CBM Asia Development Corp.
TSX VENTURE : TCF
OTCBB : CBMDF
FRANKFURT : IY2

CBM Asia Development Corp.

April 07, 2014 08:00 ET

CBM Asia Announces CAD$11 Million Non-Brokered Private Placement and Cost Cutting Measures

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 7, 2014) -

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWS AGENCIES

Following the announcement in regard to the development plans of the Kutai West PSC (April 4, 2014) CBM Asia Development Corp. ("CBM Asia" or the "Company") (TSX VENTURE:TCF)(OTCBB:CBMDF)(FRANKFURT:IY2) announces a non-brokered private placement of CAD$11,000,000 secured loans with bonus shares (the "Offering"). The Company also announces substantial costs cutting measures.

CAD$11,000,000 Secured Notes with Bonus Shares

The Company is offering up to 550 Units at a price of CAD$20,000 per Unit for aggregate gross proceeds of up to CAD$11,000,000, subject to the Issuer's right to increase the size of the Offering at its sole discretion. The Units will be sold directly by the Issuer and through certain dealers, agents and other finders, registered and otherwise (collectively "Finders").

Unit. Each Unit consists of one Note in the principal amount of CAD$20,000 and 80,000 Bonus Shares.

Bonus Shares. All Bonus Shares to be issued pursuant to the Offering will be granted immediately on Closing and subject to a hold period of 4 months and 1 day.

Notes. The Notes will be subject to, inter alia, the following rights and restrictions:

  • Principal. Notes will be issued in the principal amount of CAD$20,000 or integral multiples thereof.
  • Interest. The Notes will bear simple interest at the rate of 18% per annum, calculated annually not in advance, with interest only payments payable semi-annually.
  • Term. The Notes will be for a term of two years and mature on the second anniversary of the Closing Date.
  • Security. Each Note in the principal amount of CAD$20,000 will be secured, on a pro rata undivided basis, by a pledge over the equivalent of thirty-six (36) of 0865665 B.C. Ltd. Shares representing 0.15% of the total issued and outstanding shares of 0865665 B.C Ltd.
  • 0865665 B.C. Ltd. holds a 26% interest in Sekayu PSC in South Sumatra, Indonesia. The Sekayu PSC has a National Instrument 51-101 compliant engineered recoverable prospective resources of 1,062 Bcf (177 MMboe) of which CBM Asia is entitled to 276 Bcf (46 MMboe). Each CAD$20,000 Note is supported by 414 MMcf (69,000 boe) of recoverable resource. The Sekayu PSC 51-101 engineering report is available on the Company's website (www.cbmasia.ca - investors/engineering reports).
  • Early Repayment. The Company shall have the right to prepay the Notes, in whole or in part, at any time without notice, bonus or penalty, provided that if the Company prepays the Notes prior to the first anniversary of the Closing Date, the Company shall pay to the holders of Notes an amount equal to one year's interest on the Notes, less any interest previously paid by the Issuer;
  • Rank. All Notes will rank pari passu with one another, in accordance with their terms, without discrimination, preference or priority;
  • Trustee. The Notes will be issued pursuant to and governed by a note indenture to be entered into between the Company and a third party trustee, on behalf of the Subscribers, as designated by the Company.

Finders: The Company reserves the right to pay to the Finders in connection with the issue and sale of Units under the Offering a commission or fee in cash and/or finder's warrants in accordance with the policies of the TSX Venture Exchange (the "Exchange") in consideration for their services in introducing Subscribers to the Company.

Approval: The Offering is subject to the acceptance of the Exchange.

Use of Proceeds: The proceeds for the Offering will be used to fund;

  • CBM Asia's obligation of the Kutai West PSC Phase I development project and Sekayu PSC appraisal work
  • Upfront restructuring and downsizing costs
  • General and administrative expenses
  • Kutai II arbitration award

Descriptive details of the Use of proceeds can be found in the Company's new corporate presentation on the company website (www.cbmasia.ca - investors/presentations).

