TECPETROL ANNOUNCES INTENTION TO MAKE ALL-CASH TAKE-OVER BID DIRECTLY TO SHAREHOLDERS OF ALPHA LITHIUM CORPORATION

USA - English

• USA - español
• USA - Deutsch
• USA - Français

Highly Certain Cash Payment to Alpha Shareholders Otherwise Exposed to Risk as Owners of an Early-Stage Lithium Exploration Company

Tecpetrol is a Credible Transaction Party with a Clear Path to Closing

Offer Affords Shareholders the Opportunity to Determine the Outcome of their Investment Following Alpha's Unwillingness to Engage

Tecpetrol Prepared to Increase Offer Price if Shown Greater Value Through Engagement

Tecpetrol's Intention is to Responsibly Develop Alpha's Lithium Assets as part of the Integrated Western Battery Supply Chain

TORONTO, June 2, 2023 /PRNewswire/ -- Tecpetrol Investments S.L. ("Tecpetrol"), a member of the Techint Group, announced today that it intends to make a formal offer (the "Offer") to acquire all of the issued and outstanding common shares ("Shares") of Alpha Lithium Corporation (NEO: ALLI) (OTC: APHLF) (German WKN: A3CUW1) ("Alpha" or the "Company"), a Canadian incorporated, headquartered and listed company, for cash consideration of C$1.24 per Share (the "Offer Price").  Tecpetrol intends to make the Offer directly to Alpha shareholders so that they can determine the outcome of their investment.

The Offer follows repeated attempts by Tecpetrol to constructively engage with Alpha. Most recently, Tecpetrol suggested that the parties engage in confidential discussions with respect to the value of the Company to determine whether a mutually agreeable transaction price could be put to Alpha shareholders for their consideration. Tecpetrol reiterated to Alpha that it had an ability to increase the value of its proposal if the parties could reach agreement on a mutually acceptable transaction price. In order to facilitate these discussions, Tecpetrol waived its previous requests for due diligence and exclusivity. Despite the waiver of the due diligence request, which eliminated the need for a non-disclosure agreement, Alpha has continued to insist that Tecpetrol execute a comprehensive non-disclosure agreement that would preclude Tecpetrol from making an offer directly to shareholders and inappropriately limit Tecpetrol's strategic options, depriving shareholders of the opportunity to choose to accept or reject the Offer.

Tecpetrol is a company incorporated in Spain that is part of the Techint Group, a conglomerate with a strong presence in Canada for more than 20 years, notably through Tenaris, the leading Canadian manufacturer and supplier of steel tubes for the Canadian oil and gas industry. Tecpetrol's intention, in line with its energy transition strategy, is to responsibly develop these premium lithium assets as part of the integrated Western battery supply chain. The proposal is aligned with Canada's critical minerals strategy, whose vision is to increase the supply of critical minerals and support the development of the domestic and global value chains for the green and digital economy.

Financial and Strategic Benefits of the Offer

Tecpetrol firmly believes that shareholders should have the opportunity to determine what is best for their investment by accepting compelling, immediate and certain value in the form of C$1.24 in cash per Share from a credible transaction partner with a clear path to closing. Tecpetrol believes that if the Company were to pursue an asset-level transaction (see "Background to the Offer" below), shareholders could be deprived of that opportunity.

Tecpetrol believes the significant benefits of the Offer include, among others:

• Attractive Cash Payment and Immediate Liquidity to Shareholders Through De-Risked Transaction. The Offer crystallizes robust value for Alpha shareholders, at near Alpha's all-time high trading price, despite being made in a market environment with lower lithium prices and rising costs.¹

The Offer also provides immediate liquidity to holders of a thinly-traded investment in an early-stage lithium exploration company, in a de-risked transaction that eliminates the exploration, development and execution risk associated with bringing the Alpha's properties into production.

• Credible and Experienced Counterparty with Clear Path to Closing. The Techint Group is a large global industrial organization and has an extensive track record and reputation of completing large transactions in industrial and extractive sectors around the globe, including in Canada. The Techint Group's strong integration in the Western allied countries' supply chains and significant presence and history of successful investment in Canada make it a credible transaction partner with a clear path to closing given that, to the knowledge of Tecpetrol, there are no regulatory approvals required in connection with the Offer. In contrast, Tecpetrol believes that there would be meaningful transaction risk for Alpha shareholders if the Company were to pursue a transaction under its ongoing asset-level auction process with a party from a country likely to face significant scrutiny under the Investment Canada Act and the Government of Canada's Policy Regarding Foreign Investments from State-Owned Enterprises in Critical Minerals under the Investment Canada Act (the "Critical Minerals Policy"), such as Alpha's previously proposed asset-level transaction with Uranium One (a subsidiary of a Russian state-owned enterprise) that had to be aborted. (See "Background to the Offer" below.)
  
