Reject Total’s Unsolicited Offer: It Significantly Undervalues Savanna
December 23, 2016
Dear Fellow Shareholder,
The Board of Directors of Savanna Energy Services Corp. (“Savanna” or the “Company”) believes your company is poised for recovery. Against this backdrop, Total Energy Services Inc. (“Total”) has launched an unsolicited and opportunistic offer to acquire Savanna in exchange for shares of Total. The exchange ratio significantly undervalues your interest in Savanna.
The Board, after a full review and with the advice of external financial and legal advisors, recommends that shareholders REJECT the Total offer. To reject the Total offer, simply take no action.
Offer Only Benefits Total
Your Board has concluded that Total’s offer undervalues Savanna and benefits only Total. The facts confirm Total’s self-interest:
Recent positive developments
Total’s no-premium offer fails to take into account recent positive internal developments, especially Savanna’s recent financings. Our balance sheet is stronger and we are well positioned to participate in a recovery of industry conditions.
Moreover, Total’s no-premium offer fails to take into account important external events that strongly suggest a recovery is underway. These external events include the nomination to the U.S. cabinet of strong energy industry proponents, the approval of two new Canadian oil export pipelines, and agreements by OPEC members and certain non-OPEC producers to curb production for the first time in eight years.
Savanna will benefit far more than Total from these external events, because Savanna eclipses Total in the highly consequential drilling and well servicing businesses. Savanna has 101 drilling rigs and 87 workover rigs in Canada, the U.S. and Australia. Total, an amalgamation of disparate small businesses, has just 18 drilling rigs, only in Canada. It has no workover rigs anywhere.
Don’t accept Total’s claim
Don’t accept Total’s claim that its offer should be accepted just because it is higher than the share price for our recent financings. Total’s claim ignores, among other things, the following three facts:
Strategic Alternatives to Maximize Value
As previously disclosed, Savanna’s Special Committee of the Board of Directors has instructed its financial advisor, Peters & Co. Limited, to prepare to conduct a formal process to explore strategic alternatives with a view to maximizing value for all shareholders of Savanna. The Special Committee anticipates that a strategic alternatives process will commence in early 2017.
While there can be no certainty of a superior transaction, the decision to run a strategic alternatives process follows strong expressions of interest from third parties.
Don’t Tender to Total’s No-Premium Offer
Please read the accompanying Directors’ Circular in its entirety. It details the 12 principal reasons we believe shareholders should REJECT Total’s no-premium offer, and it provides the complete background to Total’s offer, including significant facts that the Total Circular omitted or mischaracterized.
The Board of Directors of Savanna unanimously recommends that you REJECT the Total offer and DO NOT TENDER your Common Shares. To reject the Total offer, simply TAKE NO ACTION.
If you have tendered your shares in error and wish to withdraw, simply ask your broker or D.F. King (see contact information below) to assist you with this process.
Thank you for your consideration and for your support.
“Jim Saunders” “Christopher Strong”
Jim Saunders Christopher Strong
Chairman of the Board Director, President & CEO
Savanna Energy Services Corp. Savanna Energy Services Corp.
For further information, please visit our website at www.savannaenergy.com or contact our information agent, D.F. King at 1-800-622-1678 or moc.g1488103945nikfd1488103945@seir1488103945iuqni1488103945
Value of the Total Offer discount was calculated on December 21, 2016, as it appears in the Directors’ Circular.