UPDATED 25/9/15 – Eurasia Drilling Company To Merge With Schlumberger – Schlumberger Will Not Extend Log Stop Date Past the 30th September 2015

Update 25/9/15

Eurasia Drilling Company Limited announces that Schlumberger B.V. has advised the Company that SLB will not extend the long-stop date for completion of the proposed merger between the Company and EDC Acquisition Company Limited (“EACL”) and the related transaction with SLB (the “Transaction”) after 30 September 2015.

The Company has previously scheduled a conference call for September 30, 2015, at which the Company will update the market on the proposed Transaction.

Update 30/6/2015

Eurasia Drilling Company Limited announces that Schlumberger B.V. (“SLB”) and the Company continue to wait for a written final confirmation from the Russian Federal Anti-Monopoly Service (“FAS”) and the Government Commission on Monitoring Foreign Investment in relation to the proposed merger between the Company and EDC Acquisition Company Limited (“EACL”) and the related transaction with SLB. In light of this, the parties to the proposed transaction have agreed to extend the long-stop date for completion of the transaction from 30 June 2015 to 30 September 2015.

The Company will make a further announcement regarding the expected timing of the completion of the transaction in due course.

Update 29/5/2015

Eurasia Drilling Company Limited (the “Company”) announces that Schlumberger B.V. (“SLB”) and the Company continue to wait for a written final confirmation from the Russian Federal Anti-Monopoly Service (“FAS”) and the Government Commission on Monitoring Foreign Investment in relation to the proposed merger between the Company and EDC Acquisition Company Limited (“EACL”) and the related transaction with SLB. In light of this, the parties to the proposed transaction have agreed to extend the long-stop date for completion of the transaction from 31 May 2015 to 30 June 2015.

The Company will make a further announcement regarding the expected timing of the completion of the transaction in due course.

Update 30/4/15

Eurasia Drilling Company Limited announces that Schlumberger B.V. and the Company are continuing to cooperate with the Russian Federal Anti-Monopoly Service (“FAS”) and the Commission on Foreign Investment in relation to the proposed merger between the Company and EDC Acquisition Company Limited (“EACL”) and the related transaction with SLB. In light of this, the parties to the proposed transaction have agreed to extend the long-stop date for completion of the transaction from 30 April 2015 to 31 May 2015.

The Company will make a further announcement regarding the expected timing of the completion of the transaction in due course.

UPDATE – Merger Extended to the 30th of April 2015

Updated Story…

Eurasia Drilling Company Limited announces that it has today agreed with certain members of the Company’s management team and certain significant shareholders the terms of a merger between the Company and EDC Acquisition Company Limited, a company formed by one of the Participants solely for the purposes of the Merger, under the provisions of the Companies Law (2013 Revision) of the Cayman Islands, as amended (the “Cayman Companies Law”). The Company’s board of directors formed a special committee (the “Special Committee”), comprising the Earl of Clanwilliam (as chairman of the Special Committee), Igor Belikov and Alexander Shokhin, who are independent non-executive directors of the Company and unaffiliated with EACL and any of the Participants or their affiliates, to negotiate exclusively the terms of the Merger for and on behalf of the Company with the assistance of advisers appointed by the Special Committee.

The Company expects to convene an Extraordinary General Meeting of the shareholders of the Company (the “Shareholders”) for Monday 16 February 2015 at 12 noon (GMT) at the offices of Vinson & Elkins RLLP, CityPoint, 33rd Floor, One Ropemaker Street, London EC2Y 9UE (the “Extraordinary General Meeting”).

At the Extraordinary General Meeting, the Shareholders will be asked to consider and vote upon a proposal to approve the plan of merger (the “Plan of Merger”)between the Company and EACL and the transactions contemplated by the Plan of Merger. Under the terms of the Plan of Merger, the Company will be merged with EACL, with the Company continuing as the surviving company after the Merger. The Plan of Merger is made pursuant to a merger implementation agreement dated 20 January 2015 between the Company and EACL (the “Merger Implementation Agreement”).

The Company further announces that, subject to the approval of the Plan of Merger and the Merger becoming effective (the date on which the Merger becomes effective being the date that the Plan of Merger is registered by the Cayman Islands Registrar of Companies (the “Effective Date”)), it intends to cancel the listing of the global depositary receipts (“GDRs”)representing its issued and outstanding shares with a nominal or par value of US$0.01 each (the “Shares”) on the Official List of the UK Financial Conduct Authority and the admission of the GDRs to trading on the London Stock Exchange with effect from or around Monday 23 February 2015. Subject to the Merger becoming effective, the Company has also provided written notice to The Bank of New York Mellon as depositary for the GDR programme (the “Depositary”)terminating the deposit agreement in respect of the GDRs (the “Deposit Agreement”) with effect from or around Friday 6 March 2015. A separate notification of such termination and a notification that the Extraordinary General Meeting has been convened and setting out the procedure for GDR holders to exercise their voting rights will be issued by the Depositary to GDR holders.