  
• Risk of Downward Impact on Share Price if Offer Not Accepted. If the Offer is not successful and no alternative transaction is available or is otherwise capable of obtaining the regulatory approvals, Tecpetrol believes it is highly likely that the trading price of the Shares will decline to lower levels and trade in a way that reflects the inherent volatility of the global capital markets and lithium commodity prices and the limited liquidity of the Shares.
  
  
• Standalone Plan Remains Challenging and Underfunded. The development of Alpha's assets requires substantial debt and/or equity financing to fund a significant capital program, which would be carried out in a market environment that carries material financing risk and would likely result in significant dilution to shareholders – all against a backdrop of significant development and execution risk that necessitates technical expertise.
  
  
• Tax-Efficient Structure. Tecpetrol is contemplating an acquisition of Shares directly from Alpha shareholders, which Tecpetrol expects will be more tax-efficient for shareholders than a distribution following an asset sale.
  
  
• Opportunity for Shareholders to Determine the Outcome of their Investment. Four of the Company's six directors are current or former members of management and not independent. Tecpetrol believes that neither the Offer nor its attempts to engage with Alpha have received independent consideration. Alpha shareholders can now determine for themselves whether to accept the Offer.
  
  
• No Financing Condition. Tecpetrol has the financial resources necessary to satisfy the Offer in full with cash on hand and does not require external financing.

Background to the Offer

Since its creation, Tecpetrol's Energy Transition Unit has continually evaluated potential investment, acquisition and other commercial opportunities in energy assets in Argentina and elsewhere that, in line with its energy transition strategy, may be responsibly developed as part of the integrated Western battery supply chain.  Tecpetrol recognizes that a key component to building an emerging Western battery supply chain is lithium supply, and Tecpetrol believes that its energy transition strategy is aligned with Western efforts to secure this supply, including the Government of Canada's Critical Minerals Policy.  

On December 1, 2022, Tecpetrol received an unsolicited invitation to participate in an auction process for the sale of Alpha's interest in the Tolillar Project (the "Sale Process"). It was Tecpetrol's understanding that the Sale Process was to be broad in nature and include participants from several countries, including China. It was also Tecpetrol's understanding that the Sale Process was focused on a sale of an interest in the Tolillar Project, rather than a corporate-level transaction involving Alpha, and potentially enable participation in the Sale Process by parties that would likely face significant scrutiny under the national security provisions of the Investment Canada Act and the Critical Minerals Policy.

At the time, Tecpetrol indicated its willingness to participate in the Sale Process, as well as its willingness to explore a potential corporate-level transaction that Alpha shareholders might find more attractive than the asset-level structure put forward in the Sale Process.  In Tecpetrol's view, with the Tolillar Project being Alpha's sole material mineral property and representing substantially all of its assets, a corporate-level transaction would not only afford shareholders the chance to determine what is best for their investment but also allow them the opportunity to dispose of their entire interest in Alpha and receive full value for their Shares. In addition, based on the information available to Tecpetrol and its advisors, a corporate-level transaction would generally be more tax-efficient for shareholders than a distribution to shareholders of the proceeds resulting from an asset-level transaction, the amount and timing of which distribution is at the discretion of Alpha's board of directors.

However, Tecpetrol was advised by representatives of the Company that Alpha would not consider a corporate-level transaction. Tecpetrol interpreted this response to indicate that, by exclusively pursuing an asset-level structure, Alpha was prioritizing parties other than Tecpetrol with its Sale Process, which Tecpetrol believed were likely parties that would face significant scrutiny under the Investment Canada Act. As a result, Tecpetrol declined to participate in the Sale Process, but between December 2022 and April 2023 continued monitoring the situation, conducting its due diligence of Alpha and the Tolillar Project based on publicly-available information, and advancing its evaluation of a potential transaction.

