November 8, 2007
Eastern Echo says Schlumberger offer undervalues company
The Board of Eastern Echo Holding Plc, management and founding shareholders, who together hold more than 14 percent of Eastern Echo's share capital, say they don't intend to accept the current offer from Schlumberger BV. They say that the offer price of a minimum of NOK 11 and a maximum of NOK 12 per share is "considered not to represent the fair value of the company."
The Board says that based on a day rate assumption of $250,000 per vessel, operating expenses per day per vessel of $86,000, Eastern Echo will have a net result of approximately $ 220 million, or NOK 1.2 billion, in 2010. The unsolicited offer from Schlumberger values Eastern Echo at NOK 3.2 billionn. This implies a pay-back time of less than three years, which the Board finds unacceptably low.
The Board and management believe that the fair value of the company could be above NOK 20 per share.
Given the intention of certain shareholders not to accept the current offer, Schlumberger BV will not achieve an acceptance ratio of 90%, which means the prevailing offer price will then be NOK 11.
On November 7, 12.2 million shares were traded at a volume weighted average price of NOK 12.84 per share which is 16.7 percent higher than the offer price of NOK 11.