Norway-based Badger Explorer has signed a letter of intent (LOI) for the acquisition of compatriot well intervention systems supplier and designer Dwellop AS.
Badger said on Monday that the LOI is for the acquisition of 100 percent of shares in Dwellop AS.
Furthermore, shareholders controlling 28 percent of the company’s shares have asked the board of directors to call for an extraordinary general meeting (EGM) to consider a proposal for certain corporate changes as a result of the recent private placement.
The proposal entails electing new board members to reflect the new ownership structure in the company as well as a change of name and authorization related to issuance and acquisition of own shares.
Dwellop is an independent systems and technology provider delivering topside handling equipment for well intervention and plugging & abandonment (P&A) operations.
A large part of the business is focused on the design and manufacturing of mechanical and structural wireline, coil tubing, and pipe handling equipment for the well intervention market.
The company is headquartered in Stavanger, Norway, and is currently owned by management and key employees after a management buyout from Rolls-Royce in 2014.
As agreed in the LOI, Badger will purchase all outstanding shares in Dwellop for an agreed purchase price of NOK 190 million ($22.4 million). The price will be settled in cash and shares with NOK 60 million paid in cash while the remaining NOK 130 million will be settled by the issuance of new Badger shares at a price of NOK 0.65 per share.
The remuneration shares will constitute of approximately 15.9 percent of total Badger shares. The sellers have agreed to a lock-up period of 36 months for the remuneration shares after the closing of the transaction, as well as customary non-compete and non-solicitation provisions.
Badger said that, due to Dwellop’s strong business and product portfolio, the company would be organized as a standalone portfolio company of Badger and would be developed on a separate basis going forward.
The transaction is subject to satisfactory outcome of a confirmatory due diligence process, final and binding documentation and Badger board approval.
Marcus Hansson, Badger chairman, said: “We are thrilled to work with Dwellop’s management team to grow the company both organically and pursue other acquisition opportunities within the well intervention market. In addition to the acquisition of Dwellop, we are also pursuing other potential acquisition opportunities, in order to continue the growth and development of Badger.”
Badger tool status
The Badger Explorer is a new formation and reservoir evaluation tool which drills into the subsurface without drilling an exploration well with a rig.
The company said it was in the process of completing a strategic and technical review of the Badger tool to ensure that the company would make the correct decisions for maximizing its value. In that regard, the company has engaged Rystad Energy to assist in this process. The company will also explore ways to obtain alternative funding for development of the tool.
The company also said that it intended to transfer the Badger tool and other technologies to a wholly owned subsidiary of Badger.