Vitol's Response to Actions Taken by Sterling Resources

ROTTERDAM, Netherlands, April 15, 2013 /PRNewswire/ - The Vitol Group ("Vitol") who, through its wholly owned subsidiaries, owns a 14.0% shareholding in Sterling Resources Ltd. ("Sterling" or the "Company"), wishes to comment on Sterling's decision, announced on April 8, 2013, to undertake a proposed US$225 million high yield bond issue (the "Proposed High Yield Bond") and pursue a Cladhan Farm-Down (the "Proposed Cladhan Farm-Down").

Vitol believes that the Proposed High Yield Bond and Proposed Cladhan Farm-Down represent the latest in a line of value destructive initiatives undertaken by Sterling's board of directors that are highly dilutive to all shareholders and whose main purpose appears aimed at preserving the Company's independence at all costs and at the expense of all its shareholders. Specifically, Vitol believes that the Proposed High Yield Bond effectively represents a defensive tactic to frustrate its intended take-over offer, both due to its restrictive covenants and security package as well as the prohibitive costs required to retire the Proposed High Yield Bond.

Any reasonable acquirer of Sterling would factor into its consideration the need to retire the Proposed High Yield Bond to avoid being hamstrung in its ability to manage the Company's business and assets post acquisition (caused by the bond's restrictive covenants and comprehensive security package). The cost of retiring the Proposed High Yield Bond is exorbitant, according to the proposed term sheet, requiring the payment of an estimated US$47 million to retire the bond (as at May 2013), which when added to the manager's fees totals an estimated US$53 million. This represents approximately 24% of the proposed principal amount of the bond (US$225 million) and around 23% of the Company's current market capitalization. From Vitol's or any other offeror's perspective, the bond would remove $0.17 per share of value, which if reflected in Vitol's intended offer price would reduce it from the announced $0.85 to $0.68 per share. We would encourage all shareholders to review the onerous terms of the Proposed High Yield Bond by requesting the term sheet and draft prospectus from either the Company or the manager (Pareto Securities).

Vitol also wishes to inform all shareholders that a group of shareholders (the "Shareholder Group"), representing more than 45% of shares outstanding, sent a letter to the Board of Sterling, dated April 11, 2013, requesting that the Company hold a shareholder vote on the Proposed High Yield Bond and Proposed Cladhan Farm-Down. According to an April 3, 2013 statement by the Company, it is fully financed until August, which would allow sufficient time for shareholders to consider the Proposed High Yield Bond and Proposed Cladhan Farm-Down at the AGM scheduled for June 11, 2013. On April 13, 2013, the Shareholder Group received a response from the Special Committee dismissing the request for a shareholders vote.

Vitol believes Sterling's dismissal of the views of these significant shareholders represents the latest in a line of initiatives designed to protect the position of management and the Board at the expense of shareholders. These initiatives include:

• Delay to independent valuation, depriving shareholders of the opportunity to consider the superior Vitol offer. Unfortunately, Vitol Anker has been unable to formally commence its previously announced premium, all-cash offer (the "Offer") for the outstanding shares of Sterling as the independent valuation required by applicable securities laws has not been provided by Sterling.  Shortly after the announcement of the Offer, on February 12, 2013, Sterling's board advised Vitol Anker that the chosen valuator was very familiar with Sterling's assets and that a draft of the independent valuation would be delivered in 4 weeks.  It has now been over 8 weeks since Vitol's announcement and no independent valuation has been provided; meanwhile, Sterling's board and management have actively pursued counter-measures and dilutive, obstructive initiatives.

• Dilutive equity financing. The Company's recently completed CAD$63.25 million equity offering was priced at an 11.8% discount to the Offer and diluted the Company's outstanding share capital by 37.4%.  Another value dilutive equity offering could again be pursued under this board/management team.

• Costly financing fees. In an effort to attain additional liquidity, the Company agreed to a number of costly and restrictive measures with its banking group to secure waivers and extensions on the Company's senior secured credit facility, the total cost of which we estimate at approximately US$5 million. Including all fees that have been paid for financings over the past 4 months alone, we estimate that the Company will have disbursed approximately US$16 million in fees if the Proposed High Yield Bond proceeds.

• Self-inflicted loss of bank market support. The Proposed High Yield Bond and Proposed Cladhan Farm-Down are being pursued because the actions by Sterling's management and board have resulted in defaults on the senior credit facility and apparently eroded bank market confidence in the Company.  Consequently, Sterling has turned to a bond market with limited depth and heavy conditionality applied to weak companies, the result of which, if the Proposed High Yield Bond is completed, will be a very expensive financing with onerous terms.

• Dilutive Proposed Cladhan Farm-Down imposed as condition of bond. The Proposed Cladhan Farm-Down of a further interest in Cladhan is extremely value dilutive compared to the Company's earlier farm-down and independent valuations published in the investment community, effectively eroding Sterling's fully carried interest to no more than 2%. Vitol notes that the Proposed High Yield Bond covenants commit Sterling to proceed with the transfer of the 12.6% farm-out component, effectively crystallizing the value destruction.

In light of this string of value-dilutive initiatives by Sterling, Vitol will carefully consider the implications on its Offer, including the impact on any offer price. According to Vitol's estimates, the March equity issue caused CAD0.04 per share value dilution from the baseline of Vitol's intended offer price of CAD0.85 per share. The Proposed Cladhan Farm-Down causes an estimated reduction in the value of the retained interest by more than CAD0.15 per share compared to the imputed value from the original farm-out to TAQA. Fees paid over the course of the past four months have so far caused an estimated CAD0.05 per share of value erosion. Finally, if the Proposed High Yield Bond proceeds, we estimate a CAD0.17 cent per share negative value impact for any potential acquirer or Sterling. Additional value has been eroded through the further delay and cost increase for Breagh Phase 1, as announced by Sterling on April 3, 2013.

Vitol believes it is apparent that Sterling's action taken to date has destroyed substantial value in the Company, and should the Proposed High Yield Bond and Proposed Cladhan Farm-Down proceed, the price of any offer by Vitol would need to reflect the value erosion caused by the management and board of the Company. Having failed to secure a superior offer during its strategic review process, it appears the Company has instead focused its efforts on initiatives that serve to obstruct shareholders from considering Vitol's intended offer.

About The Vitol Group

The Vitol Group was founded in 1966 in Rotterdam, the Netherlands. Since then the company has grown significantly to become a major participant in world energy markets and is now the world's largest independent energy trader. Its trading portfolio includes crude oil, oil products, LPG, LNG, natural gas, coal, power, metals and carbon emissions. The Vitol Group trades with all the major national oil companies, the integrated oil majors and the independent refiners and traders.

Further details on The Vitol Group are available at www.vitol.com.

Press Release for Informational Purposes Only

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell any securities. The solicitation and the offer to buy the shares will be made only pursuant to the separate formal offer and take-over bid circular and other related documents.

Forward-Looking Statements and Information

This news release contains "forward-looking statements" and "forward-looking information", which may not be based on historical facts. Forward-looking statements and forward-looking information, include, but are not limited to, information and statements with respect to the Offer or the business, operations and financial condition of Sterling. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of The Vitol Group at the date the statements are made. Such forward-looking statements and forward-looking information involve known and unknown risks, uncertainties and other factors that may cause the actual results events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements or forward-looking information. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements and forward-looking information. Except as required by applicable securities laws, Vitol Anker disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements or forward-looking information contained herein to reflect future results, events or developments.

SOURCE The Vitol Group

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