Angle Energy Inc.
TSX : NGL

Angle Energy Inc.

October 15, 2013 15:42 ET

Angle Energy Announces Business Combination with Bellatrix Exploration Ltd.

CALGARY, ALBERTA--(Marketwired - Oct. 15, 2013) - Angle Energy Inc. (TSX:NGL) ("Angle" or the "Company") is pleased to announce that it has entered into an arrangement agreement (the "Arrangement Agreement") with Bellatrix Exploration Ltd. (TSX:BXE)(NYSE MKT:BXE) ("Bellatrix") pursuant to which Bellatrix, has agreed to acquire all of the issued and outstanding common shares (the "Common Shares") of Angle and all of Angle's issued and outstanding 5.75% convertible unsecured subordinated debentures with a maturity date of January 31, 2016 (the "Debentures"). The transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").

Under the terms of the Arrangement, Angle shareholders will receive, at their election, for each Angle Common Share held, either: (i) $3.85 in cash; or (ii) 0.4734 of a Bellatrix common share, subject to the cash amount payable to Angle shareholders equaling $69.7 million and thus subject to prorating. Pursuant to the Arrangement, if approved by holders of the Debentures, such holders of the Debentures will receive $1,040 in cash per Debenture, plus all accrued and unpaid interest to the day immediately prior to the effective date of the Arrangement. Pursuant to the Arrangement, the consideration offered for the Common Shares based on the cash offer of $3.85 per share represents a 31% premium over the 10 day volume weighted average trading price ending October 11, 2013 ("VWAP"), and a 20% premium to the last closing price on the Toronto Stock Exchange (the "TSX"). Based on Bellatrix's closing price on October 11, 2013 of $8.45 and assuming an average cash component of 22% of the total consideration, the Arrangement implies a price of $3.97 per Common Share, which is a 35% premium to Angle's 10 day VWAP and a 24% premium to the last closing price.

Bellatrix will also assume Angle's net debt, estimated at $185 million (excluding $60 million in Debentures and $16 million in estimated transaction and severance costs associated with the Arrangement, which includes $2.4 million of costs to acquire the Debentures and assuming cashless exercise of in-the-money options based on the cash offer of $3.85), as at September 30, 2013. The total value of the Arrangement is approximately $576 million, based on the volume weighted average trading price of Bellatrix for the 10 trading days ending October 11, 2013 of $8.1324 per Bellatrix share.

"Angle's shareholders will benefit from this business combination with Bellatrix, which is the successful result of a comprehensive review of strategic alternatives available to Angle, announced in July," said Gregg Fischbuch, Chief Executive Officer of Angle. "This complementary transaction creates one of the largest Cardium producers and landholders in Alberta and provides Angle shareholders an attractive price, with significantly enhanced liquidity and the opportunity for ongoing participation in a larger and well capitalized combined company."

"We believe the combined entity will have the size, technical strength, financial resources and extensive inventory of high-quality light oil and liquids-rich gas locations to provide our shareholders with the opportunity for significant capital appreciation," said Heather Christie-Burns, President and Chief Operating Officer of Angle.

THE ARRANGEMENT AGREEMENT

The Arrangement is subject to customary conditions for a transaction of this nature, which include court and regulatory approvals, including the TSX and the NYSE MKT, the approval of 66 2/3% of Angle shareholders represented in person or by proxy at a special meeting of Angle shareholders to be called to consider the Arrangement, the approval of 66 2/3% of Bellatrix shareholders at a special meeting of Bellatrix shareholders and, if required, the approval of the majority of the minority after excluding the votes cast in respect of the Angle Common Shares held by certain directors and officers of the Company. In addition, majority approval by Bellatrix shareholders at a special meeting of Bellatrix shareholders is required. The board of directors of Bellatrix has approved the Arrangement and recommended that shareholders of Bellatrix vote in favour of the issuance of the Bellatrix common shares pursuant to the Arrangement. Directors and officers of Bellatrix holding approximately 2.2% of the outstanding Bellatrix shares have entered into agreements with Angle pursuant to which they have agreed to vote their Bellatrix common shares in favour of the Arrangement.

Pursuant to the Arrangement Agreement, holders of the Debentures will be asked to vote on the Arrangement, as a separate class. However, completion of the Arrangement is not conditional on receipt of such approval. If the requisite Debenture holder approval is not obtained, the Debentures will be excluded from the Arrangement and dealt with in accordance with their terms. To be part of the Arrangement Agreement, the Arrangement must be approved by 66 2/3% of Angle Debentureholders represented in person or by proxy at an extraordinary meeting of Angle Debentureholders and if required, the approval of the majority of the minority after excluding the votes cast in respect of Debentures held by certain directors and officers of the Company.

A joint management information circular regarding the Arrangement is expected to be mailed to Angle shareholders and debenture holders and Bellatrix shareholders in mid-November 2013 for a special meeting of the holders of Angle Common Shares, an extraordinary meeting of holders of Debentures and special meeting of Bellatrix shareholders, each scheduled to take place in mid December with closing expected to occur shortly thereafter.

