Update on Acquisition, Circular and Notice of GM

RNS Number : 0474N

Hunting PLC

25 August 2011

 



For Release

25 August 2011

Hunting PLC

("Hunting" or the "Company" or the "Group")

Update on Acquisition, Publication of Circular

and Notice of General Meeting

Further to the announcement of the proposed acquisition ("Acquisition") of TSI Acquisition Holdings LLC and its subsidiaries including Titan Specialties, Ltd. ("Titan Group") ("Acquisition Announcement") made on 5 August 2011, Hunting (LSE:HTG), the international energy services group, announces that the circular relating to the Acquisition (the "Circular") is today being posted to shareholders and will shortly be available on Hunting's website.

In addition to the information published in the Acquisition Announcement, the Circular includes, inter alia, the following information:

Information on the Titan Group

For the six months ended 30 June 2011, the Titan Group delivered unaudited US GAAP revenue and EBITDA of US$114.7 million and US$41.7 million (36.4% EBITDA margin), respectively. Revenue in all divisions was higher than that achieved in the first half of 2010. The Perforating and Instruments divisions have grown significantly compared to the same period last year and ahead of the Titan Group management team's expectations for the period. Hunting is pleased to report that the Titan Group's strong performance has continued into the early part of the second half of the year.

Titan Group's financials for the three years ended 31 December 2008, 2009 and 2010 have been restated in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") as applied by Hunting. The intention to restate Titan Group's financials was set out in the Acquisition Announcement. Certain adjustments have impacted Titan Group's historic financials. The material adjustments comprise:

·      a reduction of estimated useful lives of some of the Titan Group's intangible assets, thereby increasing amortisation charges, but leaving EBITDA unaffected;

·      a charge in relation to Titan Group's equity based incentive schemes, which reduces historic EBITDA though it will not have an ongoing impact as the schemes terminate on completion of the Acquisition; and

·      a reclassification of the amortisation charge in respect of deferred financing costs from general and administrative expenses to finance expense increasing profit from operations, but leaving EBITDA unaffected.

Titan Group Summary Financial Information

Restated in accordance with IFRS as applied by Hunting and as set out in the Circular

US$ million	Year ended 31 December 2010	Year ended 31 December 2009	Year ended 31 December 2008
Revenue	157.7	86.9	144.1
EBITDA	48.5	18.8	49.2
EBITDA margin	30.8%	21.6%	34.1%
Profit from operations	31.9	3.0	33.8
Profit / (loss) before taxation	21.7	(10.3)	17.5
Profit / (loss) for the year	21.2	(10.6)	17.0

In 2009, the Titan Group's financial performance was impacted by the economic downturn, which significantly reduced North American drilling activity. However, the business has performed strongly since then as the market has recovered strongly and also having strengthened its routes to market through opening a number of additional distribution facilities.

The Titan Group had net assets of US$145.1 million (£89.1 million) and gross assets of US$353.6 million (£217.0 million) at 31 December 2010.

Note: The above summary financial information is extracted from the audited IFRS consolidated financial statements of the Titan Group set out in the Circular.

For comparison purposes, set out below is summary financial information of Titan Group as presented under US GAAP for the years ended 31 December 2008, 2009 and 2010. Please note this information is not included within the Circular.

Titan Group Summary Financial Information

As presented under US GAAP

US$ million	Year ended 31 December 2010	Year ended 31 December 2009	Year ended 31 December 2008
Revenue	157.7	86.9	144.1
EBITDA	49.5	20.3	50.4
EBITDA margin	31.4%	23.4%	35.0%
Profit from operations	38.6	10.1	40.5
Profit / (loss) before taxation	29.0	(2.4)	24.8
Profit / (loss) for the year	28.5	(2.7)	24.3

The Titan Group had net assets of US$168.1 million (£103.1 million) and gross assets of US$378.4 million (£232.1 million) at 31 December 2010.

Note 1: The above summary financial information is extracted or derived from the audited US GAAP Consolidated Financial Statements for the years ended 31 December 2008, 2009 and 2010.

Note 2: The summary financial information as presented under US GAAP was also set out in the Company's Acquisition Announcement on 5 August 2011. The Company has since become aware that the profit / (loss) before taxation and profit / (loss) for the year, for the years ended 31 December 2009 and 2008 in the Acquisition Announcement, were not correctly extracted from the relevant US GAAP financial statements. This has been corrected above. The correction involves removing gains / (losses) on cash flow hedges of US$3.2 million and US$(1.0) million in the years ended 31 December 2009 and 2008, respectively, which should have been included within other comprehensive income rather than profit / (loss) before taxation and profit / (loss) for the year.  There is no change to EBITDA or profit from operations in either year as a result of this amendment.

