GEOPARK ANNOUNCES COMMENCEMENT OF TENDER OFFER TO PURCHASE UP TO U.S.$50,000,000 OF ITS COMMON SHARES AT PRICE NOT GREATER THAN U.S.$10.00 NOR LESS THAN U.S.$9.00 PER COMMON SHARE
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Insights
The tender offer proposed by GeoPark Limited represents a strategic financial maneuver aimed at consolidating ownership and potentially enhancing shareholder value. By repurchasing up to 10.02% of its issued and outstanding shares, the company is signaling confidence in its intrinsic value, especially when the repurchase price is juxtaposed with the current market value. This could indicate that the management perceives the stock to be undervalued, providing a potential upside for existing shareholders.
Moreover, the repurchase plan is self-funded through GeoPark's cash reserves and investments, which showcases the company's liquidity and financial stability. However, investors should be mindful of the opportunity cost associated with such buybacks, as the capital deployed could have been invested in growth opportunities or debt reduction. The short-term market reaction to such news is typically positive, as it often leads to an uptick in share price due to the reduced supply of shares and improved financial ratios, such as earnings per share (EPS).
From a financial perspective, the tender offer's structure is important to evaluate. The offer is not contingent on a minimum number of shares being tendered, which avoids the risk of the offer falling through due to insufficient shareholder participation. Shareholders should consider the proration and 'odd lot' priority terms, as these could affect the actual number of shares repurchased from each shareholder, especially if the offer is oversubscribed.
It is also important to note that the tender offer may have tax implications for tendering shareholders, as the buyback is conducted at a premium to the current market price. This could result in capital gains for participating investors, which they should factor into their decision-making process. Additionally, the involvement of reputable financial institutions as the Dealer Manager and Information Agent adds credibility to the tender process, potentially increasing shareholder participation.
The announcement underscores GeoPark's commitment to corporate governance by not influencing shareholder decisions regarding the tender offer. The Board of Directors' neutral stance is aligned with best practices, ensuring that shareholders have the autonomy to make an informed choice based on their individual investment strategies and the information provided in the tender offer documents.
Shareholders should evaluate the long-term implications of the share repurchase, considering that a reduced share count could lead to greater volatility in the stock price. While the immediate effect might be an increase in shareholder value, the reduction in equity also decreases the company's capital base, which could affect its ability to raise funds in the future. This strategic move should be weighed against the company's growth prospects and the potential for future capital requirements.
When the tender offer expires, GeoPark will determine the lowest price per share within the range of prices specified above that will enable it to purchase the maximum number of shares having an aggregate purchase price not exceeding U.S.
The tender offer will expire at 5:00 p.m.,
Shareholders will receive the purchase price in cash, subject to applicable withholding and without interest, for shares tendered at prices equal to or less than the purchase price, subject to the conditions of the tender offer, including the provisions relating to proration, "odd lot" priority and conditional tenders in the event that the aggregate cost to purchase all of the shares validly tendered and not validly withdrawn at or below the purchase price exceeds U.S.
GeoPark will use a portion of its cash and investments to fund the tender offer.
The Dealer Manager for the Offer is BTG Pactual US Capital, LLC. The Information Agent for the tender offer is Georgeson LLC. The Depositary is Computershare Trust Company, N.A. The Offer to Purchase, Letter of Transmittal and related documents are being mailed to shareholders of record and also will be made available for distribution to beneficial owners of common shares. For questions and information, please call the Information Agent toll free at (866) 356-2715 or the Dealer Manager at (212) 293-4600.
None of GeoPark, its Board of Directors, the Dealer Manager, the Information Agent or the Depositary is making any recommendations to shareholders as to whether to tender or refrain from tendering their shares into the tender offer. Shareholders must make their own decisions as to how many shares they will tender, if any. In so doing, shareholders should read and evaluate carefully the information in the Offer to Purchase and in the related Letter of Transmittal.
NOTICE
THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL GEOPARK LIMITED'S COMMON SHARES. THE TENDER OFFER IS BEING MADE ONLY PURSUANT TO THE OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND RELATED MATERIALS THAT GEOPARK WILL SHORTLY BE DISTRIBUTING TO ITS SHAREHOLDERS AND FILING WITH THE SECURITIES AND EXCHANGE COMMISSION. SHAREHOLDERS AND INVESTORS SHOULD READ CAREFULLY THE OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND RELATED MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING THE VARIOUS TERMS OF, AND CONDITIONS TO, THE TENDER OFFER. SHAREHOLDERS AND INVESTORS MAY OBTAIN A FREE COPY OF THE TENDER OFFER STATEMENT ON SCHEDULE TO, THE OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND OTHER DOCUMENTS THAT GEOPARK WILL SHORTLY BE FILING WITH THE SECURITIES AND EXCHANGE COMMISSION AT THE COMMISSION'S WEBSITE AT WWW.SEC.GOV OR BY CALLING GEORGESON LLC, THE INFORMATION AGENT FOR THE TENDER OFFER, TOLL-FREE AT (866) 356-2715. SHAREHOLDERS ARE URGED TO CAREFULLY READ THESE MATERIALS PRIOR TO MAKING ANY DECISION WITH RESPECT TO THE TENDER OFFER.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
All statements contained in this press release, other than statements of historical fact, are forward-looking statements including those regarding the expected timing of the tender offer described in this press release. These statements speak only as of the date of this press release and are based on our current plans and expectations and involve risks and uncertainties that could cause actual future events or results to be different from those described in or implied by such forward-looking statements, including risks and uncertainties regarding: changes in financial markets; changes in economic, political or regulatory conditions or other trends affecting the ethanol, sugar and logistics industries; and changes in facts and circumstances and other uncertainties concerning the completion of the tender offer. Further information about these matters can be found in our Securities and Exchange Commission filings. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.
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