If the resolution to approve the Merger is passed at the Extraordinary General Meeting by the requisite percentage of the Shareholders and the Merger is consummated:

·      each of the Shares in issue and outstanding at the Merger Consideration Record Date (as defined below), other than the Excluded Shares (as defined below), will be cancelled in exchange for payment of cash consideration of US$22.00 per Share (the “Merger Consideration”) following completion of the Merger or, in the case of Dissenting Shares (as defined below), the fair value of the Shares as determined in accordance with section 238 of the Cayman Companies Law; 

·      Dissenting Shares shall cease to confer upon any Dissenting Shareholder (as defined below) any of the rights of a member except the right to payment of the fair value of such Dissenting Shares held by them, the right to participate in proceedings until the determination of fair value is reached and the right to institute proceedings to obtain relief on the ground that the Merger is void and unlawful subject to and in accordance with the provisions of section 238 of the Cayman Companies Law, unless any holders of Dissenting Shares fail to perfect or effectively withdraw or lose their dissenter rights, in which event they shall receive the Merger Consideration;

·      each share of EACL issued and outstanding as at the Effective Date shall be converted into and exchanged for one Share;

·      each Share held by EACL in issue and outstanding as at the Merger Consideration Record Date shall be cancelled by operation of law at the Effective Date; and

·      each Share held by the Participants in issue and outstanding as at the Merger Consideration Record Date shall remain issued and outstanding as at and following the Effective Date.

The “Dissenting Shares” are any Shares owned by “Dissenting Shareholders” who have validly exercised and have not effectively withdrawn or lost their rights to dissent from the Merger in accordance with section 238 of the Cayman Companies Law and who have the right to seek payment of the fair value of their Shares.

The “Excluded Shares” are the Shares that will be held by EACL and the Participants at the Effective Date representing approximately 69.33% of the Company’s total outstanding Shares.

“Merger Consideration Record Date” means 5 p.m. (EST) on the business day immediately prior to the day on which the Plan of Merger is filed with the Cayman Islands Registrar of Companies.

The Merger Consideration represents a premium of 81.1% over the GDR price on 19 January 2015.

It is proposed that the Merger Consideration will be financed by a loan of approximately US$991 million provided by a subsidiary of Schlumberger Limited (“SLB”) to EACL in accordance with the terms of a convertible loan agreement entered into between such subsidiary of SLB (“SLB Subsidiary”) and EACL on 20 January 2015 (the “Convertible Loan Agreement”). The Merger will not be completed unless all of the conditions precedent in the Convertible Loan Agreement have been satisfied or waived (where applicable) by the relevant time.

On or around the Effective Date, SLB Subsidiary and EACL have agreed that the convertible loan facility will be converted into new Shares in an amount equal to the number of Shares (other than the Excluded Shares) cancelled by operation of law as part of the Merger at a conversion price of US$22.00 per Share. Following such conversion under the Convertible Loan Agreement, SLB Subsidiary and another affiliate has agreed to acquire approximately a further 14.98% of the Shares from the Participants in accordance with and subject to the terms of a share purchase agreement between SLB Subsidiary and such affiliate and the Participants dated 20 January 2015 (the “Share Purchase Agreement”). SLB Subsidiary has agreed to pay US$176 million to the Participants for an option (the “Call Option”) to acquire the balance of the Participants’ Shares subject to and in accordance with the terms of a call option agreement dated 20 January 2015 (the “Call Option Agreement”). The Call Option is exercisable in whole (but not in part only) by SLB Subsidiary during a two year period commencing three years from completion of the acquisition of approximately 14.98% of the Shares.

The Company anticipates that on the Effective Date, following conversion of the convertible loan facility into Shares pursuant to the Convertible Loan Agreement and acquisition of approximately 14.98% of the Shares from the Participants in accordance with the Share Purchase Agreement, approximately 54.35% of the Shares will be held directly or indirectly by the Participants and approximately 45.65% of the Shares will be held directly or indirectly by SLB through its group companies.

Conditional on the implementation of the Merger, SLB Subsidiary has agreed to pay certain of the Participants an aggregate of US$44 million under non-competition agreements between SLB Subsidiary and certain of the Participants.

The Merger cannot be implemented unless the Plan of Merger and the transactions contemplated by the Plan of Merger, including the Merger, are passed by an affirmative vote of a majority of at least two-thirds of the votes of those Shareholders present and entitled to vote and voting in person or by proxy at the Extraordinary General Meeting. It is expected that the holders of the Shares currently owned directly or indirectly by the Participants and which comprise approximately 69.33% of the issued Shares will vote in favour of the resolution to be voted on at the Extraordinary General Meeting.

