Alexander Energy Ltd.

TSX VENTURE : ALX


December 05, 2013 21:14 ET

Alexander Energy Ltd. Announces Recapitalization Financing and New Management Team

CALGARY, ALBERTA--(Marketwired - Dec. 5, 2013) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Alexander Energy Ltd. (TSX VENTURE:ALX) ("Alexander" or the "Corporation") is pleased to announce that it has entered into a definitive reorganization and investment agreement (the "Agreement") with Richard McHardy, Albert Stark, Ed Wong, Fotis Kalantzis, Thomas Boreen and Michelle Wiggins, (the "Initial Investor Group") which provides for: (i) a non-brokered private placement of up to an aggregate of approximately $26.5 million (the "Private Placement"); (ii) the appointment of a new management team and board of directors (collectively, the "New Management Team"); and (iii) a rights offering (the "Rights Offering") to current holders of common shares ("Common Shares") of Alexander (collectively, the "Transaction"). Completion of the Transaction is subject to customary closing conditions, including the approval of the TSX Venture Exchange (the "TSXV"). Upon completion of the Transaction, it is anticipated that the shareholders of Alexander will be asked to approve, at a special meeting called for such purpose, a change of the Corporation's name to "Spartan Energy Corp."

The New Management Team will be led by Richard McHardy as President & Chief Executive Officer, Michelle Wiggins as Vice President, Finance and Chief Financial Officer, Ed Wong as Vice President, Engineering, Albert Stark as Vice President, Operations, Fotis Kalantzis as Vice President, Exploration and Thomas Boreen as Vice President, Geology.

Upon closing of the Transaction, the new board of directors will be comprised of Richard McHardy, Don Archibald, Reg Greenslade, Michael Stark and Grant Greenslade. Sony Gill, a partner in the CFMA Group in the Calgary office of the national law firm McCarthy Tétrault LLP, will act as Corporate Secretary.

New Management Team

The New Management Team has a solid track record of creating value in high-growth, junior oil and gas companies through an integrated strategy of acquiring, exploiting and exploring. Most recently, the New Management Team led Spartan Oil Corp. ("Spartan Oil"), a light oil producer focused primarily in the Cardium light oil resource play at Pembina in central Alberta. At Spartan Oil, the New Management Team grew production from approximately 650 boepd to 5,500 boepd in the 18 months prior to its sale to Bonterra Energy Corp. in January, 2013 for approximately $500 million. Prior to Spartan Oil, the New Management Team led Spartan Exploration Ltd. ("Spartan Exploration"), a light oil producer with operations focused in the Cardium light oil play at Pembina and the Lower Shaunavon oil play in southwest Saskatchewan. While at Spartan Exploration, the New Management Team grew production from 0 boepd to 2,500 boepd in just over 3 years prior to its sale in June 2011 for approximately $228 million.

Having successfully founded, grown and sold a number of previous companies, the New Management Team will apply its past experience to grow the recapitalized Alexander through a combination of organic growth and acquisitions.

Richard McHardy,
President and Chief Executive Officer
Richard McHardy has been a founder of several public oil and gas companies and has extensive experience in leadership roles at public oil and gas companies. Mr. McHardy was President, CEO and a director at Spartan Oil. Previously Mr. McHardy was President, CEO and a director of Spartan Exploration, the President and a director of Titan Exploration Ltd. ("Titan") and has served as corporate secretary for a number of other public companies. Prior to founding Titan, Mr. McHardy was a partner at McCarthy Tétrault LLP, one of Canada's largest national law firms, where he practiced securities and corporate law. Mr. McHardy has over 18 years' experience in the legal and oil and gas industries.
Michelle Wiggins,
Vice President, Finance and Chief Financial Officer
Michelle Wiggins was a co-founder of Spartan Oil and was the Vice President, Finance and CFO of Spartan Oil. Previously, Ms. Wiggins was the Vice President, Finance and CFO of Spartan Exploration and the Vice President, Finance and CFO of Titan. Ms. Wiggins has over 20 years' experience in accounting and financial matters in the oil and gas industry.
Albert Stark,
Vice President, Operations
Albert Stark is a professional engineer with over 18 years of experience in the oil and gas industry. Mr. Stark was a co-founder of Spartan Oil and was the Vice President, Operations of Spartan Oil. Previously, Mr. Stark was the Vice President, Operations of Spartan Exploration and the Vice President, Operations of Titan.
Fotis Kalantzis,
Vice President, Exploration
Fotis Kalantzis is a geophysicist with over 20 years of experience in the oil and gas industry. Dr. Kalantzis was a co-founder of Spartan Oil and was the Vice President, Exploration of Spartan Oil. Previously, Dr. Kalantzis was the Vice President, Exploration of Spartan Exploration and the Exploration Manager at Innova Exploration Ltd.
Ed Wong,
Vice President, Engineering
Ed Wong is a professional engineer with over 20 years of experience in the oil and gas industry. Mr. Wong was a co-founder of Spartan Oil and was the Vice President, Engineering of Spartan Oil. Previously, Mr. Wong was the Vice President, Engineering of Spartan Exploration and the Hoadley Business Unit Manager at Samson Canada Resources Ltd.
Thomas Boreen,
Vice President, Geology
Thomas Boreen is a professional geologist with over 18 years of experience in the oil and gas industry. Dr. Boreen was the Chief Geologist at Spartan Oil and previously held positions with Suncor, Apache Canada, Shell Canada and Home Oil.

