Canadian Oil Recovery & Remediation Enterprises Ltd.
TSX VENTURE : CVR

Canadian Oil Recovery & Remediation Enterprises Ltd.

June 16, 2009 09:57 ET

Canadian Oil Recovery and Remediation Enterprises Ltd. Announces Up To $10 Million Financing Commitment by Saudi Arabian Investors

TORONTO, ONTARIO--(Marketwire - June 16, 2009) - Canadian Oil Recovery and Remediation Enterprises Ltd. (TSX VENTURE:CVR) ("CORRE" or the "Company") a provider of leading edge oil recovery and remediation technologies and services, is pleased to announce that it has entered into binding memoranda of agreement in connection with a two-phase financing for aggregate gross proceeds of up to $10 million (the "Financing"). The principal subscriber for $8.5 million of the Financing is Al-Najah Advanced Technology Co. Ltd. ("NAT"), a wholly-owned subsidiary of Saudi Binladin Group ("SBG"). The remaining balance of the Financing (an aggregate of $1.5 million) is committed by Hassan Dahlawi, an existing director of the Company based in Jeddah, Saudi Arabia. The proceeds of the Financing will be used: (i) to fund the purchasing and fabrication of plant and ancillary equipment as required in support of CORRE's anticipated project pipeline; (ii) to fund bid and performance bonds, as well as necessary mobilization and site commissioning costs as required for CORRE's expected projects; (iii) to fund potential joint partnerships to expand the Corporation's oil service product offerings; and (iv) for general working capital purposes.

SBG, founded in 1950 and headquartered in Jeddah, Saudi Arabia, is a multinational construction conglomerate and holding company for the assets owned by the Binladin family. SBG, now worth in excess of $5 billion, is represented in most Saudi cities and in a number of capital cities across the Middle East. In Egypt alone, SBG represents the country's largest foreign-owned private equity group, with over 40,000 employees. Outside the Middle East, SBG's operations are handled by the Geneva, Switzerland based Saudi Investment Company (SICO) and the group maintains a representative office in London, England. SBG is noted for several high quality, unique and significant construction projects, including being part of the winning consortium awarded a contract in excess of $27 billion by the government of Saudi Arabia to build King Abdullah Economic City. NAT, also based in Jeddah, is SBG's technology investment subsidiary.

Mr. John Lorenzo, Chief Executive Officer of CORRE, commented: "CORRE is extremely pleased to announce this exceptional moment in the Company's history and to consummate this relationship with Saudi Binladin Group. The financial commitment made by SBG will allow CORRE to expedite its business plan and fully exploit the opportunities at hand that would otherwise be challenging to attain. In addition, the relationship with SBG places CORRE in an extremely unique and strong position in the Middle East and North African markets and more specifically in respect of business opportunities within Saudi Arabia, a prime potential market for our products and services. We are thankful for this significant vote of confidence from SBG and look forward to a long and prosperous relationship together." Mr. Lorenzo added: "We would also like to thank Mr. Hassan Dahlawi for his unfailing support and confidence in the management and business of our Company."

Phase I of the Financing shall consist of the issuance of secured convertible debentures (collectively, "Debentures") in the aggregate principal amount of $5,000,000 ($4,250,000 issuable to NAT; $750,000 issuable to Mr. Dahlawi). These Debentures shall have a coupon of 10% (payable quarterly in arrears) and a maturity date of one (1) year. The debenture to be issued to NAT (the "NAT Convertible Debenture") shall be subject to extension to the date that is eighteen (18) months from the date of issuance and the debenture to be issued to Mr. Dahlawi (the "Dahlawi Convertible Debenture") shall be subject to extension for one (1) additional year beyond the initial term. The Debentures will be convertible into common shares of the Company at a price of $0.20 per share at any time prior to maturity at the option of the holder. The Debentures will convert into common shares automatically upon review and acceptance by NAT of CORRE's formal five-year business and financial plan. CORRE is currently developing this business and financial plan and will deliver it to NAT within three (3) months of closing of Phase I of the Financing. Following receipt of this plan, NAT will have two (2) months to review the plan and provide comments to the Company. Provided that NAT accepts the business and financial plan within this timeframe, the Debentures (both the NAT Convertible Debenture and the Dahlawi Convertible Debenture) will convert automatically into common shares of the Company.

