Culane Energy Corp.
TSX VENTURE : CLN

Culane Energy Corp.

June 17, 2011 18:41 ET

Culane Enters Into Arrangement and Asset Sale Agreements

CALGARY, ALBERTA--(Marketwire - June 17, 2011) - Culane Energy Corp. ("Culane" or the "Company")(TSX VENTURE:CLN) is pleased to announce that it has entered into an agreement (the "Arrangement Agreement") with Killam Acquisition Company Ltd. ("AcquisitionCo"), a subsidiary of a TSX 200-listed company, whereby AcquisitionCo will acquire all of the issued and outstanding common shares of Culane (the "Culane Shares") for cash consideration of $2.32 per Culane Share for aggregate consideration of $78.7 million, including the assumption of $13.8 million of net debt, pursuant to a plan of arrangement ("the Arrangement"). In conjunction with entering into the Arrangement Agreement, Culane has also divested certain assets located in Saskatchewan for additional cash proceeds to Culane of approximately $7.3 million, with such proceeds having been applied to reduce Culane's current indebtedness. The transaction represents a 35% premium to the closing price of the Culane Shares on June 17, 2011 and a 35% premium over the 20-day weighted average trading price of the Culane Shares on the TSX Venture Exchange up to and including June 17, 2011.

The Board of Directors has unanimously approved the Arrangement, determined that it is fair to Culane shareholders and that the Arrangement is in the best interests of Culane. The directors and officers of Culane and certain significant shareholders, representing approximately 40% of the outstanding Culane Shares, have entered into support agreements pursuant to which they have agreed to vote their Culane Shares in favour of the Arrangement. An information circular describing the Arrangement is expected to be mailed to security holders in late June 2011 for an annual and special meeting of shareholders (the "Meeting") scheduled to take place on or about July 28, 2011. The Arrangement will be subject to the approval of at least 66 Γàö% of the votes cast by Culane shareholders at the Meeting. Closing is subject to certain conditions, including the receipt of court and other regulatory approvals.

FirstEnergy Capital Corp. is acting as exclusive financial advisor to Culane with respect to the Arrangement and has provided the Board of Directors of Culane with an opinion that, subject to the review of final documentation, the consideration to be received under the Arrangement is fair, from a financial point of view, to Culane shareholders.

Culane has agreed not to solicit or initiate any discussion or negotiation concerning the sale of significant assets or other business combinations. In the event the Arrangement does not proceed, under certain circumstances, Culane has agreed to pay a non-completion fee of $2.5 million to AcquisitionCo. In addition, AcquisitionCo has the right to match any competing proposal, in the event such proposal is made.

About Culane Energy Corp.

Culane Energy is a junior oil and gas company engaged in the exploration, development and production of oil and natural gas in Alberta and Saskatchewan.

Culane website: www.culaneenergycorp.com

Reader Advisories

Forward-Looking Statements: This news 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 statements and information. More particularly and without limitation, this news release contains forward-looking statement and information concerning the anticipated completion of the plan of arrangement and the anticipated timing thereof. Culane has provided these anticipated times in reliance on certain assumptions that it believes are reasonable, including assumptions as to the time required to prepare meeting materials for mailing, the timing of receipt of the necessary regulatory and court approvals and the satisfaction of and time necessary to satisfy the conditions to the closing of the plan of arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the plan of arrangement. In addition, there are no assurances the plan of arrangement will be completed. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Culane are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward-looking statements and information, whether written or oral, attributable to Culane or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements and information contained in this news release are made as at the date of this news release and Culane does not undertake any obligation to update publicly or to revise any of the included forward-looking statements and information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is define din the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Culane Energy Corp.
    Donald D. Staus
    President & Chief Executive Officer
    (403) 263-2773
    (403) 263-2776 (FAX)
    dstaus@culaneenergycorp.com

    Culane Energy Corp.
    Stewart Larsen
    Vice President of Finance & Chief Financial Officer
    (403) 263-2773
    (403) 263-2776 (FAX)
    slarsen@culaneenergycorp.com

    Culane Energy Corp.
    Thomas H. Field, Vice President, Engineering &
    Operations, and Chief Operating Officer
    (403) 263-2773
    (403) 263-2776 (FAX)
    tfield@culaneenergycorp.com

    Culane Energy Corp.
    420, 333 - 5th Avenue S.W.
    Calgary, Alberta T2P 3B6
    www.culaneenergycorp.com