The directors have strong track records and distinguished careers in both the oil and gas industry and capital markets and have held prominent lead positions within a range of successful companies. Their combined experience and expertise will provide the New Management Team with invaluable advice, guidance and support.

Corporate Strategy

The New Management Team has extensive experience in creating shareholder value through a focused full-cycle business plan and believes the current market environment provides an excellent opportunity to reposition Alexander as a high growth junior oil and gas company. The New Management Team believes that Alexander will be well positioned to take advantage of acquisition opportunities in the current market.

Following the completion of the Transaction, Alexander expects to focus on predominantly light oil opportunities in Western Canada, growing through a targeted acquisition and consolidation strategy complemented by development and exploration drilling. The current Alexander production base (current production of approximately 625 boepd) and the recapitalized corporate structure will allow for the exploitation of the current drilling inventory and expansion of the Corporation's opportunity suite through internally generated prospects and strategic acquisitions.

Upon completion of the Transaction, the recapitalized Alexander is expected to have a net cash position of approximately $19 million, assuming the Private Placement is fully subscribed. The New Management Team believes that this starting point will provide them with a platform for aggressive growth through strategic acquisition and internally generated prospects.

Upon completion of the Transaction and subject to all regulatory and shareholder approvals, it is anticipated that the New Management Team will change the name of the Corporation from "Alexander Energy Ltd." to "Spartan Energy Corp."

Private Placement and Stock Options

Pursuant to the Private Placement, the Initial Investor Group, together with additional subscribers identified by the Initial Investor Group, will subscribe for up to a maximum of 140 million units (the "Units") of Alexander at a price of $0.15 per Unit and up to a maximum of 36.67 million Common Shares at a price of $0.15 per Common Share for maximum total proceeds of $26.5 million. Each Unit shall be comprised of one Common Share and one Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to purchase one Common Share at a price of $0.20 for a period of five years. The Warrants will vest and become exercisable as to one-third upon the 20-day weighted average trading price of the Common Shares (the "Market Price") equaling or exceeding $0.30, an additional one-third upon the Market Price equaling or exceeding $0.40 and a final one-third upon the Market Price equaling or exceeding $0.50.

The completion of the Private Placement is expected to occur in multiple tranches. The initial closing will include a minimum of 100 million Units subscribed for by the Initial Investor Group and certain other investors identified by the Initial Investor Group (the "Initial Closing"). The resignation of the current board of directors and management team of Alexander and the appointment of the New Management Team will occur contemporaneous with the completion of the Initial Closing. The closing of subscriptions for any remaining Units and of the Common Shares will occur on such dates as determined by the Initial Investor Group.

Proceeds from the Private Placement will be used to reduce Alexander's indebtedness and for general corporate purposes.

In conjunction with the completion of the Initial Closing, Alexander shall grant options to acquire up to 21,090,614 Common Shares of Alexander (assuming the issuance of 140 million Units pursuant to the Private Placement), 18,770,647 of which will be granted to the new directors and officers of Alexander. Each grant of options will be for a five year term. The options will vest over three years (1/3 on each of the first, second and third anniversary of the grant date). The options will be exercisable at a price of $0.20 Common Share.

Rights Offering

Upon completion of the Private Placement, and subject to Alexander receiving the Written Consent (as defined below) on or before December 11, 2013, Alexander shareholders will be entitled to participate in the Rights Offering, which is expected to be conducted by way of a Rights Offering Circular. Pursuant to the Rights Offering, each shareholder as of the record date for such offering (the "Record Date") will be issued one right ("Right") for each Common Share held on the Record Date, entitling that holder to purchase one (1) Common Share for every eight (8) Rights held at a price of $0.15 per Common Share at or before the expiry time of the Rights Offering, following which all outstanding Rights shall terminate and expire. Subscribers of Common Shares under the Private Placement will not be entitled to participate in the Rights Offering with respect to any securities acquired pursuant to the Private Placement. The Rights Offering is subject to applicable regulatory approval, including the TSXV.

