Sintana Energy Inc (TSX-V:SEI, OTCQB:SEUSF) has released a letter to shareholders providing additional details and context about its proposed all-share acquisition of Challenger Energy Group PLC (AIM:CEG, OTCQB:BSHPF), following the publication of a Scheme Document earlier in the day.
The document, available on Sintana’s website, outlines the elements of the acquisition and has been distributed to Challenger shareholders.
The company said that communication with its own shareholders had been limited by UK takeover regulations since the deal was announced on October 9.
In the letter, Sintana told investors that the rationale for the transaction was being driven by diversification, new geographic exposure, and an opportunity to expand its partnership with Chevron.
On diversification, Sintana said the company’s success in Namibia has been “the confluence of right time, right place and right exposure,” but that it recognizes the risks of focusing too heavily on one region.
“Diversification becomes more important with progress, particularly when you are otherwise singularly exposed to one environment,” the letter stated.
The company said the acquisition would also provide exposure to Uruguay’s emerging offshore sector, where international energy companies, including Shell, Apache, YPF, Chevron, and Challenger have secured licenses in recent years. Sintana said this activity highlights the potential of the South Atlantic conjugate margin on the South American side.
Further, the transaction would further broaden Sintana’s existing relationship with Chevron, which is a partner in its Namibian projects. Challenger holds a 40% retained interest in Uruguay’s OFF-1 license, where Chevron operates and partially carries that interest.
The company said this creates an opportunity to extend its partnership with Chevron across both sides of the South Atlantic margin.
According to Sintana, the timing of the acquisition reflects the completion of complex regulatory processes tied to the purchase of a UK-listed company and Sintana’s concurrent plan to list its shares on London’s AIM market by the end of the fourth quarter of 2025.
The company said its board took steps to manage potential conflicts of interest, forming a special committee of disinterested directors to evaluate the deal.
Executive chairman Keith Spickelmier chaired the committee, while Robert Bose was excluded from deliberations and voting due to conflicts. Pareto Securities AS advised the committee and provided a fairness opinion. The board approved the acquisition unanimously, excluding Bose.
The letter also disclosed that Charlestown, an investor associated with Bose, holds approximately 21 million Sintana shares, or 5.7% of the company’s outstanding stock, along with a C$4 million working capital facility available to the combined company. Charlestown and Bose also hold equity positions in Challenger valued at roughly US$2.2 million.
Sintana said it has conducted a detailed review of the transaction under Canadian securities rules, including Multilateral Instrument 61-101, to determine whether a shareholder vote is required. The company said the process was designed to comply with all applicable regulations and ensure shareholder protection.
“We remain steadfast in our belief in the merits and benefits of this combination to Sintana, and by extension to our fellow shareholders,” the company concluded.