By May 2023, Tecpetrol had completed its due diligence of public information.  On May 15, 2023, Tecpetrol submitted to Alpha a non-binding proposal (the "Initial Proposal") to acquire all of the issued and outstanding Shares for a purchase price of C$1.24 per Share.  Tecpetrol also offered Alpha an opportunity to discuss the Initial Proposal in additional detail. 

On May 16, 2023, Alpha advised Tecpetrol that its board of directors was not willing to consider the Initial Proposal or engage in discussions with Tecpetrol. In addition, Tecpetrol's financial advisor had a discussion with Alpha's financial advisor to, among other things, emphasize Tecpetrol's position as a credible and experienced counterparty with a clear path to closing and Tecpetrol's willingness to increase the purchase price put forward in the Initial Proposal if it were afforded due diligence access. Tecpetrol's financial advisor also requested guidance regarding the extent of improvement to the Offer Price that would be necessary to obtain the support of Alpha's board of directors, but no such guidance was provided.

In light of Alpha's refusal to consider the Initial Proposal or engage in discussions with Tecpetrol, Tecpetrol believed that shareholders should be made aware of the Initial Proposal and, on May 22, 2023, issued a press release disclosing the key terms of the Initial Proposal.

On May 31, 2023, Tecpetrol's financial advisor again contacted Alpha's financial advisor to communicate Tecpetrol's willingness to waive its previous requests for due diligence access and exclusivity and provide Alpha with an opportunity to engage directly in discussions with respect to the value of the Company with a view to increasing the Offer Price following discussions.

On June 1 2023, Tecpetrol's financial advisor contacted Alpha's financial advisor to propose specific steps for a confidential exchange of information regarding the value at which each party would support a potential transaction.  Following that update, notwithstanding that Tecpetrol had waived its due diligence request, which eliminated the need for a non-disclosure agreement, Alpha insisted that Tecpetrol execute a comprehensive non-disclosure agreement in the form prepared by Alpha that would preclude Tecpetrol from making an offer directly to shareholders and inappropriately limit Tecpetrol's strategic options; depriving shareholders of the opportunity to choose to accept or reject the Offer.

Tecpetrol is not prepared to accept these inappropriate preconditions. Accordingly, in light of Alpha's repeated refusal to engage constructively in discussions with Tecpetrol to increase the Offer Price, Tecpetrol intends to proceed directly with the Offer to Alpha shareholders.

Offer Details

Full details of the Offer, which will be formally made by a wholly-owned Canadian subsidiary of Tecpetrol, will be provided in a formal offer and take-over bid circular, letter of transmittal and notice of guaranteed delivery (collectively, the "Offer Documents") to be filed with Canadian securities regulatory authorities and mailed to Alpha shareholders. Tecpetrol will request a list of security holders from Alpha and expects to mail the Offer Documents as soon as practicable after receipt of such list.  The Offer will be open for acceptance for a period of 105 days following formal commencement, unless the Offer is extended, accelerated or withdrawn in accordance with its terms, and will constitute a "Permitted Bid" for purposes of Alpha's shareholder rights plan.  The shareholder rights plan has not been approved or ratified by shareholders.

The Offer will be conditional upon certain conditions being satisfied or, where permitted, waived at or prior to the expiry of the Offer. Such conditions will include, among others to be described in the formal offer and take-over bid circular: (a) there having been validly deposited under the Offer and not withdrawn that number of Shares which represent more than 50% of the outstanding Shares, excluding those Shares beneficially owned, or over which control or direction is exercised, by Tecpetrol or by any Person acting jointly or in concert with Tecpetrol, which is a statutory non-waivable condition; (b) there having been validly deposited under the Offer and not withdrawn that number of Shares (together with associated rights under Alpha's shareholder rights plan) which represent at the expiry of the Offer at least two-thirds of the outstanding Shares on a fully-diluted basis; (c) Tecpetrol having determined that there has not occurred a material adverse effect in respect of Alpha; and (d) Tecpetrol having determined that Alpha has not taken any action or disclosed that it intends to take any action that might make it inadvisable for Tecpetrol to proceed with the Offer, such as the entering into any definitive agreement or transaction under or in connection with the Sale Process.  The Offer is not subject to any due diligence or access condition, financing condition or Tecpetrol shareholder approval condition.  In addition, to the knowledge of Tecpetrol, there are no regulatory approvals required in connection with the Offer.  

