Avenir Diversified Income Trust
TSX : AVF.UN

Avenir Diversified Income Trust

June 22, 2009 18:53 ET

Avenir Diversified Income Trust Agrees to Make Offer to Acquire a Private Oil and Gas Company

CALGARY, ALBERTA--(Marketwire - June 22, 2009) - Avenir Diversified Income Trust (TSX:AVF.UN) ("Avenir" or the "Trust") is pleased to announce that it has entered into an agreement pursuant to which Avenir will, subject to certain conditions, make an offer (the "Offer") to acquire all of the outstanding common shares ("Privco Shares") of a private oil and gas company ("Privco"). The total value of the Offer is approximately $22.5 million, including assumed debt, transaction costs and future asset retirement obligations. The Offer will be subject to certain conditions, including the deposit of not less than 66 2/3% of the outstanding Privco Shares, receipt of all required regulatory approvals and other customary conditions. The acquisition will be funded from the Trust's available bank lines in its Oil and Gas Division.

Through the transaction, the Trust will be acquiring producing assets focused in the Peace River Arch with additional opportunities on a significant land base. The characteristics of the transaction are as follows:

- Production of 660 BOED comprised of 35% light and medium oil.

- Proved plus probable reserves of 1.7 million BOE (80% proved reserves) as determined by a mid year company internal update to the McDaniel & Associates Consultants Ltd. audited evaluation dated December 31, 2008.

- Undeveloped land base of 50,000 net acres valued at $2.4 million and a proprietary seismic database valued at $1.5 million.

- Tax pools of $30.3 million as of December 31, 2008.

Based on the acquisition costs adjusted for land and seismic value, the Trust will acquire the production and reserves of Privco for $27,633 per BOED and $10.89 per BOE on a proved plus probable basis. The transaction is expected to be about 8% accretive to cashflow per unit based on current commodity prices and the acquisition provides the Trust with a new core area that is expected to be managed within the current staff complement of the Trust's Oil and Gas Division.

The Offer has the unanimous support of the Board of Directors of Privco. The Board of Directors of Privco has concluded that the Offer is in the best interests of Privco and its shareholders and will recommend that Privco Shareholders tender their Privco Shares to the Offer. Holders of in excess of 34% of the outstanding Privco Shares, including all directors and officers of Privco, have entered into lock-up agreements with Avenir whereby they have agreed to tender their Privco Shares to the Offer. Peters & Co. Limited has acted as financial advisor to Privco and has provided the Board of Directors of Privco with their opinion that the consideration to be received by the holders of Privco Shares pursuant to the Offer is fair, from a financial point of view to the holders of Privco Shares.

Privco has agreed to pay the Trust a non-completion fee in the amount of $700,000 and the Trust has agreed to pay Privco a non-completion fee of $500,000 in certain circumstances if the Offer is not completed. Privco has agreed to terminate any discussions with other parties and agreed not to solicit or initiate discussion or negotiation with any third party with respect to alternate transactions involving Privco and has granted the Trust a right of first refusal to match any other proposals Privco may receive.

Additional information about the Trust and an electronic copy of these documents may be obtained on the Avenir Diversified Income Trust SEDAR profile at www.sedar.com. and on the Trust's website at www.avenirtrust.com.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Avenir Diversified Income Trust
    William Gallacher
    Chief Executive Officer
    (403) 237-9949
    (403) 237-0903 (FAX)
    or
    Avenir Diversified Income Trust
    Gary Dundas
    Chief Financial Officer
    (403) 237-9949
    (403) 237-0903 (FAX)
    or
    Avenir Diversified Income Trust
    Suite 300, 808 - 1st Street S.W.
    Calgary, Alberta T2P 1M9
    Website: www.avenirtrust.com