By Lisa Kerner and Jennifer Lanning Drey
Charlotte, N.C., and Portland, Ore., Feb. 23 - International Petroleum Investment Co. agreed to acquire NOVA Chemicals Corp. for $6.00 per share in a court-approved plan of arrangement under the Canada Business Corporations Act, the companies announced on Monday.
NOVA said the per-share offer price is a 348% premium over its closing price on Feb. 20.
The total value of the arrangement, including the assumption of NOVA's net debt, is approximately $2.3 billion.
IPIC said it has agreed to a $250 million credit backstop facility to provide NOVA with sufficient liquidity as part of the agreement.
"This deal is intended to enable us to meet all of our obligations to all of our stakeholders and will strengthen our balance sheet as well," Jeff Lipton, NOVA's chief executive officer, said during a Monday conference call held to discuss the transaction.
"When compared to a wide range of alternatives that our company has explored over the number of months we've been doing this work, the IPIC agreement was assessed to be clearly the best alternative for NOVA Chemicals, its shareholders, its bondholders and other stakeholders," he said.
The arrangement is subject to regulatory approval and approval by at least two-thirds of NOVA shareholders.
There is no financing condition to the deal, NOVA said.
During Monday's call, Lipton said gaining the regulatory approvals necessary to close the deal is expected to take 60 to 75 days. The primary requirement will be approval of IPIC as a sovereign fund by the Canadian government, he said.
The arrangement agreement provides for a $15 million termination fee payable by NOVA in some circumstances as well as non-solicitation provisions that limit NOVA's ability to solicit third-party proposals.
NOVA will operate as an independent chemicals and plastics company led by current NOVA president and chief operating officer Chris Pappas. Pappas will replace Jeff Lipton as CEO upon Lipton's retirement on May 1.
UBS Investment Bank and RBC Capital Markets provided fairness opinions to NOVA's board of directors.
IPIC is being advised by HSBC.
NOVA also announced it has secured $150 million in new financing in the form of a revolving credit facility with Export Development Canada and a syndicate of three Canadian banks.
The $150 million exceeds the Feb. 28 new financing condition the Calgary, Alta., plastics and chemicals company agreed to as part of its previously announced financial covenant relief.
"This is a very big step toward ensuring NOVA Chemicals' financial position remains solid through this challenging period. We are particularly pleased to add EDC as a new lender to our financing mix," said Larry MacDonald, NOVA chief financial officer.
IPIC, wholly owned by the Government of the Emirate of Abu Dhabi, invests in the hydrocarbon sector outside Abu Dhabi.
| Acquirer: | International Petroleum Investment Co.
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| Target: | NOVA Chemicals Corp.
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| Announcement date: | Feb. 23
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| Price per share: | $6.00
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| Expected closing: | Upon approvals
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| Termination fee: | $15 million
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| Stock price of target: NYSE: NCX: $1.34 on Feb. 20
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