CALGARY, ALBERTA--(Marketwired - Dec. 6, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.
Ceiba Energy Services Inc. (TSX VENTURE:CEB) ("Ceiba" or the "Company") is pleased to announce the following:
- Ceiba has entered into a letter of intent to acquire all of the shares of Cam-Star Resources (1990) Ltd. ("Cam-Star" or the "Private Co.") for an aggregate purchase price of approximately $2.8 million, subject to adjustments (the "Acquisition").
- In connection with the proposed acquisition, Ceiba also announces a non-brokered private placement (the "Private Placement") of units and 8% convertible, unsecured, subordinated debentures of the Company for aggregate gross proceeds of up to $4 million.
- Ceiba Management intends to subscribe for approximately $250,000 of units.
Summary of the Acquisition
The purchase price for the Acquisition of approximately $2.8 million will be paid with $2.6 million in cash and the issuance of 500,000 common shares of Ceiba ("Common Shares") with a deemed price of $0.40 per share, which Common Shares will be held in escrow for one year subject to Private Co. achieving certain performance targets. The effective date of the Acquisition is December 1, 2013 and closing is expected to occur on or about December 31, 2013. The Acquisition shall be subject to customary closing conditions, including the receipt of the approval of the TSX Venture Exchange Inc. (the "Exchange"). Upon completion of the Acquisition Private Co. will become a wholly-owned subsidiary of Ceiba. In connection with the Acquisition, the Company has agreed to pay an advisory fee of $100,000 to an arm's length third party.
Cam-Star is a privately owned operator of water disposal facilities in Central Alberta. It has three licensed Class II operating disposal wells and associated equipment and one licensed, suspended disposal well. The operating disposal wells have a total surface storage capacity of approximately 1700 m3 and a daily injection capacity of 1000 m3 (6,200 bbls). Two of the operating disposal wells are located near Camrose, Alberta, 70 km south east of Edmonton and 80km west of Ceiba's Kinsella terminal and have been operating for over ten years. The third operating disposal well is near Ponoka, Alberta approximately 100km south of Edmonton and has been in operation for one year.
- The Acquisition is expected to provide revenue of approximately $900,000 for 2014, and management believes that there is significant potential to increase future revenues through focused marketing efforts and operational enhancements.
- The Acquisition will provide Ceiba access to Viking and Cardium oil plays.
- There are over 20,000 producing wells within 100 km radius of Private Co.'s operating disposal wells.
- With the Acquisition, Ceiba will have established a network of 5 facilities from Edmonton (Chamberlain) southeast to Kinsella and south to Ponoka.
"This Acquisition is a continuation of our strategic plan to increase our footprint in Alberta to meet the growing disposal needs of our customers," said Ian Simister, President. "With this Acquisition adding to our assets in Silver Valley and our recently opened Chamberlain Facility, we will have five operating disposal wells contributing to the bottom line in 2014, compared to the single operating disposal well we had through most of 2013."
In connection with the proposed Acquisition, Ceiba intends to complete the Private Placement of approximately $3,000,000 of units ("Units") and approximately $1,000,000 of 8% convertible unsecured subordinated debentures ("Debentures") of the Company for aggregate gross proceeds of up to $4,000,000. Each Unit will be issued at a price of $0.40 per Unit and will be comprised of one Common Share and one share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to acquire one Common Share at a price of $0.50 for a period of one year from the closing of the Private Placement.
The Debentures will bear interest at a rate of 8.0%, payable semi-annually, and will be convertible into Common Shares, subject to certain adjustments, at a conversion price of $0.55 per Common Share. The Debentures will have a face value of $1000 per Debenture and a maturity date of September 30, 2015. Upon maturity, the Debentures shall be subject to mandatory conversion into Common Shares at the conversion price. The Debentures will be direct, unsecured obligations of the Corporation, subordinated to other indebtedness of the Corporation for borrowed money and ranking equally with all other unsecured subordinated indebtedness of the Company.
Closing of the Private Placement is expected to occur on or about December 18, 2013 or such other date as the Company may determine, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Exchange. The Common Shares and Warrants comprising the Units and the Debentures issued pursuant to the Private Placement will be subject to resale restrictions imposed by applicable securities laws and the policies of the Exchange.
Management of the Company intends to subscribe for approximately $250,000 of Units.
The Company also advises that it is in discussions with respect to further debt financing, including conventional bank debt. The Company intends to use the proceeds from any potential debt financing and the Private Placement to fund the Acquisition, growth capital and general working capital.
In connection with the Private Placement, the Company may pay eligible persons a finder's fee of up to 6% in cash of the proceeds of the Private Placement that result from such parties efforts, and may also issue such number of broker warrants as is equal to 6% of the number of Units and Debentures placed by such eligible persons under the Private Placement, subject to compliance with applicable securities laws. Each broker warrant will entitle the holder to acquire one Unit at a price of $0.40 per Unit for a period of 12 months from the closing of the Private Placement.
Future Plans and Outlook
In addition to completion of the Acquisition, the Company remains focused on its capital and growth plans for 2014. Ceiba expects that these plans will include expanding services at the Silver Valley facility as well as initiating wastewater disposal services at its Athabasca site. The Company continues to evaluate and seek additional acquisition and expansion opportunities.
Ceiba provides specialized services to the energy sector, specifically to companies involved in the exploration, extraction and production of oil and natural gas in under serviced market space throughout Western Canada. Ceiba develops and constructs facilities in proximity to its customers to provide treatment of crude oil emulsion, terminalling, storage and marketing of oil and disposal of production water.
Certain information regarding Ceiba in this news release, including management's assessment of the expected time of completion of the Acquisition and the Private Placement and the Company's future revenues and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with receipt of regulatory approvals, the Company's ability to secure financing, risks associated with oilfield services operations, general risks associated with oil and gas exploration, development, production, marketing and disposal of waste, loss of markets, environmental risks, competition from other service providers, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Ceiba's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements or information contained in this news release are made as of the date hereof and Ceiba does not undertake any 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.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. 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 U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
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 the accuracy of this release.