If the statutory minimum is satisfied and the other conditions to the Offer are satisfied or waived at or prior to the expiry of the Offer such that Tecpetrol takes up the Shares validly deposited under the Offer, it will make a public announcement of the foregoing and extend the period during which Shares may be deposited and tendered to the Offer for a period of not less than 10 business days after the date of such announcement.

Following completion of the Offer, Tecpetrol intends (but is not required) to enter into one or more transactions to enable it to acquire all Shares not acquired under the Offer, including a compulsory acquisition or subsequent acquisition transaction. If Tecpetrol is able to complete such a transaction, Tecpetrol intends to seek to delist the Shares from the NEO and to cause Alpha to cease to be a reporting issuer if permitted under applicable law.

Full details of the Offer will be provided in the Offer Documents to be filed with Canadian securities regulatory authorities and mailed to Alpha shareholders. This news release is not a substitute for the Offer Documents.  The Offer Documents are not currently available but, once they are made available, will contain important information relating to the Offer, Tecpetrol and Alpha and should be reviewed carefully.

Shareholders should consult their own tax advisors having regard to their own particular circumstances to determine the particular tax consequences to them of a disposition of Shares pursuant to the Offer, a compulsory acquisition or subsequent acquisition transaction.

Readers are cautioned that Tecpetrol may determine not to make or proceed with the Offer and there can be no assurance that the Offer will be made or that the final terms of the Offer will be as described in this news release.

Advisors

BMO Capital Markets is serving as financial advisor and Davies Ward Phillips & Vineberg LLP is serving as legal advisor to Tecpetrol. In addition, Crestview Strategy is serving as government relations advisor and Teneo is serving as strategic communications advisor.

About the Tecpetrol Energy Transition Unit
Tecpetrol's Energy Transition Unit is Techint Group's dedicated business unit responsible for advancing its position in the global energy transition through investments in decarbonized energy sources, carriers and technologies, with the objective of contributing to a significant reduction in the carbon footprint. As part of this initiative through its subsidiary Techenergy Lithium S.A., Tecpetrol has built a lithium processing pilot plant in northern Argentina engineered for scale, which supports a production flowsheet involving direct lithium extraction. For additional information on Tecpetrol, please visit its website at https://www.tecpetrol.com/en

The Techint Group is a global conglomerate with diversified business lines in steelmaking, complex infrastructure construction, design and construction of industrial plans and machinery, technologies for the metals and mining industries, oil and gas exploration and production and research-oriented health facilities. Through our six main companies – Tenaris S.A. (NYSE and Mexico: TS and EXM Italy: TEN), Ternium S.A. (NYSE: TX), Techint Engineering & Construction, Tenova, Tecpetrol and Humanitas – the Techint Group operates on six continents, employs 79,300 employees and generates over US$33 billion in annual revenue. We have an extensive track record of completing large transactions in industrial and extractive sectors around the globe, including in Canada, and in navigating complex regulatory frameworks. For additional information on the Techint Group, please visit its website at https://www.techintgroup.com/en

Caution Regarding Forward-Looking Statements

This news release contains "forward looking information". Forward-looking information is not based on historical facts, but rather on current expectations and projections about future events, and is therefore subject to risks and uncertainties that could cause actual results to differ materially from the future results expressed or implied by the forward-looking information. Often, but not always, forward-looking information can be identified by the use of forward-looking words such as "plans", "expects", "intends", "seeks", "anticipates", "believes", or variations of such words, and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information contained in this news release includes, but is not limited to, statements regarding Tecpetrol's intention to make the Offer and the proposed terms and conditions of the Offer, including the price of the Offer, the timing of the Offer, the conditions of the Offer, the acceptance period of the Offer and other details of the Offer; Tecpetrol's intention to request a list of security holders from Alpha and its expectation to mail the Offer Documents as soon as practicable after receipt of such list; information concerning Tecpetrol's plans for Alpha in the event the Offer is successful; the satisfaction or waiver of the conditions to consummate the Offer; benefits of the Offer; expectations concerning the Sale Process and its timing and the potential participants in, and potential structure of any transaction resulting from, the Sale Process; anticipated regulatory considerations and other transaction risks applicable to any transaction resulting from the Sale Process, including with respect to the Investment Canada Act and the Critical Minerals Policy and any shareholder approval that may or may not be required or sought in connection with any transaction resulting from the Sale Process; the possibility of an alternative transaction resulting from the Sale Process and the likelihood that the price of the Shares will decline back to pre-Offer levels if the Offer is not successful; the tax treatment of the Offer for shareholders, including the tax-efficiency of an acquisition of Shares relative to an asset-level transaction involving of the Tolillar Project followed by a distribution of the proceeds therefrom to shareholders; intentions to delist the Shares and to cause Alpha to cease to be a reporting issuer if permitted under applicable law; expectations regarding Alpha's standalone plan and the financing and capital program required to execute such plan; and the completion of a compulsory acquisition or a subsequent acquisition transaction.