Shareholder and Stock Exchange Approvals

Completion of the Transaction is subject to a number of conditions and approvals including, but not limited to, the approval of the TSXV and shareholder approval. Under the policies of the TSXV, the completion of the Private Placement is subject to the approval of the shareholders of Alexander as the completion of the Private Placement will result in the creation of a new "control person" (as defined under the policies of the TSXV). In addition thereto, the appointment of the New Management Team is subject to shareholder approval under the policies of the TSXV. The required disinterested shareholder approval may be obtained by Alexander either by receipt of written consents by holders of more than 50% of the issued and outstanding voting shares of Alexander (the "Written Consent") or by approval of a resolution at a special meeting of shareholders (the "Alexander Meeting"). Pursuant to the Agreement, Alexander has agreed to obtain the Written Consent on or before December 11, 2013, failing which the Initial Investor Group has the right to terminate the Agreement. In the event that the Written Consent is not obtained on or before December 11, 2013 and the Initial Investor Group waives its termination right, Alexander has agreed to convene and hold the Alexander Meeting on or before January 31, 2014.

The Corporation

Alexander consists of approximately 625 boepd of production (60% oil) in central Alberta and has approximately 70.9 million Common Shares outstanding on a fully diluted basis and current net debt of approximately $7.5 million, excluding the costs of the Transaction. Upon completion of the Private Placement and assuming the exercise of all Rights issued in connection with the Rights Offering, Alexander will have approximately 256 million Common Shares, and assuming the exercise of all Warrants issued in connection with the Private Placement, there will be approximately 396 million Common Shares outstanding on a fully diluted basis.

Board of Directors' Recommendation

The board of directors of Alexander has determined that the transactions contemplated by the Agreement are in the best interests of its shareholders, has unanimously approved such transactions and recommends that Alexander's shareholders approve the Agreement and the Transaction and execute the Written Consent. Any shareholder of Alexander wishing to obtain and execute the Written Consent should contact Alexander as set forth below.

Directors and officers of Alexander who, in aggregate, own, directly or indirectly or exercise control or direction over approximately 14.8% of the Common Shares, have entered into support agreements or agreed to enter into support agreements pursuant to which they have agreed or will agree, among other things, to execute a Written Consent.

The Agreement

The Agreement contains a number of customary representations, warranties and conditions and provides for a non-completion fee of $125,000 payable by Alexander to the Initial Investor Group, and a non-completion fee of $125,000 payable by the Initial Investor Group to Alexander, in certain circumstances. The Agreement also provides that the Initial Investor Group shall receive an expense reimbursement fee of up to $125,000 in the event the Written Consent is not obtained and Alexander shareholders do not approve the Transaction at the Alexander Meeting. The complete Agreement will be accessible on Alexander's SEDAR profile at www.sedar.com.

Financial Advisors

Clarus Securities Inc. is acting as strategic advisor to the Initial Investor Group.

Peters & Co. Limited is acting as strategic advisor to Alexander with respect to the Transaction.

About Alexander

Alexander Energy Ltd. is a Calgary, Alberta based company engaged in the oil and gas exploration and development industry. The Corporation's Common Shares are listed on the TSX Venture Exchange under the trading symbol "ALX".

Forward-Looking and Cautionary Statements

This news release may include forward-looking statements including opinions, assumptions, estimates, the New Management Team's assessment of future plans and operations, and, more particularly, statements concerning the completion of the Transaction contemplated by the Agreement, the number of securities issued by way of the Private Placement, the business plan of the New Management Team, the change of name of the Corporation, use of proceeds, debt levels and production following completion of the Transaction.

When used in this document, the words "will," "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "should," and similar expressions are intended to be among the statements that identify forward-looking statements.

The forward-looking statements are founded on the basis of expectations and assumptions made by Alexander which include, but are not limited to, the timing of the receipt of the required shareholder, regulatory and third party approvals, the future operations of, and transactions completed by Alexander as well as the satisfaction of other conditions pertaining to the completion of the Transaction.

Forward-looking statements are subject to a wide range of risks and uncertainties, and although Alexander believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized.

Any number of important factors could cause actual results to differ materially from those in the forward -looking statements including, but not limited to, shareholder, regulatory and third party approvals not being obtained in the manner or timing set forth in the Agreement, the ability to implement corporate strategies, the state of domestic capital markets, the ability to obtain financing, changes in general market conditions and other factors more fully described from time to time in the reports and filings made by Alexander with securities regulatory authorities.

Except as required by applicable laws, neither Alexander nor the Initial Investor Group undertake any obligation to publicly update or revise any forward-looking statements.

The term "boe" may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf: 1 bbl is based upon an energy equivalency conversion method primarily applicable at the burner tip and it does not represent a value equivalency at the well head.

Neither the 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 this news release.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

Contact Information

  • Alexander Energy Ltd.
    Dan Wilson
    Director and Chief Executive Officer
    (403) 874-9862
    (403) 264-1348 (FAX)

    Alexander Energy Ltd.
    Richard (Rick) McHardy
    (403) 265-6444
    (403) 264-1348 (FAX)