ASX/ Media Release
3April2018
Receiptofunsolicited,non-binding,indicativeandconditional
proposalfromHarbourEnergyandgrantingofduediligence
Santosadvisesthaton29March2018itreceivedanunsolicited,non-binding,indicativeand
conditionalproposal(“HarbourProposal”)fromaspecialpurposeentityofHarbourEnergy
Ltd(“Harbour”)forittoacquire100percentofSantossharesbywayofaschemeof
arrangement. TheindicativeofferpriceisUS$4.98pershare,whichinAustraliandollars,isequivalentto A$6.501pershareandrepresentsapremiumof: + 28percenttothelastclosingpriceofSantosofA$5.07pershareon29March2018;and + 30percenttotheonemonthvolumeweightedaveragesharepriceofSantosofA$5.00 pershareupto29March2018. Theindicativeofferpriceiscomprisedofthefollowingcomponents: + AcashofferpriceofUS$4.70pershare(equivalenttoA$6.131pershare);plus + AspecialdividendofUS$0.28pershare(equivalenttoA$0.371pershare)whichis expectedtobefullyfranked2. ForthoseshareholdersabletorealisethefullvalueofSantos’frankingcredits,thespecial dividendwouldrepresentadditionalvalueoverandabovetheindicativeofferpriceofupto A$0.161pershare. TheHarbourProposalalsoprovidesforafixedAustraliandollarofferpriceforthefirst 10,000sharesheldbyeachindividualshareholder. Harbourhasindicatedthispricewouldbefixedbyreferencetotheprevailingexchangerate atthetimebindingtransactiondocumentationisenteredinto. Harbourhasindicatedthatfundingforthetransactionistobeprovidedintheformof US$7.75bnofdebtthatistobeunderwrittenbyJ.P.MorganandMorganStanley(whohave eachprovidedcommitmentletters)andthebalanceinequityfromHarbour,otherEIG managedfundsandMercuriaGlobalEnergy(whohaveeachprovidedequitycommitment lettersfortheirrespectiveamounts). TheHarbourProposalfollowsthreepriorunsolicitedproposalsfromHarbour,being:(i)14 August2017(indicativeofferprice:A$4.55pershare);(ii)22March2018(indicativeoffer price:A$6.25pershare);and(iii)27March2018(indicativeofferprice:A$6.37pershare).1 BasedonanAUD/USDexchangerateof0.7662asreferencedintheHarbourProposal2 SubjecttoreceiptofafavourabletaxrulingfromtheAustralianTaxationOfficeMediaenquiries Investorenquiries SantosLimitedABN80007550923JoannaVaughan AndrewNairn GPOBox2455,AdelaideSA5001+61292761134/+61(0)419111779 +61881165314/+61(0)437166497 T+61881165000F+61881165131joanna.vaughan@santos.com andrew.nairn@santos.com www.santos.com Page1of2ASantosBoardcommitteecomprisingtheChairman,theManagingDirectorandtheChairof
eachoftheBoardstandingcommitteeshasbeenformedtoconsidertheapproachfrom
HarbourandtomakerecommendationstotheSantosBoard.
TheSantosBoardconsidersthat,basedontheindicativeofferpriceofA$6.50pershare,itis
intheinterestsofshareholderstoengagefurtherwithHarbour.
Accordingly,HarbourhasenteredintoaconfidentialityagreementwithSantostoallow
Harbourtheopportunitytoundertakeconfirmatoryduediligence.
ThereisnocertaintyatthistimethattheHarbourProposalwillresultinanofferforSantos
thatiscapableofbeingconsideredbyshareholders.
DirectorsthereforeadvisethatSantosshareholderstakenoactioninrelationtotheHarbour
Proposalatthistime.
RegardlessoftheoutcomeofengagementwithHarbour,theBoardandmanagementremain
focusedoncontinuingtodelivershareholdervaluethroughthetransformationofSantosinto
alowcost,reliableandhighperformancebusinesswithstronggrowthpotential.
TheHarbourProposalissubjecttoanumberofconditions,including:
+ Aminimumof15%(uptoamaximumof20%)ofexistingSantossharesoutstanding
rollingoverintounlistedsharesofaspecialpurposecompany(“HarbourRollCo”)that
willremaininvestedinSantos;
+ Entryintobindingdebtfinancingcommitments;
+ Completionofconfirmatoryduediligence;
+ Regulatoryapprovals,includingapprovalbytheForeignInvestmentReviewBoard;
+ UnanimousrecommendationoftheHarbourProposalbytheSantosBoard(inthe
absenceofasuperiorproposal);and
+ Entryintobindingtransactiondocumentation,includingstandarddealprotection
mechanisms.Harbourhasindicatedinitsproposalthat,whilstithasnotreachedanyagreement,arrangementorunderstandingwiththem,ENNandHonyCapital(togetherSantos’largestshareholder)maywishtorollovertheirexistingSantossharesintoHarbourRollCo.Rothschild&Co.,J.B.North&Co.andDeutscheBankareactingasfinancialadviserstoSantosandHerbertSmithFreehillsisactingaslegaladvisertoSantos.Ends. SantosLimitedABN80007550923 GPOBox2455,AdelaideSA5001 T+61881165000F+61881165131www.santos.com
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