Canadian Superior Energy Inc. ("Canadian Superior") (TSX: SNG)(NYSE
Amex: SNG) and Challenger Energy Corp. ("Challenger") (TSX VENTURE:
CHQ) announced today that the companies have entered into an
arrangement agreement (the "Arrangement Agreement") providing for
the acquisition by Canadian Superior of Challenger. Canadian
Superior will acquire all of the outstanding common shares of
Challenger (the "Challenger Shares") in exchange for the issuance
of 0.51 of a common share of Canadian Superior ("Canadian Superior
Shares") for each outstanding Challenger Share.
Based on the 20 day volume weighted average trading price of the
Canadian Superior Shares, the exchange ratio equals a price of
C$.4345 per Challenger Share and represents a 36% premium to
Challenger's closing trading price on June 18, 2009 and a 15%
premium to the 20 day volume weighted average trading price of the
Challenger Shares. The total transaction value, including the
assumption of approximately C$54.4 million in Challenger's net
debt, is approximately C$77.8 million.
Characteristics of the Pro Forma Company
- Current Western Canadian production of approximately 3,050
boepd (85% natural gas); with an additional 300 boepd behind pipe
and over 146,000 net undeveloped in Alberta and BC;
- A diversified suite of oil and natural gas exploration and
development assets located in Canada, Trinidad and Tobago, and
North Africa and a liquefied natural gas ("LNG") project located on
the east coast of the United States;
- A market capitalization in excess of C$160.6 million (based on
the current trading price of the Canadian Superior Shares);
- Approximately 195.8 million shares outstanding.
Canadian Superior has previously announced that, as part of its
restructuring pursuant to the Companies' Creditors Arrangement Act
("CCAA"), it has reached an agreement with Centrica plc.
("Centrica"), under which Centrica will acquire from Canadian
Superior a 45 per cent interest in Block 5(c), located offshore
Trinidad, for US$142.5 million in cash. The Centrica agreement is
subject to the satisfaction of certain conditions including
pre-emption rights from existing field partners and to the approval
by the Court of Queen's Bench of Alberta, and by the Ministry of
Energy and Energy Industries of the Government of Trinidad and
Tobago.
It is Canadian Superior's objective to exit CCAA with the
following assets in place; a twenty five per cent interest in Block
5(c) and its MG exploration block, both in Trinidad, all of its
Western Canadian producing properties, its interest in the 7th of
November block offshore Libya and Tunisia, its Liberty Natural Gas
LNG project in New Jersey, and its offshore Nova Scotia exploration
acreage. In addition the Company will reconstitute its Board of
Directors, make additions to senior management, and also intends to
have in place a new undrawn credit facility, with sufficient
funding to execute its anticipated 18-month capital program.
Transaction Terms and Conditions.
The transaction is to be effected by way of an arrangement (the
"Arrangement") under the Canada Business Corporations Act.
Completion of the Arrangement, which is anticipated to occur in
late August, is subject to, among other things, the requisite
approval of the holders of Challenger Shares (Challenger
Shareholders), the approval of the Court of Queen's Bench of
Alberta, the receipt of all necessary regulatory and stock exchange
approvals, and certain closing conditions that are customary for a
transaction of this nature.
The Board of Directors of Challenger has unanimously determined
that the proposed Arrangement is in the best interests of, and fair
to, Challenger and its stakeholders, and unanimously recommends
that Challenger Shareholders vote in favour of the Arrangement at
the upcoming meeting. Each of the directors and officers of
Challenger, who collectively hold approximately 2% of the
outstanding Challenger Shares, have agreed to enter into support
agreements pursuant to which each has agreed to vote in favour of
the Arrangement.
The Arrangement Agreement prohibits Challenger from soliciting
or initiating any discussion regarding any other business
combination or sale of material assets, contains provisions for
Canadian Superior to match competing, unsolicited proposals and
provides for a mutual C$3 million termination fee payable in
certain circumstances.
Complete details of the terms of the Arrangement are set out in
the Arrangement Agreement, which will be filed by each of Canadian
Superior and Challenger on SEDAR and will be available at
www.sedar.com.
Financial Advisors
Jennings Capital Inc. ("Jennings") is acting as financial
advisor to the Independent Committee of the Board of Directors of
Canadian Superior (the "Independent Committee") with respect to the
Arrangement and has advised the Independent Committee and the Board
of Directors of Canadian Superior that it is of the opinion that
the consideration to be offered by Canadian Superior pursuant to
the proposed Arrangement is fair, from a financial point of view,
to Canadian Superior and its shareholders.
Peters & Co. Limited ("Peters & Co.") is acting as
financial advisor to Challenger in connection with its review of
strategic alternatives and the Arrangement and has advised the
Board of Directors of Challenger that it is of the opinion, as of
the date hereof, that the consideration to be received by the
Challenger Shareholders pursuant to the proposed Arrangement is
fair, from a financial point of view, to the Challenger
Shareholders.
About Canadian Superior and Challenger
Canadian Superior Energy Inc. is a Calgary, Alberta, Canada
based diversified global energy company engaged in the exploration
and production of oil and natural gas with operations and/or
projects located in Canada, Trinidad and Tobago and North Africa.