Upon acceptance of the plan by NAT (and conversion of the NAT Convertible Debenture into common shares of CORRE), NAT shall be entitled to appoint a number of directors to the board of CORRE as is commensurate with its pro rata equity interest in the Company. The appointment of such individuals shall be subject to applicable corporate law and approval by the TSX Venture Exchange. As a condition to closing of Phase I of the Financing, the founding shareholders of CORRE shall have entered in a voting trust agreement pursuant to which they shall have agreed to cast all votes attaching to their common shares of CORRE in favour of nominees presented by NAT. The Debentures will be secured against the Company's ARES I Plant (currently located in Kuwait) and ARES III Plant (currently located at CORRES's testing facility in Montreal, Quebec). The first charge of security will be in favour of NAT, with the security under the Dahlawi Convertible Debenture being subordinate to the security evidenced by the NAT Convertible Debenture. Pursuant to the memorandum of agreement entered into with NAT (the "NAT Memorandum of Agreement"), CORRE has also granted NAT with a right of first refusal to participate in all future financings of CORRE for a period of three (3) years, commencing upon completion of Phase II of the Financing. Closing of Phase I of the Financing is subject to satisfaction or waiver of certain conditions, including receipt of all necessary consents and approvals (including, but not limited to approval of the TSX Venture Exchange), approval of not less than 50% of the shareholders of CORRE (which may be obtained via consents in writing from parties holding such amount of voting stock in aggregate), approval by the directors of the Company, completion of due diligence and provision of customary representations, warranties, security documentation and related materials. NAT shall be entitled to terminate the NAT Memorandum of Agreement in the event that all conditions precedent are not satisfied on or before August 15, 2009. The NAT Memorandum of Agreement also incorporates an addendum, which contemplates the granting of certain additional rights and entitlements to NAT, such as piggyback rights (in respect of sales of common shares by founding shareholders), US registration rights (if required) and the right to top-up its proportionate holdings in order to prevent any dilution via additional share issuances. The specific terms of these rights are expected to be evidenced in final documentation that is to be delivered upon closing of Phase I of the Financing.

Phase II of the Financing consists of financing commitments for a further $5,000,000 ($4,250,000 from NAT; $750,000 from Mr. Dahlawi). These commitments will be evidenced through the issuance of share purchase warrants concurrently with the closing of Phase I of the Financing. The warrant issued to NAT (the "NAT Share Warrant") will entitle NAT to acquire up to 21,250,000 common shares of the Company at a price of $0.20 per share on or before the date that is one (1) year from the date that the entire principal amount of the NAT Convertible Debenture is converted into common shares of CORRE (the "NAT Phase II Financing Share Warrant Commitment Date") and shall be funded in four stages as follows:

- $1,250,000 to be advanced within three (3) months of the NAT Phase II Financing Share Warrant Commitment Date;

- $1,000,000 to be advanced within six (6) months of the NAT Phase II Financing Share Warrant Commitment Date;

- $1,000,000 to be advanced within nine (9) months of the NAT Phase II Financing Share Warrant Commitment Date; and

- $1,000,000 to be advanced within twelve (12) months of the NAT Phase II Financing Share Warrant Commitment Date.

Notwithstanding the foregoing contemplated schedule, NAT shall be entitled to exercise the NAT Share Warrant and provide any or all of the foregoing payments at any time prior to the contemplated dates of advance. Upon delivery of the foregoing funds by NAT and the issuance of common shares of CORRE in accordance with the exercise (in whole or in part) of the NAT Share Warrant, NAT shall be entitled to appoint a number of additional directors to the board of CORRE as is commensurate with its pro rata equity interest in the Company at that time. The appointment of such individuals shall be subject to applicable corporate law and approval by the TSX Venture Exchange.

Mr. Dahlawi will also be issued a share purchase warrant (the "Dahlawi Share Warrant"), pursuant to which he shall undertake to subscribe for and fund $750,000 of common shares of CORRE at a price of $0.20 per share. The Dahlawi Share Warrant shall be exercisable on or before the date that is one (1) year from the date that the entire principal amount of the Dahlawi Convertible Debenture is converted into common shares of CORRE (the "Dahlawi Phase II Financing Share Warrant Commitment Date") and shall be funded over four stages as follows:

- $187,500 to be advanced within three (3) months of the Dahlawi Phase II Financing Share Warrant Commitment Date;

- $187,500 to be advanced within six (6) months of the Dahlawi Phase II Financing Share Warrant Commitment Date;

- $187,500 to be advanced within nine (9) months of the Dahlawi Phase II Financing Share Warrant Commitment Date; and

- $187,500 to be advanced within twelve (12) months of the Dahlawi Phase II Financing Share Warrant Commitment Date.

Notwithstanding the obligations on the part of Mr. Dahlawi to provide such advances on or before the foregoing dates, Mr. Dahlawi shall be entitled to provide any or all of the foregoing advances at any time prior to their respective obligated dates of advance.

CORRE would also like to take this opportunity to express its gratitude to Mr. Ahmad Al-Hamdan of Al-Hamdan Group, the Company's Jeddah based financial and business advisor. Mr. Al-Hamdan has confirmed his trust and confidence in CORRE's business by electing to receive a majority of his fees for his valuable services in CORRE common shares. Accordingly, upon closing Phase I of the Financing, Al-Hamdan Group will receive 1.26 million CORRE common shares determined at the same share price of the Financing ($0.20 per share). Additionally, Al-Hamdan Group will receive a cash fee of $172,000.

About CORRE

CORRE is a Canadian company that utilizes its proprietary Advanced Recovery Equipment Systems ("ARES") program to provide five comprehensive solutions for oil recovery and soil remediation. ARES I, II and IV are commercialized technologies offering economically viable and environmentally safe sludge treatment solutions and remediation of oil contaminated sand, soil and solids. ARES III is currently being commercialized for the extraction of oil from tar sands and ARES V represents a bioremediation technology in research and development. CORRE plans to deploy ARES in the oil producing countries of the Middle East and other regions where there is substantial demand for its oil recovery and remediation services.

Forward Looking Statements

Except for statements of historical fact relating to the Company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are 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 projected in the forward-looking statements. Except as required by applicable securities requirements, the Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.



Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the release.

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