California Resources Corporation (NYSE:CRC) entered into a definitive merger agreement to acquire Aera Energy LLC from Green Gate Resources E, LLC and Canada Pension Plan Investment Board for $2.1 billion on February 7, 2024. Under the terms of the agreement, Aera's owners will receive 21.2 million shares of California Resources Corporation?s common stock and California Resources Corporation will assume $1.1 billion of debt and other liabilities of Aera. As part of the transaction, Green Gate Resources managed by IKAV sold 51% and Canada Pension Plan Investment Board sold 49%. Post closing, Green Gate Resources and CPP Investments will collectively hold 22.9% of CRC?s common stock, with CRC shareholders owning approximately 77.1% of the combined company. In case of certain circumstances, California Resources Corporation will pay $100 million to IKAV for termination. IKAV and CPP Investments will be subject to customary lock-up periods, which preclude the sale of any shares for six months after closing. At least 2/3 of issued shares will be subject to a 12 month lock up and at least 1/3 of the issued shares will be subject to an 18 month lock up period. CRC has secured a firm commitment for a $500 million bridge loan facility to facilitate closing. The CRC management team will run the combined company which will be headquartered in Long Beach, California, and at closing IKAV and CPP Investments will each nominate one representative to the CRC Board. The transaction is subject to customary closing conditions, regulatory approvals, expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and CRC shareholder approval. The merger agreement has been unanimously approved by CRC?s Board of Directors and the shareholders of Aera. The merger agreement has been approved by IKAV board. The transaction is expected to close in the second half of 2024. The transaction is expected to be accretive. The required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired at 11:59 p.m. Eastern Time on March 25, 2024. As of May 20, 2024, California Resources tends to offer and sell to eligible purchasers $500 million in aggregate principal amount of senior unsecured notes due 2029 and intends to use the net proceeds from this offering, cash on hand and borrowings under its revolving credit facility to repay the existing indebtedness of Aera Energy. If the consummation of the Aera Merger does not occur on or before May 7, 2025 the Company notifies the trustee in writing that the merger agreement related to the Aera Merger has been terminated or the Company will not pursue the consummation of the Aera Merger. CRC will pay Okapi Partners, LLC a fee of up to $30,000, plus expenses. CRC has agreed to pay Jefferies a fee of $12.0 million, $1.5 million of which was payable upon delivery of Jefferies? opinion, and the remainder of which is payable upon the closing of the mergers.

Citi and Jefferies acted as financial advisors and Alison S. Ressler, Bradley S. King, Tia S. Barancik, Isaac J. Wheeler, Stephen Profeta, Mark Schenkel, Jeannette E. Bander, John E. Estes, Matthew J. Brennan and Steven L. Holley of Sullivan & Cromwell LLP acted as legal advisors to CRC. Wells Fargo and Truist acted as financial advisors and David Allinson and Thomas Brandt of Latham & Watkins LLP acted as legal advisor to CPP Investments & IKAV. Ann Beth Stebbins of Skadden, Arps, Slate, Meagher & Flom LLP represented Jefferies LLC as financial advisor to California Resources Corporation. Jefferies LLC acted as fairness opinion provider to California Resources Corporation. Jhett R. Nelson and Adam Garmezy of Kirkland & Ellis LLP acted as legal advisor to IKAV. Okapi Partners LLC acted as information agent to California Resources. Citigroup Global Markets acted as fairness opinion provider to California Resources. American Stock Transfer & Trust Company, LLC acted as transfer agent to California Resources.

California Resources Corporation (NYSE:CRC) completed the acquisition of Aera Energy LLC from Green Gate Resources E, LLC and Canada Pension Plan Investment Board on July 1, 2024. Effective July 1, 2024, Bobby Saadati, chief executive officer of IKAV Energy Inc., and James Jackson, Managing Director, Sustainable Energies at Canada Pension Plan Investment Board, were appointed to serve on CRC?s Board of Directors. The combined company will be run by the current CRC executive team and will continue to be headquartered in Long Beach, California.