Pursuant to the terms of the Merger Implementation Agreement, in addition to approval by Shareholders and the shareholder of EACL, the filing of the Plan of Merger with the Cayman Islands Registrar of Companies is subject to certain conditions, including: (i) no material adverse change having arisen in relation to the Company; (ii) the Special Committee not having withdrawn its recommendation of the Merger; (iii) none of EACL, the Company, any subsidiary of the Company nor any of the Participants becoming subject to European Union or United States sanctions or sanctions extended by an Order of Her Majesty in Council to the Cayman Islands or the British Virgin Islands; and (iv) no order or judgment having been made by any governmental authority which renders unlawful, restrains or prohibits the Merger or any of the related transactions and no written notice of an intention to make such an order or judgment having been received. Unless the conditions precedent to the Merger have been satisfied or waived (where applicable) by 31 March 2015 (or such other date as is agreed between the Company and EACL), the Merger will not proceed and the Merger Implementation Agreement will be terminated.

The Special Committee considers the terms of the Merger to be fair and reasonable so far as the Shareholders (other than EACL and the Participants) are concerned and unanimously recommends that Shareholders vote FOR the special resolution to authorise and approve the Merger Implementation Agreement, the Plan of Merger and the transactions contemplated by the Plan of Merger, including the Merger. The Special Committee, in deliberating whether to recommend the Merger, has taken financial and other advice which it deems appropriate, including an opinion from Sberbank CIB on the fairness, from a financial point of view, of the consideration payable to the Shareholders (other than EACL and the Participants) under the terms of the Merger (the “Fairness Opinion”). In providing the Fairness Opinion to the Special Committee, Sberbank CIB has placed reliance on the Special Committee’s commercial assessment of the Merger.  Sberbank CIB is acting exclusively for the Special Committee and no one else in connection with the provision of the Fairness Opinion and will not be responsible to any person other than the Company for providing the Fairness Opinion.

A circular providing notice of the Extraordinary General Meeting and containing detailed information about the Merger and the Extraordinary General Meeting is expected to be dispatched to Shareholders today and will also be available on the Company’s website – www.eurasiadrilling.com/investor-relations/EGM/. 

Dissenting Shareholders will have the right to seek payment of the fair value of their Shares if the Merger is completed, but only if they deliver to the Company, before the vote is taken at the Extraordinary General Meeting, a written objection to the Merger complying with the requirements of section 238(2) and (3) of the Cayman Companies Law and subsequently comply with all procedures and requirements of section 238 of the Cayman Companies Law for the exercise of the right to dissent. The fair value of the Dissenting Shares as determined under the Cayman Companies Law could be more than, the same as, or less than the Merger Consideration which Dissenting Shareholders would receive pursuant to the Plan of Merger if such Dissenting Shareholders do not exercise the right to dissent.

Dissenters’ rights are available only to registered holders of Shares. Shareholders wishing to dissent must comply with the procedures and requirements for exercising dissenters’ rights with respect to the Shares under section 238 of the Cayman Companies Law.

HOLDERS OF GDRS ALONE WILL NOT HAVE A RIGHT TO ATTEND OR VOTE AT THE EXTRAORDINARY GENERAL MEETING OR DISSENT UNLESS THEY SURRENDER THEIR GDRS, PAY THE DEPOSITARY FEES (CONSISTING OF UP TO US$0.03 PER GDR SURRENDERED, A CABLE FEE OF US$17.50 AND ANY APPLICABLE TAXES OR GOVERNMENTAL CHARGES) AND BECOME SHAREHOLDERS BY 7 A.M. (EST) ON WEDNESDAY 11 FEBRUARY 2015. THE DEADLINE FOR RECEIPT OF CANCELLATION INSTRUCTIONS BY THE DEPOSITARY IS 7 A.M. (EST) ON MONDAY 2 FEBRUARY 2015. HOWEVER, A GDR HOLDER MAY, IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE DEPOSIT AGREEMENT, DELIVER TO THE DEPOSITARY VOTING INSTRUCTIONS IN RESPECT OF SOME OR ALL OF THE SHARES REPRESENTED BY ITS GDRS BY
7 A.M. (EST) ON WEDNESDAY 11 FEBRUARY 2015, WHEREUPON THE DEPOSITARY SHALL USE ITS REASONABLE ENDEAVOURS TO VOTE SUCH SHARES IN ACCORDANCE WITH SUCH VOTING INSTRUCTIONS AT THE EXTRAORDINARY GENERAL MEETING.

Neither the London Stock Exchange nor the UK Financial Conduct Authority nor any other securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this document or in any related notice of the Extraordinary General Meeting.

Vinson & Elkins RLLP and Maples and Calder are acting as the Special Committee’s legal advisers in the United Kingdom and the Cayman Islands respectively in relation to the Merger.

XENON Capital Partners LLC is acting as financial adviser to EACL and the Participants. Skadden, Arps, Slate, Meagher & Flom (UK) LLP and Walkers are acting as legal advisers to EACL and the Participants in the United Kingdom and the Cayman Islands respectively in relation to the Merger.