The Arrangement Agreement includes customary non-solicitation covenants (subject to the fiduciary obligations of the board of directors of Angle and the right of Bellatrix to match any Superior Proposal within 72 hours (as defined in the Arrangement Agreement)). The Arrangement Agreement, among other things, provides for a reciprocal non‐completion fee of $17 million in the event the Arrangement is not completed or is terminated by either party in certain circumstances.

RECOMMENDATION OF THE BOARD OF DIRECTORS

On July 3, 2013, Angle announced it had retained financial advisors to assist the Special Committee of the Board of Directors in exploring and evaluating a broad range of strategic alternatives to maximize shareholder value. The Board of Directors of Angle has, based upon, among other things, a verbal fairness opinion from FirstEnergy Capital Corp., a recommendation of the Special Committee, and after consulting with its financial and legal advisors unanimously approved the Arrangement and unanimously determined that the Arrangement is in the best interests of Angle and the holders of the Common Shares and Debentures and determined that the Arrangement is fair to Angle shareholders and debenture holders. FirstEnergy Capital Corp. provided a verbal opinion that, as at the date hereof and subject to the assumptions, limitations and qualifications set forth therein and review of final documentation, the consideration to be received by the holders of Common Shares and Debentures under the Arrangement is fair, from a financial point of view, to such holders. The Board of Directors of Angle unanimously recommends that Angle securityholders vote in favour of the Arrangement at the shareholder and debenture holder meetings, as applicable to be called to consider the Arrangement.

All directors and officers of Angle, representing 8.3% of the issued and outstanding Common Shares have entered into voting support agreements with Bellatrix pursuant to which they have agreed to, among other things, to support the Arrangement and vote their Common Shares and Debentures, as applicable in favour of the Arrangement.

FINANCIAL ADVISORS

FirstEnergy Capital Corp., as lead, and Cormark Securities Inc. are acting as financial advisors to Angle in respect of the Arrangement.

AltaCorp Capital Inc. and Macquarie Capital Markets Canada Ltd. are acting as financial advisors to Bellatrix with respect to the Transaction and each has provided the board of directors of Bellatrix with its verbal opinion that, subject to its review of the final form of the documents affecting the Transaction, the consideration to be paid to Angle shareholders pursuant to the terms of the Arrangement is fair, from a financial point of view, to Bellatrix.

ABOUT ANGLE

Angle Energy Inc. is a public, Calgary-based oil and gas exploration and development company incorporated in 2004. Angle's objective is to build shareholder value through the profitable growth of its high quality asset base through a combination of drilling and strategic acquisitions. Angle's proven and dedicated team of industry specialists are focused on identifying and developing high quality assets in the Western Canadian Sedimentary Basin, with an emphasis in west central Alberta. Common shares of Angle are listed for trading on the Toronto Stock Exchange under the symbol "NGL".

Basis of Presentation

Forward-Looking Information

Certain information contained in this press release, including information and statements which may contain words such as "could", "plans", "should", "anticipates", "expects", "believes", "will" and similar expressions and statements relating to matters that are not historical facts, are forward-looking statements including, but not limited to, the completion of the acquisition of all of the Angle Common Shares and Debentures by Bellatrix.

These forward-looking statements are based on a number of risks and assumptions, including that the parties may not get the requisite approvals or be able to get the required shareholder, court, regulatory and other approvals necessary to complete the sale of all of the Common Shares and Debentures. Risks and uncertainties also relate to the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity prices, financing sources and exchange rate fluctuations. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, actual results may differ materially from those predicted. Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: statements related to the timing or completion of the Arrangement; the various reasons upon which the Arrangement may not close including, on account of conditions of closing not being fulfilled or waived, a competing bid or the Arrangement not being approved by Angle shareholders or Bellatrix shareholders; the risk that the Arrangement Agreement may be terminated in circumstances which require the payment of the non-completion fee; the existence of operating risks inherent in Angle's business; foreign currency exchange rate fluctuations; general economic, market or business conditions, including stock market volatility; the performance of the Angle's oil and gas properties; volatility in market prices for oil and gas; estimations of future costs; geological, technical, drilling and processing problems; changes in laws or regulations, including taxation and environmental regulations; and such other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by Angle, all of which may be found on SEDAR at www.sedar.com.

Readers are cautioned that the foregoing list of important factors is not exhaustive. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise, and as such, undue reliance should not be placed on forward-looking statements. These statements speak only as of the date of this press release. Unless required by law, Angle does not undertake any intention or obligation or update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Contact Information

  • Angle Energy Inc.
    Heather Christie-Burns
    President and Chief Operating Officer
    (403) 263-4534
    (403) 263-4179 (FAX)

    Angle Energy Inc.
    Gregg Fischbuch
    Chief Executive Officer
    (403) 263-4534
    (403) 263-4179 (FAX)

    Angle Energy Inc.
    Ken Hillier
    Chief Financial Officer
    (403) 263-4534
    (403) 263-4179 (FAX)

    Angle Energy Inc.
    Suite 700
    324 Eighth Avenue SW
    Calgary, Alberta T2P 2Z2
    www.angleenergy.com