Canadian Phoenix Resources Corp.
TSX VENTURE : CPH

Canadian Phoenix Resources Corp.

April 16, 2008 09:00 ET

Canadian Phoenix Resources Corp. Corporate Update: Proposed Transaction-Marble Point Energy Ltd.

CALGARY, ALBERTA--(Marketwire - April 16, 2008) -

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

CANADIAN PHOENIX RESOURCES CORP. ("Canadian Phoenix" or "CPH") (TSX VENTURE:CPH) is pleased to announce that, further to its February 29, 2008, press release Marble Point Energy Ltd. ("Marble Point") has entered into two separate purchase agreements with arm's length parties pursuant to which it has agreed, subject to certain conditions, to purchase oil and assets for a total purchase price of $51.8 million, subject to adjustments (the "Asset Acquisitions"). Canadian Phoenix has provided its guarantee allowing Marble Point to advanced the total amount of $7.18 million as deposits for the Asset Acquisitions, of which a maximum of $6.59 million is subject to forfeit should Marble Point fail to complete an acquisition due to the lack of funds. Closing of the Asset Acquisitions is scheduled to occur on April 30, 2008.

Marble Point, as borrower, and Canadian Phoenix, as guarantor, entered into a secured credit facility (the "Facility") dated April 15, 2008 with Ionic Capital Corp. ("Ionic", formerly Quest Capital Corp.). The maximum amount that may be borrowed by Marble Point under the Facility is $35 million. Marble Point borrowed the initial amount of approximately $7.25 from Ionic under the Facility to fund the payment of the deposits and fees. Subject to the satisfaction of certain conditions, the balance of the $35 million will be available for use by Marble Point to pay a portion of the balance of the purchase price for the Asset Acquisitions. Canadian Phoenix has issued 4,381,753 common shares ("CPH Shares") to Ionic at the deemed price of $0.14895 in partial consideration of the initial advance under the Facility. A maximum of 22,268,683 CPH Shares are issuable to Ionic if the full amount of $35 million is advanced to Marble Point under the Facility. These CPH Shares will be held in escrow and released to Ionic upon the successful completion of the Marble Point Transaction (as defined below). If the Marble Point Transaction is not completed, these CPH Shares will be returned to Canadian Phoenix for cancellation and Canadian Phoenix and Marble Point will be obliged to pay the amount to Ionic in cash.

In conjunction with Canadian Phoenix's $100 Million financing plan, Marble Point proposes to conduct a private placement of 100 million preferred shares ("MPE Preferred Shares") at the price of $0.65 per share for proceeds of $65 million to fund the balance of the purchase price for the Asset Acquisitions and for other corporate purposes. This placement will be completed in place of the financing proposed by Canadian Phoenix in its February 29, 2008 news release.

Canadian Phoenix has, with the consent of shareholders controlling in excess of 37% of the total number of CPH Shares outstanding, provided a guarantee to Ionic in support of Marble Point's obligations under the Facility and a security interest in favour of Ionic in support of such guarantee. Canadian Phoenix and Marble Point have entered into an indemnity agreement which sets out each company's obligations to indemnify the other for amounts paid to Ionic. Canadian Phoenix, Marble Point and certain of its principal shareholders and management team have entered into a corporate governance agreement which sets out Marble Point's reporting obligations to Canadian Phoenix along with covenants of Marble Point to not carry out certain type of actions, including debt or equity financings and material asset sale and dispositions, without the consent of Canadian Phoenix. In addition, such parties will enter into an escrow agreement which provides for the cancellation of up to 7.1 million common shares of Marble Point in certain events and a financing agreement which sets out the overall structure for the acquisition (the "Marble Point Transaction") by Canadian Phoenix of a controlling shareholder interest in Marble Point.

The Asset Acquisitions by Marble Point has resulted in Canadian Phoenix and Marble Point agreeing to re-structure the Marble Point Transaction as initially described in Canadian Phoenix's news release of February 29, 2008. To effect the Marble Point Transaction, it is now anticipated that 433 million units ("CPH Units") of Canadian Phoenix will be delivered to subscribers for MPE Preferred Shares, Canadian Phoenix will receive that number of common shares of Marble Point equal to 60% of the number then outstanding, all MPE Preferred Shares will be cancelled and CPH will assume or otherwise discharge the Facility and provide to Marble Point a secured loan of $41.5 million. The CPH Units will be issued at the deemed price of $0.15 per unit and will be comprised of one common share ("CPH Share") of Canadian Phoenix and one non-transferable CPH Share purchase warrant ("CPH Warrant"). Each full CPH Warrant will entitle the holder thereof to purchase one additional CPH Share at a price of $0.20 on or before the earlier of the date that is two years from the completion of the private placement and 30 days after the giving of notice of early termination by Canadian Phoenix. Canadian Phoenix may, in its sole discretion, provide such notice if the closing price of the CPH Shares on the TSX Venture Exchange is at least $0.30 for a minimum of 30 consecutive trading days (whether or not trading occurs on such days) (the "Triggering Event"") within 30 days of the Triggering Event by written notice to the CPH Warrantholder that the exercise period of the CPH Warrant has been reduced to 30 days following delivery of such notice.

The Marble Point Transaction is an arm's length transaction that is conditional upon the execution of definitive agreements, completion of satisfactory due diligence, receipt of shareholder (if applicable), debentureholder and regulatory approval, and receipt of third party consents and other conditions customary in a transaction of this nature. It is anticipated that Canadian Phoenix will prepare a Filing Statement in accordance with the form prescribed by the TSX Venture Exchange in respect of the Marble Point Transaction. Where applicable, the transactions disclosed in this news release cannot close until the required shareholder approval is obtained. There can be no assurance that these transactions will be completed as proposed or at all. It is anticipated that the Marble Point Transaction will be completed on or before May 31, 2008.

Canadian Phoenix Resources Corp. is a publicly traded junior oil and gas exploration, development and production company with operations in Western Canada. Canadian Phoenix is pursuing a corporate strategy of being a consolidator of undervalued oil and gas assets located in the Western Canadian Sedimentary Basin. Canadian Phoenix's shares trade on the TSX Venture Exchange under the symbol "CPH".

ON BEHALF OF THE BOARD OF DIRECTORS OF CANADIAN PHOENIX RESOURCES CORP.

Robert J. Chenery, President & CEO

This news release does not constitute an offer to sell or the solicitation of an offer to buy the securities of Canadian Phoenix within the United States. Securities of Canadian Phoenix have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws. Accordingly, none of the securities of Canadian Phoenix may be offered or sold in the United States or to U.S persons (as such terms are defined in Regulation S under the 1933 Act) unless registered under the 1933 Act and applicable state securities law or an exemption from such registration is available.

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning completion of the Asset Acquisitions and related financings as well as the Marble Point Transaction. The forward-looking statements and information are based on certain key expectations and assumptions made by Marble Point, including expectations and assumptions concerning the advance of funds under the Facility and the completion of the private placement of MPE Preferred Shares. Although Canadian Phoenix and Marble Point believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Canadian Phoenix and Marble Point can give no assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. There are risks also inherent in the nature of the Asset Acquisitions and Marble Point Transaction, including financing risk, Canadian Phoenix not entering into definitive agreements that provide for such transaction, incorrect assessment of the value of the Assets Acquisitions and Marble Point, and failure to obtain the required security holder, regulatory and other third party approvals. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements and information contained in this press release are made as of the date hereof and Canadian Phoenix undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Canadian Phoenix Resources Corp.
    Robert J. Chenery
    President & CEO
    (403) 920-0040
    (403) 920-0043 (FAX)