RPT Resources Ltd. ("RPT") (TSX VENTURE:RPT) became aware of a dissident proxy
circular (the "Dissident Circular") that was filed on SEDAR on November 18, 2010
by Mr. Amir Mousavi (the "Dissident Shareholder"). The Dissident Shareholder
subsequently issued a press release on November 26, 2010 (the "Dissident
Release"). RPT wishes to respond to the incorrect information set forth in the
Dissident Circular and the Dissident Release.
Timing of Announcement of ArPetrol Transaction
On November 22, 2010, RPT announced that it had entered into a letter of intent
on November 19, 2010 for an arm's length business combination (the "ArPetrol
Transaction") with ArPetrol Inc. ("ArPetrol"). Conversations with ArPetrol
commenced in mid October 2010 following the efforts of Mr. Sam Charanak to
introduce the parties, and negotiations between the parties continued from that
time up to the date of execution of the letter of intent. In fact, the letter of
intent was in the final stages of negotiation when the Dissident Circular was
first filed on SEDAR. The decision to enter into the letter of intent with
ArPetrol was completely unrelated to the Dissident Circular and was not
"hurried" (as incorrectly stated in the Dissident Release), but rather involved
negotiation over time and in a manner that was in the best interests of RPT and
its shareholders.
As noted in RPT's press release of November 22, 2010, the ArPetrol Transaction
is anticipated to constitute a change of business and/or a reverse takeover in
accordance with the policies of the TSX Venture Exchange and, as such, the
approval of the shareholders of RPT will be required. As a result, RPT
determined to defer the holding of its annual and special meeting of
shareholders that was scheduled for December 3, 2010 until such time as it could
present the ArPetrol Transaction to shareholders for approval. At that time,
shareholders will have complete information in order to make an informed
decision on all matters to be transacted at the meeting.
Merits of the ArPetrol Transaction
Management of RPT has negotiated what it feels to be a fair and proper valuation
of ArPetrol and a transaction that has created value for, and is in the best
interests of, RPT shareholders. RPT has engaged Raymond James Ltd. to act as
financial advisor to RPT with respect to the ArPetrol Transaction and it is
expected that Raymond James will be asked to provide an opinion on the fairness
of the ArPetrol Transaction, from a financial point of view, to the RPT
shareholders. Further, if required by the TSX Venture Exchange and subject to
the completion of satisfactory due diligence, Raymond James has also agreed to
act as sponsor of the combined entity in connection with the ArPetrol
Transaction. Similarly, Canaccord Genuity Corp. is acting as financial advisor
to ArPetrol and it is expected that Canaccord Genuity will be asked to provide
an opinion on the fairness of the ArPetrol Transaction, from a financial point
of view, to the ArPetrol shareholders. The ArPetrol Transaction will also be
reviewed by, and is subject to the approval of, the TSX Venture Exchange. Based
on the above, both RPT and ArPetrol shareholders will have the benefit of
independent third party assessments of the fairness of the ArPetrol Transaction
and will be protected by the application of regulatory requirements and stock
exchange review, in addition to their entitlement to vote on the ArPetrol
Transaction after being provided with full disclosure.
Commenting on the merits of the ArPetrol Transaction, Tim Thomas, President and
Chief Executive Officer of ArPetrol, expressed his views on ArPetrol's business:
"ArPetrol owns a 100 percent interest in, and is operator of, a producing asset
with redevelopment opportunities and an 85 million cubic feet per day gas plant.
In addition, we have an inventory of exploration projects which is expected to
create additional value. Overall, we believe Argentina has significant potential
which makes it a leading South American hydrocarbon province, following the
recent successes realized by other Canadian companies in Colombia and elsewhere
in South America. In our view, Argentina is positioned for change and growth and
we expect to be a major part of that future success."
Management of RPT and ArPetrol also expect that commitments in respect of the
financing which is anticipated to be completed in connection with the ArPetrol
Transaction will be obtained prior to, or concurrently with, RPT and ArPetrol
entering into the definitive agreement in respect of the ArPetrol Transaction.
The parties believe this will reduce financing and deal risk, providing comfort
for the parties and the companies' shareholders to move forward to obtain the
required approvals and complete the transaction.
Extension of MetaLeach Consulting Agreement
Since August 2009, RPT's principal focus has been to search for mineral
properties, primarily zinc oxide mineralization, which may be suitable for
application of the proprietary mineral processing technology developed by
MetaLeach Limited, a wholly owned subsidiary of Alexander Mining PLC. Prior to
entering into the letter of intent for the ArPetrol Transaction, RPT had
detailed and lengthy discussions with a number of companies regarding mineral
properties that were presented through RPT's consulting arrangement with
MetaLeach Limited, some of which were ongoing right up to the time that
negotiations with ArPetrol commenced. In order to keep these discussions and
options available to RPT, management determined it was in the best interests of
its shareholders to renew the consulting arrangement with MetaLeach Limited.
This consulting arrangement is on a month to month basis and does not represent
a material expense to RPT.
