EXHIBIT 99.1
Letter from the Chairman of Magellan Petroleum Corporation (ARBN 117 452 454) in regard to the
Offer to acquire all the Shares it does not already own in Magellan Petroleum Australia Limited
(ACN 009 728 581) 12 April 2006
Dear MPAL Shareholder:
Magellan Offer Unconditional
Since I last wrote to you on 23 March 2006, there have been a number of important developments
in regard to Magellans Offer for MPAL shares.
These developments are as follows:
Share offer has been declared unconditional
The Magellan Board of Directors has decided today to waive the only remaining defeating condition
of the Offer. Specifically, this was the condition that MPAL attained a 90% relevant interest in
MPAL. Previously, the Magellan Board had signalled to the market that Magellan would waive that
condition when it reached 80%. Magellan has now reached 76.8%, and notwithstanding it remains
short of the 80% level, Magellan has decided to waive the final offer condition. By declaring the
Offer free from all defeating conditions, Magellan will immediately acquire all shares validly
submitted prior to the Offer Closing Date.
Magellan has now received acceptances for over 48% of the shares being bid for. This includes
acceptances from MPALs two largest minority shareholders, Origin Energy, and Paradice Investments.
The impressive level of acceptances received provides a clear and compelling argument that
comparing relative market values of Magellan and MPAL is valid and important.
Early payment of consideration to accepting MPAL shareholders
Magellan will provide the consideration (ie. the payment of cash and issue of Magellan shares) to
accepting MPAL Shareholders at the following times:
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In regard to valid acceptances that have been received by todays date, on or about
21 April 2006, and |
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In regard to valid acceptances that are received after today and prior to the Offer
Closing Date, approximately 10 business days after the date the acceptance is received. |
Offer still scheduled to close on 21 April
The Offer is scheduled to close on Friday 21 April. If you have not yet accepted, but wish to do
so, please send in your acceptance forms in good time to meet the Closing Date.
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No increase in price
As announced to the Australian Stock Exchange (ASX) on 24 February 2006, Magellan will not be
increasing its Offer consideration. Under ASIC guidelines, because Magellan has publicly made a
no increase statement, it must abide by that statement. Accordingly, those MPAL shareholders who
perhaps have delayed making a decision on accepting the Officer in case there may have been an
increase in the Offer consideration, may wish to now reconsider whether or not they intend to
accept.
Accordingly, this is Magellans FINAL Offer.
If Magellan attains an acceptance level of at least 90% prior to the Offer Closing Date, Magellan
intends to move to acquire 100% of MPAL by way of the compulsory acquisition process available
under the Corporations Act.
Accepting MPAL shareholders could receive tax rollover relief if Magellan reaches 80%
Importantly, if and when Magellan is able to acquire over 80% of MPAL, accepting MPAL shareholders
could be eligible for scrip for scrip capital gains tax rollover relief for the share element of
the Offer consideration they receive.
Listing of Magellan Shares on ASX
Magellan intends to apply for all Magellan Shares (rather than only those Magellan CDIs to be
issued as consideration for MPAL Shares) to be quoted on the ASX in the form of Magellan CDIs. At
present there are over 25.7 million Magellan Shares on issue. Under the Offer, up to approximately
15.7 million new Magellan Shares would be issued.
Accordingly, all MPAL shareholders who accept the Offer and receive new Magellan Shares can trade
those Shares on either (i) NASDAQ and the Boston Stock Exchange, or (ii) the ASX, depending on
whether the accepting shareholder has chosen to receive Shares certificates, or Magellan CDIs.
Magellan Shares can be converted to Magellan CDIs, and vice versa. Shareholders should read
section 7.4 of the Magellan Bidders Statement to familiarize themselves of the mechanics involved.
Value of Benchmark Offer Consideration
Magellan Shares are trading at a price which presents an attractive Offer premium to the present
market value of MPAL. At Magellans volume weighted average price of US$1.96* from 23 December
2005 to 11 April 2006, at the prevailing exchange rate and Offer ratio, the Benchmark Offer
Consideration is currently valued at A$2.12 per MPAL Share. This is a 31% premium to MPALs
closing price of A$1.62 on 11 April 2006.
* Source: Bloomberg. Magellans closing price on 11 April 2006 was US$2.28. Magellan Shares
have traded in the range of US$1.61 to US$2.37 in the period from 23 December 2005 to 11 April
2006.
We urge all those MPAL shareholders who have not already accepted the Offer to do so as soon as
possible. If you have mislaid your Acceptance Form, please contact Magellans Information Line on
1300 551 398 if calling within Australia, or +61 3 9415 4303 if calling from outside Australia to
request a replacement Form.
I look forward to sharing Magellans exciting future with all MPAL Shareholders.
Yours sincerely
/s/ Walter McCann
Walter McCann
Chairman
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