Cost Cutting Measures

In conjunction with the Offering, the Company has taken significant steps to reduce general and administrative (G&A) expenses and operational running costs from US$3.8-5.0 million to US$1.8-2.2 million per year. Key cuts include;

  • Reduced Vancouver office staff levels to one and cut executive pay by 50% including the President and CEO. Office size was also reduced and the investor relations program cut by 90%. These actions plus anticipated lower legal fees are expected to reduce corporate costs from US$2.0-3.2 million to US$1.0-1.4 million per year.

  • Reduced operational costs by cutting the Jakarta office staff level from 22 to four and reducing office size. These actions are expected to reduce costs from US$1.8 million to US$840,000 per year.

President and CEO Charles Bloomquist noted that, "The Company has been under new executive management since late January. In the short time since then, staffing and costs have been substantially reduced and the Company has focused on the development of commercial gas production from the Kutai West PSC. Kutai West is our most significant asset with 705 Bcf of independently evaluated gas resource (net to CBM Asia), is located next to the Sanga-Sanga PSC which is already in commercial production, and offers excellent alternatives for marketing gas at attractive prices in the near term."

ABOUT CBM ASIA DEVELOPMENT CORP.

CBM Asia Development Corp. is a Canadian-based unconventional gas company with significant coalbed methane ("CBM") exploration and development opportunities in Indonesia. The Company holds various participating interests in five production sharing contracts (each a "PSC") for CBM in Indonesia. Indonesia has one of the largest CBM resources in the world with a potential 453 trillion feet3 in-place, more than double the country's natural gas reserves (Stevens and Hadiyanto, 2004). Since 2008 a total of 54 CBM PSCs have been granted by the Government of Indonesia, representing exploration commitments of well over US$100 million during the next 3 years. In addition to CBM Asia, other companies active in CBM exploration in Indonesia include BP, Dart Energy, ENI, Medco, Santos, and TOTAL. BP, ENI, and the Indonesian government have confirmed that commercial CBM production started in March 2011 from the Sanga-Sanga PSC and is being exported from the Bontang LNG facility. The Company trades on the TSX Venture Exchange under the symbol "TCF". www.cbmasia.ca

ON BEHALF OF CBM ASIA DEVELOPMENT CORP.

Charles W. Bloomquist, President and CEO

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 release.

This news release contains forward-looking statements, which relate to future events or future performance and reflect management's current expectations and assumptions. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to the Company. Readers are cautioned that these forward looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. The economics of exploring, developing and operating resource properties are affected by many factors including, but not limited to, the cost of exploration and development operations, conclusions of economic evaluations, unexpected formations or pressures, premature declines in reserves, potential environmental damage, blow‐outs, fires, variations in the amount and saturation of CBM contained in individual coal seams and the rate of production therefrom, fluctuations in gas prices and the availability of capital. There are no assurances that the Company's work programs will result in the discovery of commercially viable or economically producible properties or that the Company will be successful in completing the Offering in whole or in part. Gas in place estimates referred to in this news release are not NI 51-101 compliant and do not represent "discovered petroleum initially-in-place" within the meaning of the Canadian Oil & Gas Evaluation Handbook (COGE Handbook). The term "discovered petroleum initially-in-place" is equivalent to discovered resources, and is defined in the COGE Handbook to mean that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. There are no assurances that any portion of the estimated gas in place resources referred to herein will be discovered. Furthermore, such estimates make no allowance for the recovery of the gas which will depend on, among other things, the reservoir characteristics encountered and future economic conditions. All of the forward-looking statements made in this news release are qualified by these cautionary statements and those made in our Canadian continuous disclosure filings available on SEDAR at www.sedar.com including our December 31, 2012 year end annual MD&A dated April 24, 2013 and June 30, 2013 interim MD&A dated August 20, 2013. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances save as required under applicable securities legislation.

THIS NEWS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES AND THE COMPANY IS NOT SOLICITING AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

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