RPT Management
Management of RPT is of the view that the Dissident Shareholder's statements
regarding the capabilities of RPT management are inaccurate. The following is
noted regarding current management:
Michelle Gahagan - Ms. Gahagan is currently a principal in a privately-held
merchant bank based in Vancouver and London. Prior to the commencement of her
involvement in merchant banking five years ago, Ms. Gahagan graduated from
Queens University Law School and practiced corporate law for 20 years, acting
for financiers with respect to syndicated tax products in the entertainment
finance sector. Ms. Gahagan has extensive experience advising companies with
respect to international tax-driven structures, mergers and acquisitions. Ms.
Gahagan has successfully completed the Investment Management Certificate course
and is a Qualified Person under the Financial Services Authority (UK) regime.
Ms. Gahagan has been the President of RPT Resources Ltd. since the fall of 2009
and is currently the managing director of Northern Rand Resource Corp. and a
director of Bowood Energy Corp. Ms. Gahagan was instrumental in completing the
business combination of Bowood Energy and Roadrunner Oil & Gas in December 2009,
which transaction has delivered an approximate 400% increase in share price
since that time.
Nelson Baker - Mr. Baker has been the President of Nelson W. Baker Geological
Services Ltd. since 1984. Mr. Baker joined the board of directors of Rainy River
Resources Ltd. and became its President in 2005 when its stock was trading at
approximately $0.25 per share. Upon his resignation from the board, Rainy
River's stock was trading at approximately $6.00 per share.
Marshall Bertram - Mr. Bertram is a director and CFO of several publicly trading
companies. Mr. Bertram is currently the President and CEO of Mineral Mountain
Resources Ltd., a company that recently completed its initial public offering at
a price of $0.25 per share and is now trading at a price of approximately $0.50
per share. Mr. Baker also sits on the board of directors of Mineral Mountain
Resources.
The above demonstrates that the current management of RPT has broad experience
and has demonstrated its ability to create shareholder value. In completing the
ArPetrol Transaction, management of RPT expects to do so again.
In addition to the strength of the current management team, upon completion of
the ArPetrol Transaction, the combined entity will have an impressive board and
management team. The new management team will be led by Tim Thomas as President
and Chief Executive Officer and Troy Wagner as Vice President, Argentina and a
new board of directors will be comprised of Claudio Ghersinich (Chairman), Abby
Badwi, Jeff Boyce, Michelle Gahagan, Tim Thomas and Ronald Williams. The
qualifications of the new management team are set forth in detail in RPT's press
release of November 22, 2010, however, some of their highlighted qualifications
are as follows:
Tim Thomas - Mr. Thomas is a professional engineer with more than 32 years of
oil and gas experience. Most recently, Tim was Senior Vice President Canadian
Oil and Gas and an officer at Nexen Inc. (TSX, NYSE), a successful oil & gas
company with assets in Canada, US, UK, Yemen, Nigeria and Colombia.
Troy Wagner - Mr. Wagner is a professional engineer and MBA graduate with 18
years of engineering and management experience. Prior to joining ArPetrol in
2007 as the in-country manager in Argentina, Mr. Wagner was COO and VP
Engineering of Elmworth Energy/Triangle USA Petroleum (OTC - US), a company
focused on developing domestic and international shale gas projects.
Abby Badwi - Abby Badwi is an international energy executive and professional
geologist with more than 35 years experience in the exploration, development and
production of oil and gas fields in North America, South America, Europe, Asia
and the Middle East. Mr. Badwi has been a director of ArPetrol since its
inception. He is currently President & CEO of Bankers Petroleum Ltd. (TSX,
London-AIM), an oil & gas company with heavy oil operations in Albania.
Claudio A. Ghersinich - Mr. Ghersinich is an independent businessman and
professional engineer with more than 30 years of oil and gas experience. He is a
co-founder and former Executive VP and VP Business Development of Vermilion
Energy Inc. (TSX). He serves or has served on the board of directors of various
public companies including Verenex Energy Inc. (formerly TSX), Vermilion Energy
Inc. (TSX), Aventura Energy Inc. (formerly TSX), Bulldog Energy Inc. (TSX),
Bulldog Resources Inc. (formerly TSX), Pegasus Oil & Gas Inc. (formerly TSXV)
and Valeura Energy Inc. (TSXV).
Jeff Boyce - Mr. Boyce is the Chairman and Chief Executive Officer of Sure
Energy Inc. (TSX). Previously, Mr. Boyce was the President & CEO of Clear Energy
Inc. (formerly TSX) and prior thereto, President & CEO and co-founder of
Vermilion Energy Inc.
Ronald Williams - Mr. Williams joined the ArPetrol Board in June 2007 and brings
over 19 years of domestic and international oil and gas industry experience. Mr.
Williams has an extensive background in the areas of audit, finance and taxation
as well as property and corporate acquisitions.
In summary, the proposed team brings a wealth of public company experience,
knowledge and repeated success in prior endeavours, which is expected to be of
indeterminate value to RPT shareholders.