Although Tecpetrol believes that the expectations reflected in such forward-looking information are reasonable, such statements involve risks and uncertainties and have been based on information and assumptions that may prove to be inaccurate, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking information and such factors and assumptions are based on information currently available to Tecpetrol, and actual results may differ materially from those expressed or implied in such statements. In addition, information used in developing forward-looking information has been obtained from various sources, including third parties and regulatory or governmental authorities.  Important factors that could cause actual results, performance or achievements of Tecpetrol or the completion of the Offer to differ materially from any future results, performance or achievements expressed or implied by such forward-looking information include, without limitation: the ultimate outcome of any possible transaction between Tecpetrol and Alpha, including the possibility that Alpha will or will not accept a transaction with Tecpetrol; actions taken by Alpha; actions taken by security holders of Alpha in respect of the Offer; that the conditions of the Offer may not be satisfied or waived by the Offeror at the expiry of the Offer period; the outcome of the Sale Process; that any transaction resulting from the Sale Process involving a state-owned enterprise or foreign-influenced private investor will be subject to certain Canadian regulatory approvals and the outcome of such regulatory approval process; that none of the Offer, any compulsory acquisition or subsequent acquisition transaction is subject to any regulatory approvals and the ability to obtain regulatory approvals (if any) and meet other closing conditions to any possible transaction, including any necessary shareholder approvals; any changes in general economic, market and/or industry-specific conditions, including in interest rates, currency exchange rates or commodity prices; industry risk; Alpha's structure and its tax characteristics; and that there are no inaccuracies or material omissions in Alpha's publicly available information.

Forward-looking information in this news release is based on Tecpetrol's beliefs and opinions at the time the information is given, and there should be no expectation that this forward-looking information will be updated or supplemented as a result of new information, estimates or opinions, future events or results or otherwise, and Tecpetrol expressly disclaims any obligation to do so except as required by applicable law.

Disclaimers

This news release is for informational purposes only and does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities.  The Offer will be made solely by, and subject to the terms and conditions set out in, the formal offer and take-over bid circular, letter of transmittal and notice of guaranteed delivery.  The Offer will not be made to, nor will deposits be accepted from or on behalf of, shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction.

The Offer will be made for the securities of a Canadian company that does not have securities registered under section 12 of the United States Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act"). Accordingly, the Offer is not subject to section 14(d) of the U.S. Exchange Act or Regulation 14D or Rule 14e-1 of Regulation 14E. The Offer will be made in the United States with respect to securities of a "foreign private issuer", as such term is defined in Rule 3b-4 under the U.S. Exchange Act, in accordance with Canadian corporate and securities law requirements. Shareholders in the United States should be aware that such requirements are different from those of the United States applicable to tender offers under the U.S. Exchange Act and the rules and regulations promulgated thereunder.

The Offer and all contracts resulting from acceptance thereof will be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.  Accordingly, the provisions of the German Takeover Code (Wertpapiererwerbs- und Übernahmegesetz) do not apply to the Offer.

None of the United States Securities and Exchange Commission, any United States state securities commission or the German Federal Financial Supervisory Authority has approved or disapproved (or will approve or disapprove) the Offer, or passed (or will pass) any comment upon the fairness or the merits of the Offer or upon the adequacy or completeness of the information contained in this news release or in any other document relating to the Offer. Any representation to the contrary is unlawful.

Contact: Alexandre Meterissian, Email: [email protected]; Investor Relations, Jorge Dimópulos, Email: [email protected]

Photo - https://mma.prnewswire.com/media/2092219/Tecpetrol_TECPETROL_ANNOUNCES_INTENTION_TO_MAKE_ALL_CASH_TAKE_OV.jpg