Canadian Superior is also developing a liquefied natural gas
("LNG") project on the East Coast of the United States. See
www.cansup.com for further information on Canadian Superior.
Challenger Energy Corp. is a Calgary, Alberta, Canada based oil
and gas exploration company which has invested approximately
US$80.1 million in exploration expenditures in Block 5(c) offshore
Trinidad and Tobago. See www.challenger-energy.com for further
information on Challenger.
Forward-Looking Statements
In the interest of providing Canadian Superior's shareholders,
Challenger's Shareholders and potential investors with information
regarding Canadian Superior and Challenger, including managements'
assessment of the future plans and operations of Canadian Superior
and Challenger, certain statements contained in this document
constitute forward-looking statements or information (collectively
"forward-looking statements") within the meaning of applicable
securities legislation. Forward-looking statements are typically
identified by words such as "anticipate", "continue", "estimate",
"expect", "forecast", "may", "will", "project", "could", "plan",
"intend", "should", "believe", "outlook", "potential", "target" and
similar words suggesting future events or future performance. In
addition, statements relating to "reserves" or "resources" are
deemed to be forward-looking statements as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves and resources described exist in the quantities predicted
or estimated and can be profitably produced in the future. In
particular, this document contains, without limitation,
forward-looking statements pertaining to the following:
expectations of management regarding the proposed acquisition of
Challenger, including the timing of completion of the acquisition,
operating and financial metrics of the acquisition, potential
synergies resulting from the acquisition and the effect of the
acquisition on Canadian Superior's operations.
With respect to forward-looking statements contained in this
document, we have made assumptions regarding, among other things:
future capital expenditure levels; future oil, natural gas, and
natural gas liquid, prices and differentials between light, medium
and heavy oil prices; future oil, natural gas, and natural gas
liquid, production levels; future exchange rates and interest
rates; our ability to obtain equipment in a timely manner to carry
out development activities; our ability to market our oil, natural
gas, and natural gas liquids successfully to current and new
customers; the impact of increasing competition; our ability to
obtain financing on acceptable terms; our ability to attract new
senior management and board members, and our ability to add
production and reserves through our development and exploitation
activities. Although Canadian Superior and Challenger believe that
the expectations reflected in the forward-looking statements
contained in this document, and the assumptions on which such
forward-looking statements are made, are reasonable, there can be
no assurance that such expectations will prove to be correct.
Readers are cautioned not to place undue reliance on
forward-looking statements included in this document, as there can
be no assurance that the plans, intentions or expectations upon
which the forward-looking statements are based will occur. By their
nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause Canadian
Superior's or Challenger's actual performance and financial results
in future periods to differ materially from any estimates or
projections of future performance or results expressed or implied
by such forward-looking statements. These risks and uncertainties
include, among other things, the following: that the Arrangement
may not close when planned or at all or on the terms and conditions
set forth herein; the failure of Canadian Superior and Challenger
to obtain the necessary shareholder, Court, regulatory and other
third party approvals required in order to proceed with the
Arrangement; volatility in market prices for oil, natural gas, and
natural gas liquids; incorrect assessment of the value of the
acquisition; failure to realize the anticipated benefits and
synergies of the acquisition; general economic conditions in
Canada, the U.S. and globally; and the other factors described
under "Risk Factors" in Canadian Superior's and Challenger's most
recently filed Annual Information Form available in Canada at
www.sedar.com, as well as in Canadian Superior's annual reports on
Form 40-F on file with the U.S. Securities and Exchange Commission.
Readers are cautioned that this list of risk factors should not be
construed as exhaustive.
The forward-looking statements contained in this document speak
only as of the date of this document. Except as expressly required
by applicable securities laws, Canadian Superior and Challenger do
not undertake any obligation to publicly update or revise any
forward looking statements, whether as a result of new information,
future events or otherwise. The forward-looking statements
contained in this document are expressly qualified by this
cautionary statement.
Statements contained in this news release relating to future
results, events and expectations are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements involve known and unknown
risks, uncertainties, scheduling, re-scheduling and other factors
which may cause the actual results, performance, estimates,
projections, resource potential and/or reserves, interpretations,
prognoses, schedules or achievements of the Corporation, or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
statements. Such factors include, among others, those described in
the Corporations' annual reports on Form 20-F on file with the U.S.
Securities and Exchange Commission.
Barrels of Oil Equivalent
Barrels of oil equivalent (boe) is calculated using the
conversion factor of 6 Mcf (thousand cubic feet) of natural gas
being equivalent to one barrel of oil. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 6
Mcf:1 bbl (barrel) is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as the term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Contacts: Canadian Superior Energy Inc. Investor Relations (403)
294-1411 (403) 216-2374 (FAX) Canadian Superior Energy Inc. 3200,
500-4th Avenue SW Calgary, Alberta T2P 2V6 www.cansup.com
Challenger Energy Corp. Manjeet Dhillon Chief Financial Officer
(403) 503-8813 mdhillon@challenger-energy.com Challenger Energy
Corp. 200, 744-4th Avenue SW Calgary, Alberta T2P 3T4
www.challenger-energy.com
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