CRC Royalty Corporation

April 16, 2015 09:00 ET

CRC Royalty Corporation Announces Shareholder Approval of Lawsuit Against Caledonian Royalty Corporation, James Kinnear and Others Obtained at Special Meeting

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 16, 2015) - CRC Royalty Corporation ("CRC") is pleased to announce that it has received shareholder approval of a statutory arrangement (the "Arrangement") which will facilitate the conduct of a lawsuit against Caledonian Royalty Corp. ("Caledonian"), James Kinnear, Charles Selby, Stuart Crichton, Caledonian Investment Management Limited and Kinnear Financial Corporation (the "Defendants"). With the benefit of shareholder approval of the Arrangement, the lawsuit will now be expanded to include additional claims against the Defendants, including claims against the personal Defendants in their capacities as former management of CRC and claims against Caledonian challenging the validity of its recent redemption of Caledonian royalty units.

The lawsuit currently claims for damages suffered by reason of, among other things, breach of contract, breach of warranty, negligence and breach of fiduciary obligations on the part of the Defendants. A significant portion of the damages for which compensation is sought are a result of Caledonian's continuing breach of its contractual covenant to issue securities of Caledonian which are listed on a recognized stock exchange in Canada to the CRC Shareholders in exchange for their CRC Shares, and thereby afford the CRC Shareholders the ability to sell such securities to liquidate their investment in CRC.

The quantum of the damages awarded in the lawsuit will ultimately be determined by the Court, but the claims for damages are premised in part on the difference between:

  1. the greater of:

    1. $25,284,000 (i.e. $12.00 per share), which is the value agreed by Caledonian in 2011; and

    2. such higher dollar value per share as may have been attributable to Caledonian shares during 2012 and early 2013, when the energy market was at its zenith and Caledonian was contractually obligated to obtain a stock exchange listing and issue publicly traded Caledonian shares in exchange for 2,107,000 CRC shares; and

  2. whatever value unlisted Caledonian shares may have at the time of judgement based on the then present value of Caledonian's oil and gas assets, as compared to its liabilities, following years of delay and continuing breaches by the Defendants.

The Arrangement provides for the benefits of the lawsuit to flow to the CRC shareholders. The Arrangement will become effective upon approval by the Supreme Court of British Columbia, as required by the Business Corporations Act (British Columbia). CRC plans to apply for that approval at an early date.

Additional details relating to the lawsuit and the Arrangement are set out in the Company's news release issued on February 26, 2015 and the Information Circular for the April 14, 2015 Meeting. Copies of those documents and a copy of the Notice of Claim are all available for review under the Company's profile on SEDAR at www.sedar.com.

We thank our shareholders and their financial advisors for their continuing support and patience in this matter, and look forward to providing further updates.

CRC ROYALTY CORPORATION

"Hugh Cartwright"

Director

Contact Information

  • CRC Royalty Corporation
    Hugh Cartwright
    Director
    604-630-7020