Dissident Shareholder's Proposed Management Team
In contrast to the wealth of experience demonstrated by the proposed management
team of ArPetrol, the Dissident Circular discloses that the slate of directors
(the "Dissident Slate") proposed by the Dissident Shareholder has limited public
company experience. The Dissident Shareholder also failed to mention that the
Dissident Slate only holds, in the aggregate, 43,500 (0.037%) of the 116,988,073
common shares of RPT that are issued and outstanding. In addition, while
management of RPT has brought forward what it believes to be a real opportunity
that is in the best interests of RPT and its shareholders, the Dissident
Shareholder has not provided details of his intended business plan or strategy
for RPT.
Opportunity to be Heard
All shareholders of RPT should recognize that, once the TSX Venture Exchange
conditional approval has been obtained, RPT will call a shareholder meeting to
approve, among other things, the ArPetrol Transaction with the proposed slate of
directors discussed above. At that meeting, all shareholders of RPT will have an
opportunity to be heard and to vote on all matters brought forth at the meeting.
It is management's view that this proposed plan to delay the previously
scheduled annual general meeting is in the best interests of RPT and its
shareholders in that it will enable RPT to provide them with full disclosure
respecting the ArPetrol Transaction. The parties are working toward a definitive
agreement and are optimistic that they will be able to do so on an expedited
timeline; however, should RPT and ArPetrol terminate their discussions or if
they are not able to enter into a definitive agreement within a reasonable
period, RPT will call an annual and general meeting providing for, among other
things, the election of directors by RPT's shareholders.
Reader Advisory
Investors are cautioned that, except as disclosed in the Management Information
Circular to be prepared in connection with the ArPetrol Transaction, any
information released or received with respect to the ArPetrol Transaction may
not be accurate or complete and should not be relied upon. Trading in the
securities of RPT should be considered highly speculative.
Trading of the common shares of RPT will remain halted pending receipt and
review by the TSX Venture Exchange of acceptable documentation regarding the
combined entity following completion of the ArPetrol Transaction. The proposed
ArPetrol Transaction has not been approved by the TSX Venture Exchange and
remains subject to TSX Venture Exchange approval.
Completion of the ArPetrol Transaction is subject to a number of conditions,
including but not limited to, TSX Venture Exchange acceptance. The ArPetrol
Transaction cannot close until the required approvals are obtained. There can be
no assurance that this ArPetrol Transaction will be completed as proposed or at
all.
An agreement to sponsor should not be construed as any assurance with respect to
the merits of the ArPetrol Transaction or the likelihood of completion.
Except for statements of historical fact, this news release contains certain
"forward-looking information" within the meaning of applicable securities law.
Forward-looking information is 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. In particular, forward-looking information in this press release
includes, but is not limited to, statements with respect to timing and
completion of the ArPetrol Transaction, the merits of the ArPetrol Transaction,
the creation of value in the combined entity, the completion of a planned
financing, the satisfaction of the conditions precedent to the ArPetrol
Transaction (including receipt of TSX Venture Exchange approval) and the timing
of calling and holding of a shareholders meeting of RPT. Although we believe
that the expectations reflected in the forward-looking information are
reasonable, there can be no assurance that such expectations will prove to be
correct. We cannot guarantee future results, performance or achievements.
Consequently, there is no representation that the actual results achieved will
be the same, in whole or in part, as those set out in the forward-looking
information.
Forward-looking information is based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those anticipated in the forward-looking information.
Some of the risks and other factors that could cause the results to differ
materially from those expressed in the forward-looking information include, but
are not limited to: general economic conditions in Canada, the United States and
globally; industry conditions, including fluctuations in the prices of oil and
natural gas; governmental regulation of the oil and gas industry, including
environmental regulation; unanticipated operating events or performance which
can reduce production or cause production to be shut in or delayed; failure to
obtain industry partner and other third party consents and approvals, if and
when required; competition for and/or inability to retain drilling rigs and
other services; the availability of capital on acceptable terms; the need to
obtain required approvals from regulatory authorities; stock market volatility;
volatility in market prices for oil and natural gas; liabilities inherent in oil
and natural gas operations; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands, skilled personnel and supplies;
incorrect assessments of the value of acquisitions; geological, technical,
drilling, processing and transportation problems; changes in tax laws and
incentive programs relating to the oil and gas industry; failure to realize the
anticipated benefits of acquisitions and dispositions; and the other factors.
Readers are cautioned that this list of risk factors should not be construed as
exhaustive.
The forward-looking information contained in this news release is expressly
qualified by this cautionary statement. We undertake no duty to update any of
the forward-looking information to conform such information to actual results or
to changes in our expectations except as otherwise required by applicable
securities legislation. Readers are cautioned not to place undue reliance on
forward-looking information.
ArPetrol Ltd. (TSXV:RPT)
Historical Stock Chart
From Aug 2024 to Sep 2024
ArPetrol Ltd. (TSXV:RPT)
Historical Stock Chart
From Sep 2023 to Sep 2024
