Also, we are pleased to announce that Arcan and Aspenleaf have agreed to amend the terms of the
Why can't there be a cash offer for all?
Our discussions with significant Debentureholders have overwhelmingly confirmed that any cash offer to Shareholders would not be supported by Debentureholders.
Why can't the Debentureholders get more cash?
No purchaser has come forward who is prepared to acquire Arcan or its assets at a price that would settle our bank debt and result in more funds being paid to the Debentureholders. Further, the consideration that we negotiated with Aspenleaf is consistent with the valuation of our Common Shares and Debentures on the TSXV prior to the announcement of the transaction.
Aspenleaf has specifically advised Arcan that the consideration being offered under the Arrangement will not be altered, increased or re-divided amongst the Shareholders and Debentureholders.
Why is the structure so complicated?
Our bank debt is high, and Aspenleaf is absorbing approximately
The terms of the Arrangement are the result of a highly negotiated process following a lengthy and thorough canvassing of the market for alternatives by Arcan and its financial advisors
The Debentures are convertible. Why can't Arcan just convert that debt into Common Shares?
Neither Arcan nor the Debentureholders can cause an early conversion of the Debentures in accordance with their terms without a massive loss in value for the Debentureholders. The Debentures have a conversion price of
Arcan's Board of Directors has a fiduciary duty to all Securityholders, and for Arcan to consent to the lowering of the conversion price prior to maturity, a conversion would need to be in the best interests of all of the Securityholders, not just the Debentureholders.
Don't the rights of the Debentureholders take precedence over the Shareholders?
Not in our present circumstances. Though Arcan faces a wall of debt comprised of its bank credit facility and the Debentures, we are not in default under either. Therefore, Arcan cannot disregard its Shareholders and enter into a re-capitalization transaction that is based on principles of insolvency whereby the Debentureholders would have an overwhelming priority over the Shareholders.
The Arrangement offers a creative and orderly solution to Arcan's capital needs. Debentureholders will receive a 25% to 33% premium on pre-announcement trading values, liquidity and Miura warrants. Shareholders will receive Miura shares and warrants.
Why does this deal need to be done now? What is the urgency?
To be clear, Arcan is not insolvent. However, the risks of going forward on a status quo path continue to grow, and we believe it is prudent for the company and advantageous to all stakeholders to address those risks now in an orderly manner.
Arcan has had two reductions in its bank line. A further reduction in Arcan's bank line after the
Arcan also faces the imminent risk of staff attrition in a competitive
The Arrangement is not in any way being imposed on Securityholders since this is a voting transaction. In our view, this is an opportunity to solve our capital structure and ongoing capital expenditure funding issues, and it is in the hands of our Securityholders to decide Arcan's future.
What other alternatives are there?
Any potential buyer needs the financial and technical capability, as well as the strategic motivation, to revitalize Arcan's drilling and water flood program. This limits potential buyers to those with a high level of technical expertise, or access to an existing team with such expertise, plus access to significant capital.
The proposal from Aspenleaf did not come to us unexpectedly. Aspenleaf was contacted as a result of our aforementioned public sales process run by
It has been communicated on several fronts that an "alternative form of transaction" is possible, and we believe this could be misleading. In making their voting decision, it is extremely important that Securityholders be aware that no such proposal has emerged, either to us, or publicly to our Securityholders. Throughout our lengthy process to seek strategic alternatives, Aspenleaf is the only party that has put forward a defined and viable proposal.
Where can I get an independent view?
We encourage you to speak with your financial advisor or broker. We also remind you that Institutional Shareholder Services and Glass Lewis, leading independent proxy advisory firms, have recommended that the Shareholders vote for the Arrangement.
Message from Arcan
"We acknowledge that this is a complex structure, but it is also innovative. It works under our financial and debt circumstances and it benefits all Securityholders. We trust that the answers and explanations we have provided here will help you make your voting decision. The Arrangement balances the rights of all Securityholders. Without such a balance, we do not believe that another transaction can be successful. We strongly recommend that Securityholders vote "FOR" the Arrangement," said
"In terms of operations, the risk of the status quo continues to grow. We need to invest and retain our staff to hold onto and continue with our hard-won operational gains. We require certainty and continuity to carry forward with a safe and efficient operation.
Arcan wishes to thank Shareholders and Debentureholders for their support and encourages them to vote FOR the Arrangement. Arcan encourages each Securityholder to review the Information Circular, as well as Arcan's recently posted Corporate Presentation, both of which are posted on Arcan's website at www.arcanres.com. To be effective, proxies must be voted in advance of the Arcan Securityholder meeting. For non-registered or beneficial Securityholders, the deadline is no later than
Securityholders with questions or who require further information about the Arrangement
Arcan strongly encourages Shareholders and Debentureholders to read the comprehensive Information Circular and the Corporate Presentation, consult with their financial advisor and vote in person, or by proxy, in time to be counted at the Securityholders meeting on
Any questions and requests for assistance may be directed to Arcan's proxy solicitation agent
North American Toll Free Phone: (800) 239-6513 Banks, Brokers and collect calls: 201-806-2222 Toll Free Facsimile: 1-888-509-5907 Email: email@example.com
Forward-Looking Information and Statements
This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "will", "shall", "continue", "expect" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains forward-looking information and statements pertaining to, among other things, the following: the expected results of the Arrangement, the possibility of a further reduction in Arcan's bank credit facility and its effect on Arcan's winter drilling program, reduced production and reduced cash flow if the status quo is maintained, staff attrition, the availability of capital to increase drilling in the
The forward-looking information and statements contained in this press release reflect several material factors and expectations and assumptions of Arcan including, without limitation, expectations and assumptions relating to Arcan, Aspenleaf and Miura being able to receive all required regulatory approvals to consummate the Arrangement, the ability of the Corporation to obtain the required levels of securityholder approval for the Arrangement, Aspenleaf's, the Corporation's and Miura's future access to capital and certain commodity price and other cost assumptions underlying the statements regarding the future prospects of Arcan and Miura. Arcan believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct. The forward-looking information and statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: failure to realize the anticipated benefits of the transaction, failure to obtain the necessary approvals, or to otherwise satisfy the conditions of the transaction, in a timely manner, or at all; and certain other risks detailed from time to time in Arcan's public disclosure documents including, without limitation, those risks identified in this press release, the Information Circular and in Arcan's annual information form, copies of which are available on Arcan's SEDAR profile at www.sedar.com.
The forward-looking information and statements contained in this press release speak only as of the date of this press release, and Arcan assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.
(i) Permission to refer to the
FOR FURTHER INFORMATION PLEASE CONTACT:
Arcan Resources Ltd. Terry McCoyChief Executive Officer firstname.lastname@example.org Arcan Resources Ltd. Douglas PennerPresident email@example.com Arcan Resources Ltd.Suite 2200, 500 - 4th Avenue S.W. Calgary, ABT2P 0H7 (403) 262-0321 Aspenleaf Energy Limited Bryan GouldPresident & Chief Executive Officer firstname.lastname@example.org Aspenleaf Energy LimitedSuite 1410, 530 - 8th Ave. S.W. Calgary, AB, T2P 3P8 Telephone (587) 390-6444 Source: Arcan Resources Ltd.