Daylight Energy convertibles to be purchased or converted under Sinopec merger agreement

By Angela McDaniels

Tacoma, Wash., Oct. 10 - Daylight Energy Ltd. said one series of its convertible debentures will be converted and the other acquired for cash under its agreement to be acquired by Sinopec International Petroleum Exploration and Production Corp. for C$10.08 per share.

Subject to holder approval, Daylight Energy's 10% series C convertibles will be converted into common shares at the C$9.60 conversion price. The holders will then receive C$10.08 per share plus accrued interest on their convertibles to the closing date.

Subject to holder approval, Sinopec will acquire all of the company's 6.25% series D convertibles for a cash price of C$1,110 per $1,000 principal amount plus accrued interest to the closing date.

If the company does not receive the necessary approval from the holders of a series of convertibles, that series will be excluded from the acquisition and will remain outstanding. In that case, Sinopec must offer to buy that series of convertibles at 101% of par plus accrued interest within 30 days of the effective date of the acquisition.

Daylight Energy's shareholders and the holders of its convertibles will vote at a special meeting in December. If shareholder approval is received, the acquisition is expected to close by the end of December. The approval of the convertible holders is not needed in order to complete the acquisition.

Sinopec agreed to acquire Daylight Energy for C$2.2 billion. The per-share price, C$10.08, is a 43.6% premium over the 60-day weighted average trading price of Daylight Energy's shares up to and including Friday.

The agreement between the companies contains a reciprocal non-completion fee of C$100 million, which is payable by either party in certain circumstances if the acquisition is not completed.

Daylight Energy is an oil and natural gas company based in Calgary, Alta.

Sinopec is a subsidiary of China Petrochemical Corp., a Beijing-based producer and supplier of oil products and petrochemical products.

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