Update on the principal terms of the Acquisition 

The Acquisition Agreement provided for an escrow amount of US$1 million (£0.6 million) for potential environmental matters which could increase to US$5 million (£3.1 million) depending on the results of an analysis undertaken by environmental consultants. Since the date of the Acquisition Agreement, this analysis has been satisfactorily completed and the escrow amount in relation to the environmental matters will remain at US$1 million (£0.6 million). Accordingly, the right of TSI Acquisition Holdings LLC to terminate the Acquisition Agreement in the event that the environmental escrow amount exceeded US$5 million (£3.1 million) has been extinguished.

Notice of general meeting

The Circular contains a notice of a general meeting (the "General Meeting") of Hunting to consider and, if thought fit, to pass the resolution approving the Acquisition. The General Meeting will be held at the offices of CMS Cameron McKenna LLP, Mitre House, 160 Aldersgate Street, London EC1A 4DD at 10:00 a.m. on 15 September 2011. The Circular should be read in its entirety and no reliance should be placed on the summary information contained in this announcement.

The Circular will be available on Hunting's website at www.huntingplc.com located in the Download Centre area of the Investors section. Copies of the Circular are available for inspection at the offices of CMS Cameron McKenna LLP, Mitre House, 160 Aldersgate Street, London EC1A 4DD during normal business hours on any weekday (UK public holidays excepted) with effect from today until the conclusion of the General Meeting.

A copy of the Circular will shortly be submitted to the National Storage Mechanism and are available for inspection at: www.hemscott.com/nsm.do.

Definitions in this announcement are consistent with those set out in the Acquisition Announcement.

For further information please contact:

Hunting	[phone]
Dennis Proctor, Chief Executive
Peter Rose, Finance Director
DC Advisory Partners Limited	[phone]
Andrew Cunningham
Michelle Le Merre
Buchanan	[phone]
Richard Darby
Jeremy Garcia

Notes to Editors:

About Hunting

Hunting is an international energy services provider to the world's leading upstream oil and gas companies. Established in 1874, it is a fully listed public company traded on the London Stock Exchange. The Company maintains a corporate office in Houston and is headquartered in London. As well as the United Kingdom, the Company has principal operations in Canada, China, Hong Kong, Indonesia, Mexico, Netherlands, Singapore, United Arab Emirates and the United States of America.

This announcement has been issued by and is the sole responsibility of Hunting. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by DC Advisory Partners Limited or any of its respective affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

DC Advisory Partners Limited, which is authorised and regulated by the FSA, is acting exclusively for Hunting and no one else and will not be responsible to any person other than Hunting for providing the protections afforded to the customers of DC Advisory Partners Limited or in relation to the contents of this announcement or any other transaction, arrangement or matter referred to herein.

FORWARD-LOOKING STATEMENTS

This announcement contains (or may contain) certain forward-looking statements with respect to certain of Hunting's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. Hunting cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding Hunting's future financial position, income growth, impairment charges, business strategy, projected levels of growth in its markets, projected costs, estimates of capital expenditure, and plans and objectives for future operations of Hunting and other statements that are not historical fact.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards as adopted by the European Union ("IFRS") applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation, the success of future acquisitions and other strategic transactions and the impact of competition - a number of which factors are beyond Hunting's control. As a result, Hunting's actual future results may differ materially from the plans, goals, and expectations set forth in Hunting's forward-looking statements. Any forward-looking statements made herein by or on behalf of Hunting speak only as of the date they are made. Except as required by the FSA, the London Stock Exchange plc or applicable law, Hunting expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any changes in Hunting's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Except to the extent required by applicable law, the Listing Rules or the Disclosure and Transparency Rules, Hunting will not necessarily update any of them in light of new information or future events and undertakes no duty to do so.

NOTE REGARDING PRESENTATION OF CURRENCIES

Unless otherwise indicated, all references in this document to "pounds sterling'' or "£'' are to the lawful currency of the United Kingdom and all references to "$", "US$", "US dollars" or "United States dollars" are to the lawful currency of the United States. For the purpose of this document and unless otherwise stated, a pound sterling to United States dollar exchange rate of 1:1.63 has been applied for illustrative purposes (source: Financial Times: closing mid-rate of exchange on 4 August 2011) to calculate the pounds sterling equivalent of the consideration for the Acquisition and any United States dollar amounts related to the Acquisition. Such translations should not be considered as a representation that such currencies could have been or could be converted into pounds sterling or United States dollars (as the case may be) at any particular rate, the rates stated above or at all.

 

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