News Column

Institutional Shareholder Services and Glass Lewis Recommend Shareholders Vote for Aspenleaf Energy's Recapitalization of Arcan Resources

August 8, 2014



ENP Newswire - 08 August 2014

Release date- 07082014 - Calgary, Alberta - Institutional Shareholder Services Inc. and Glass, Lewis & Co., LLC, independent proxy voting and corporate governance advisory firms, are each recommending that shareholders vote FOR the plan of arrangement and approve the recapitalization of Arcan Resources Ltd. (TSX - ARN) by Aspenleaf Energy Limited.

In its detailed report on the Aspenleaf proposal to recapitalize and acquire Arcan, ISS said: 'in light of the high leverage level of the company which could potentially lead to going concern uncertainty, the transaction may be viewed as a better alternative for shareholders given the lack of other superior proposals at this stage.

In addition, although the transaction involves both shareholders and debentureholders, there appears no significant evidence that shareholders are treated more unfavourably than debentureholders in terms of the transaction terms. Hence, on a balanced view, a vote FOR this resolution is warranted.'

In its report, Glass Lewis said: 'All things considered, we are of the view that such a framework provides significantly greater near- and long-term certainty for investors, effectively fixes the potential dilutive impact of Arcan's 2016 and 2018 debentures and resolves the funding requirements associated with the Swan Hill development.

Based on these considerations, Arcan's fairly dim stand-alone prospects, the board's thorough pre-execution pursuit of alternatives and the potential value to be realized - even from a reduced ownership position - in the successful development of Swan Hill, we believe shareholders should support this proposal. Accordingly, we recommend shareholders vote FOR this proposal.'

Both ISS and Glass Lewis are widely recognized as leading independent proxy voting and corporate governance advisory firms. Their analyses and recommendations are relied upon by many major institutional investment firms, mutual funds and fiduciaries throughout North America.

Arcan today posted a new investor presentation detailing why it believes it is in the best interest of all securityholders to vote FOR the Arrangement. Under this proposed transaction, among other things, Arcan will be recapitalized and acquired by Aspenleaf, all outstanding debentures will be paid out and Miura Energy Ltd. will be created and owned by current Arcan shareholders, and by debentureholders who exercise Miura Energy warrants. A special meeting of Arcan securityholders to vote on the Arrangement is scheduled on Wednesday, August 20, 2014.

Aspenleaf brings the right people to unlock significant Swan Hills value The Aspenleaf proposal provides a progressive and creative transaction that will solve Arcan's overwhelming financial problem. In addition to paying down the massive debt and assuring funds to continue drilling and the timely expansion of the water flood at a pace that can offset natural declines and grow production, the proposal provides the seasoned leadership team required to direct the accomplished technical expertise that is currently in place at Arcan.

Successful oil and natural gas companies are built on a combination of attractive assets, sufficient capital and the right people. With the debt restructured to appropriate levels, the Aspenleaf team will have the opportunity to apply and continue to enhance the advanced horizontal drilling, completion and water flood techniques that have been developed and deployed in an effort to maximize recovery levels from the Swan Hills field. This will be a direct benefit for the Miura Energy shareholders who will have a 12.5 percent interest in the Swan Hills asset.

'The ability to sustain continuous investment is critical to success and cannot be achieved under the current debt structure. Without this capital to fix the debt and fund our investment program, I am concerned that we will face the twin risks of mounting staff attrition and reductions in our banking facilities. This could result in restrictions on Arcan's ability to execute a continuous drilling program leading to production declines as natural decline takes its toll.

The status quo is fragile and carries significant downside risk that jeopardizes operational and cash flow performance. Voting FOR this creative transaction will put the people and money in place to help unlock the full value of Swan Hills for our securityholders,' said Terry McCoy, Arcan's Chief Executive Officer.

Securityholders will vote on Arcan's future on Wednesday, August 20, 2014

On July 24, 2014, Arcan mailed to securityholders the Information Circular and accompanying meeting materials detailing the Arrangement. These documents are also filed under Arcan's profile on SEDAR www.sedar.com and posted on Arcan's website www.arcanres.com for review by securityholders. In order to get the message out to securityholders, Arcan has engaged Scotia Capital Inc. as soliciting dealer manager to form a soliciting dealer group consisting of members of the Investment Industry Regulatory Organization of Canada to solicit proxies from securityholders in favour of the Arrangement.

If the Arrangement is approved by securityholders, soliciting dealers will be paid, subject to certain exceptions and thresholds, a solicitation fee of $0.003 for each common share, or $5.00 per $1,000 principal amount of debentures, in each case voted in favour. The related costs will be borne by Arcan and reimbursed by Aspenleaf if the transaction is successful.

Arcan Corporate Events - StimSol Canada Limited

Arcan has closed the previously announced sale of its 14.5-kilometre Ethel oil sales pipeline. As well, Arcan has entered into an agreement with Fortaleza Energy Inc. to lease its StimSol assets, Swan Hills acid blending facility and all related equipment and laboratory. Fortaleza has a right of first refusal to acquire the StimSol assets if the Arrangement is not completed, or purchase the StimSol shares if the Arrangement is completed, in exchange for, among other things, an option in favor of Arcan for a 10 year priority service agreement.

Securityholders with questions or who require further information about the Arrangement Arcan strongly encourages shareholders and debentureholders to read the comprehensive Information Circular, consult with their financial advisor and vote in person, or by proxy, in time to be counted at the securityholders meeting on August 20, 2014.

Any questions and requests for assistance may be directed to Arcan's proxy solicitation agent CST Phoenix Advisors:

North American Toll Free Phone: (800) 239-6513

Banks, Brokers and collect calls: 201-806-2222

Toll Free Facsimile: 1-888-509-5907

Email: inquiries@phoenixadvisorscst.com

About Arcan Resources Ltd.

Arcan Resources Ltd. is an Alberta, Canada corporation that is principally engaged in the exploration, development and acquisition of petroleum and natural gas located in Canada'sWestern Sedimentary Basin. Additional information about the Corporation is available under Arcan's profile on SEDAR at www.sedar.com and its website, www.arcanres.com.

About Aspenleaf Energy Ltd.

Aspenleaf Energy Limited is a private oil and gas company that is focused on the acquisition and exploitation of light oil and liquids-rich gas assets in Western Canada. Aspenleaf is run by a highly experienced team, with combined industry experience of well over 100 years and headed by President and CEO Bryan Gould. The company is backed by ARC Financial Corp, a Canadian energy-focused private equity manager, and Ontario Teachers' Pension Plan, one of Canada's most active pension investors.

Contact:

Arcan Resources Ltd.

Terry McCoy

Chief Executive Officer

Email: tmccoy@arcanres.com

Douglas Penner

President

Email: dpenner@arcanres.com

Aspenleaf Energy

Bryan Gould

President & Chief Executive Officer

Email: bryan.gould@aspenleafenergy.com


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Source: ENP Newswire


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