
(vi) the ability of the parties to obtain the listing of NewCo's
common shares and warrants on Nasdaq upon the closing of the
proposed business combination; (vii) the risk that the proposed
business combination disrupts current plans and operations of
Hammerhead; (viii) the ability to recognize the anticipated
benefits of the proposed business combination; (ix) unexpected
costs related to the proposed business combination; (x) the amount
of redemptions by DCRD's public shareholders being greater than
expected; (xi) the management and board composition of NewCo
following completion of the proposed business combination; (xii)
limited liquidity and trading of NewCo's securities; (xiii)
geopolitical risk and changes in applicable laws or regulations;
(xiv) the possibility that Hammerhead or DCRD may be adversely
affected by other economic, business, and/or competitive factors;
(xv) operational risks; (xvi) the possibility that the COVID-19
pandemic or another major disease disrupts Hammerhead's business;
(xvii) litigation and regulatory enforcement risks, including the
diversion of management time and attention and the additional costs
and demands on Hammerhead's resources;(xix) the risks that the
consummation of the proposed business combination is substantially
delayed or does not occur; and (xx) other risks and uncertainties
indicated from time to time in the proxy statement/prospectus
proposed to be published relating to the proposed business
combination, including those under "Risk Factors" therein, and in
DCRD's other filings with the Securities and Exchange Commission
("SEC").
No Offer or Solicitation
This communication includes information that relates to a
proposed business combination between Hammerhead and DCRD. This
document does not constitute a solicitation of a proxy, consent or
authorization with respect to any securities or in respect of the
proposed business combination. This document does not constitute an
offer to sell or exchange, or the solicitation of an offer to buy
or exchange, any securities, nor shall there be any offer, sale or
exchange of securities in any state or jurisdiction in which such
offer, solicitation, sale or exchange would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities will be made except by
means of a prospectus meeting the requirements of section 10 of the
United States Securities Act of 1933, as amended, or an exemption
therefrom.
Important Information and Where to Find It
In connection with the proposed business combination, DCRD and
NewCo intend to file a registration statement in the United States
on Form F-4 (as may be amended from time to time, the "Registration
Statement") that includes a preliminary proxy statement of DCRD and
a preliminary prospectus of NewCo, and after the Registration
Statement is declared effective, DCRD will mail the definitive
proxy statement/prospectus relating to the proposed business
combination to DCRD's shareholders as of a record date to be
established for voting on the proposed business combination. The
Registration Statement, including the proxy statement/prospectus
contained therein, will contain important information about the
proposed business combination and the other matters to be voted
upon at a meeting of DCRD's shareholders to be held to approve the
proposed business combination (and related matters). This
communication does not contain all the information that should be
considered concerning the proposed business combination and other
matters and is not intended to provide the basis for any investment
decision or any other decision in respect of such matters. DCRD and
NewCo may also file other documents with the SEC regarding the
proposed business combination. DCRD's shareholders and other
interested persons are advised to read, when available, the
Registration Statement, including the preliminary proxy
statement/prospectus contained therein, and the amendments thereto
and the definitive proxy statement/prospectus and other documents
filed in connection with the proposed business combination, as
these materials will contain important information about DCRD,
Hammerhead, NewCo and the proposed business combination.
DCRD shareholders and other interested persons will be able to
obtain copies of the Registration Statement, including the
preliminary proxy statement/prospectus contained therein, the
definitive proxy statement/prospectus and other documents filed or
that will be filed with the SEC, free of charge, by DCRD and NewCo
through the website maintained by the SEC at www.sec.gov.
Participants in the Solicitation
DCRD, Hammerhead, NewCo and their respective directors, officers
and related persons may be deemed participants in the solicitation
of proxies of DCRD shareholders in connection with the proposed
business combination. More detailed information regarding the
directors and officers of DCRD, and a description of their
interests in DCRD, is contained in DCRD's filings with the SEC,
including DCRD's Annual Report on Form 10-K for the fiscal year
ended December 31, 2021, which was filed with the SEC on March 29,
2022, and is available free of charge at the SEC's web site at
www.sec.gov. Information regarding the persons who may, under SEC
rules, be deemed participants in the solicitation of proxies of
DCRD shareholders in connection with the proposed business
combination and other matters to be voted upon at the DCRD
shareholder meeting will be set forth in the Registration Statement
for the proposed business combination when available.
Media Contacts
For Riverstone Energy Limited:
Josh Prentice
Josh@riverstonellc.com
Liz Taylor-Kerr
Head of Governance Services
liz.taylor-kerr@ocorian.com
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END
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September 26, 2022 07:07 ET (11:07 GMT)
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