NEWS RELEASE
September 25, 2008
TANGANYIKA OIL COMPANY LTD. ANNOUNCES
C$31.50 PER SHARE CASH OFFER BY SINOPEC INTERNATIONAL
PETROLEUM EXPLORATION AND PRODUCTION CORPORATION
CALGARY, ALBERTA ? Tanganyika
Oil Company Ltd. (?Tanganyika Oil? or ?the Company?) (TYK - TSX, TYKS - OMX
Nordic Exchange) announced today that it has entered into a definitive
agreement (the "Support Agreement") pursuant to which Sinopec
International Petroleum Exploration and Production Corporation
("SIPC") has agreed, subject to the terms of the Support Agreement,
to make an offer to acquire all the outstanding common shares of Tanganyika by
way of a negotiated take-over bid (the "Offer") for C$31.50 per share
in cash, which represents a substantial premium to both the recent and
historical trading prices of Tanganyika's shares. The acquisition of the Tanganyika
shares will be funded through SIPC's internal resources and is not conditional
upon any financing arrangements. SIPC is a wholly owned subsidiary of
China Petrochemical Corporation (?Sinopec Group?) and undertakes overseas
investments and operations in the upstream oil and gas sector. Sinopec
Group is China?s
largest producer and supplier of oil products and major petrochemical products.
The Support Agreement provides for, among other
things, customary Board of Directors support, non-solicitation and right to
match provisions in favour of SIPC and the payment to SIPC of a termination fee
of C$65 million if the acquisition is not completed in certain specified
circumstances. The obligation of SIPC to take up and pay for shares
pursuant to the Offer is also subject to the receipt of certain approvals from
the Government of the People?s Republic of China.
SIPC has agreed to pay a break-up fee of C$65 million in the event that all
approvals required to be obtained by SIPC from the Government of the People?s
Republic of China in order to complete the Offer are not obtained on or before
December 24, 2008 and Tanganyika elects to terminate the Support Agreement.
In connection with the Offer, all of the directors,
officers and certain other shareholders representing, collectively,
approximately 16.2% of Tanganyika?s 65,615,330 shares outstanding (calculated
on a fully-diluted basis) have entered into lock-up agreements with SIPC
pursuant to which they have agreed to, among other things, tender all of their
Tanganyika shares (including Tanganyika shares issued on the exercise of
outstanding options and Tanganyika shares represented by Swedish Depository
Receipts trading on the OMX Nordic Exchange) to the Offer.
Highlights:
? Cash
Offer for all shares at C$31.50 per share, representing a substantial premium
to Tanganyika?s
recent and historical trading prices
? Unanimous
recommendation of the Tanganyika Board of Directors
? Lock-ups
representing approximately 16.2% of the outstanding Tanganyika
shares
? C$65
million termination fee payable in certain circumstances by Tanganyika
and right to match
? C$65
million break up fee payable by SIPC in the event that all required approvals
of the Government of the People?s Republic of China
are not obtained by December 24, 2008.
The Tanganyika Board of Directors, after consulting
with its financial and legal advisors, has unanimously determined that the
Offer is fair and in the best interest of Tanganyika
shareholders and has recommended acceptance of the Offer. Scotia Waterous
Inc., the financial advisor to the Tanganyika Board of Directors, has provided
an opinion that the Offer is fair, from a financial point of view, to Tanganyika
shareholders.
"We are pleased to announce that Tanganyika
has entered into a transaction with SIPC?, stated Gary
Guidry, President and CEO of Tanganyika. ?Tanganyika
has conducted a tremendous volume of work to enhance the Syrian assets over the
past five years. SIPC?s world class scale and expertise promise continued
growth and enhancement to this asset base. We believe this transaction is
in the best interest of Tanganyika
and delivers immediate and significant value to our shareholders."
Mr. Zhou Baixiu, President of SIPC, said, "This
transaction is an important component of Sinopec Group?s strategy to become a
diversified global resource provider. We believe that our strong
technical experience and our local relationships will serve to maximize the
underlying value of these very attractive assets, and we are excited about this
opportunity. We look forward to working with the Tanganyika
team to build upon the solid foundation which they have created."
