NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

 

12 August 2010

 

STATEMENT FROM KOREA NATIONAL OIL CORPORATION ("KNOC")

Indicative cash proposal for Dana Petroleum plc ("Dana" or the "Company")

 

This is an announcement falling under Rule 2.4 of the City Code on Takeovers and Mergers (the "Code").  It does not represent a firm intention to make an offer under Rule 2.5 of the Code.  Accordingly, there can be no certainty that any offer will ultimately be made.

 

KNOC notes today's formal rejection by the Board of Dana of the indicative cash proposal by KNOC to acquire the Company at a price of 1,800 pence per share (the "Proposal").

 

It has always been the desire of KNOC to agree a recommended transaction with the Board of Dana and KNOC is 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. 

 

KNOC's view on value is based on a very detailed analysis of Dana and takes into account all of the information available to it, including the Company's recent operational and corporate transaction announcements. 

 

KNOC revised its original indicative proposal of 1,700 pence per share to 1,800 pence per share following an initial meeting with the Chief Executive Officer of Dana on 17 June 2010 during which many of the "value enhancing developments" referenced in today's announcement by Dana were discussed.  KNOC has made no negative adjustment to its offer for Bamboo and Monkwell drilling results or for the unfavourable movement in the USD/GBP exchange rate since that meeting.  KNOC believes that its Proposal of 1,800 pence per share fully and fairly reflects all of the Company's recently announced and ongoing developments, together with its exploration potential.

 

In relation to the Company's "ongoing business development programme" and Dana's statement that KNOC is "aware of significant, well advanced, non-public and valuable activities in this area, which could materially increase Dana's oil production and reserves in the near term", KNOC notes the acquisition track-record of Dana, including its success in a widely marketed auction for the acquisition of Petro-Canada Netherlands B.V..  KNOC's Proposal assumes that Dana has paid, and will continue to pay, full and fair value for any assets acquired through such auction processes. 

 

During the Calgary meeting, KNOC received an offer from Dana to review due diligence information, although this was on the basis of a confidentiality agreement with restrictive provisions and on the understanding that the Board of Dana would not be prepared to recommend the offer price of 1,800 pence per share.  KNOC believes that entry into such an agreement and a confirmatory due diligence exercise would only be appropriate in the context of an agreed offer price between the parties and the Board of Dana has not been able to support the price put forward in the Proposal to date.  The timetable proposed by KNOC at the meeting was intended to allow both parties to progress this transaction on a recommended basis at an agreed price.

 

KNOC wishes to inform the market that it has responded to the queries raised by the Board of Dana since the submission of the Proposal, including concerns relating to pre-conditions, financing and other execution risks.  A comprehensive letter was sent to the board of Dana on 30 July 2010 addressing these concerns.  Enclosed with this letter were commitment letters from financing banks confirming that financing for this transaction would be available on a "Certain Funds" basis by the time of any firm offer announcement by KNOC under Rule 2.5 of the Code, if such an announcement were to be forthcoming. 

 

KNOC is currently considering its options in relation to Dana and a further announcement will be made in due course.

 

The Proposal is no longer subject to the pre-conditions listed in the announcement made by KNOC on 23 July 2010. 

 

KNOC reserves the right to reduce the offer price of the Proposal in certain circumstances, as set out in the announcement by KNOC on 23 July 2010.

 

Enquiries:

 

Pelham Bell Pottinger	+44 (0)20 7861 3232  +44 (0)20 7861 3232
James Henderson
Mark Antelme
Bank of America Merrill Lynch	+44 (0)20 7996 1000  +44 (0)20 7996 1000
Simon Mackenzie Smith
Philip Noblet
Andrew Osborne
Anya Weaving

 

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

 

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possessionxxxx this announcement comes should inform themselves about, and observe, such restrictions.  Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

 

Merrill Lynch International ("Bank of America Merrill Lynch"), a subsidiary of Bank of America Corporation, is acting exclusively for KNOC in connection with the possible cash offer and for no one else and will not be responsible to anyone other than KNOC for providing the protections afforded to its clients or for providing advice in relation to the possible cash offer.

 

Disclosure requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10^th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

 

If two or more persons  act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on  +44 (0)20 7638 0129  +44 (0)20 7638 0129 .