Formal documentation relating to the take-over bid is
expected to be mailed by SIPC in late October 2008. The Offer will be
open for acceptance for a period of not less than 35 days and will be
conditional upon, among other things, valid acceptance of the Offer by Tanganyika
shareholders owning not less than 66 2/3% of the outstanding Tanganyika
shares (calculated on a fully-diluted basis). In addition, the Offer will
be subject to certain customary conditions, relevant regulatory approvals and
the absence of any material adverse change with respect to Tanganyika.
SIPC may waive the conditions of the Offer in certain circumstances. If
the Offer is successful, SIPC has agreed to take steps available to it under
relevant securities laws to acquire any remaining outstanding Tanganyika
shares.
Scotia Waterous Inc. is acting as financial advisor to
Tanganyika and Cassels, Brock
& Blackwell LLP is acting as legal counsel to Tanganyika.
Lehman Brothers Asia Limited acted as financial
advisor to SIPC and Vinson & Elkins LLP and Stikeman Elliott LLP are acting
as legal counsel to SIPC.
About Tanganyika
Tanganyika Oil Company Ltd. is a Canada-based oil and
gas company focused on its properties in Syria.
The Company holds operating interests in two Syrian production sharing
agreements covering the Oudeh Block and the Tishrine and Sheik Mansour
Blocks. During the first half of 2008, the average gross field production
was 16,670 barrels of oil per day (?bopd?) (Company net production 6,025
bopd). Its shares are traded on the TSX under the symbol ?TYK? and its
Swedish Depository Receipts trade on the OMX Nordic Exchange under the symbol
?TYKS?.
Forward-looking
Statements
This news release includes statements about expected
future events that are forward looking in nature and subject to risks and
uncertainties. Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the future
circumstances, outcomes or results anticipated in or implied by such
forward-looking statements will occur or that plans, intentions or expectations
upon which the forward-looking statements are based will occur. By their
nature, forward-looking statements involve numerous assumptions, known and unknown
risks and uncertainties, both general and specific, that contribute to the
possibility that circumstances, events or outcomes anticipated or implied by
forward-looking statements will not occur. These risks and uncertainties
include, among other things: risks associated with the ability to obtain any
necessary approvals, waivers, consents, court orders and other requirements
necessary or desirable to permit or facilitate the proposed transaction
(including, regulatory and securityholder approvals); the risk that any
applicable conditions of any of the proposed transactions may not be
satisfied; volatility of and assumptions regarding oil and gas prices;
assumptions contained in or relevant to the company's current corporate
guidance; fluctuations in currency and interest rates; product supply and
demand; market competition; risks inherent in marketing operations (including
credit risks); imprecision of reserves estimates and estimates of recoverable
quantities of natural gas and liquids from the Company's properties; the
ability to access external sources of debt and equity capital; the timing and
the costs of well and pipeline construction; the ability to secure adequate
product transportation; changes in laws or regulations or the interpretations
of such laws or regulations; applicable political and economic conditions; the
risk of war, hostilities, civil insurrection, political instability and
terrorist threats; risks associated with existing and potential future lawsuits
and regulatory actions; and other risks and uncertainties described from time
to time in the reports and filings made with securities regulatory authorities
by the Company. Although the Company believes that the expectations
represented by such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. Readers are
cautioned that the foregoing list of important factors is not exhaustive.
The company undertakes no obligation to update forward-looking statements if
circumstances or management?s estimates or opinions should change except as
required by applicable securities laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Tanganyika Oil Company Ltd.
Gary Guidry
President and CEO
(403) 716-4051
Fax (403) 261-1007
Email: gary.guidry@tykoil.com
Tanganyika Oil Company Ltd.
Ian Gibbs
Chief Financial Officer
(604) 689-7842
Fax (604) 689-4250
Email: ian.gibbs @tykoil.com
Tanganyika Oil Company Ltd.
Sophia Shane
Corporate Development
(604) 689-7842
Fax (604) 689-4250
Email: sophias@namdo.com