Ember Resources Inc.

Ember Resources Inc.

June 12, 2008 14:05 ET

Ember Resources Inc. Reaffirms Its Proposal to Acquire All of the Outstanding Shares of Cordero Energy Inc.

CALGARY, ALBERTA--(Marketwire - June 12, 2008) - Ember Resources Inc. (TSX:EBR) ("Ember") announces that its previously announced proposal to acquire all of the outstanding common shares ("Cordero Shares") of Cordero Energy Inc. ("Cordero") delivered to Cordero on June 6th is still open for acceptance and will remain so past the expiry at 4:30 p.m. (MST) on June 13th of the cash offer of $4.75 per Cordero Share made by ENMAX Acquisition Corp. (the "Enmax Offer").

Under the terms of the proposal, Ember would acquire all of the outstanding common shares ("Cordero Shares") of Cordero by way of a plan of arrangement under the Business Corporations Act (Alberta) for consideration of $5.35 per Cordero Share, payable at the election of each Cordero shareholder in cash or 2.61 common shares of Ember ("Ember Shares") at a deemed price of $2.05 per Ember Share.

An aggregate of $55 million in cash would be payable to the Cordero shareholders and adjustments to the aggregate number of Ember Shares issued would be made in the event that Cordero Shareholders elect to receive more or less than $55 million in cash. Ember has entered into subscription agreements to fund $45 million of the cash component of the proposal by the issuance of 21,951,221 subscription receipts ("Subscription Receipts") at a price of $2.05 per Subscription Receipt. Each Subscription Receipt would be convertible into one Ember Share upon the completion of the arrangement with Cordero. The balance of the cash component would be paid out of Ember's existing credit facilities which were recently expanded to $35 million. The Subscription Receipt financing would require the approval of the Ember shareholders at a meeting held prior to the completion of the arrangement.

In their June 11, 2008 press release Cordero expressed their inability to determine if the Ember proposal was superior to the Enmax offer. To address the concerns raised by Cordero and in support Ember's view that its proposal is superior to the Enmax offer, Ember notes the following;

Ember's offer is a 13% premium to the outstanding Enmax offer of $4.75/share;

Ember's offer represent's the equivalent of $5.35 per share in cash or shares based on the cash issue price of $2.05 per subscription receipt for the $45 million subscription receipts issued by Ember. The three day volume-weighted trading price of Ember at $1.96/share quoted by Cordero represents only $378,917 in aggregate trading value which is less than 1% of the funds raised by the subscription receipts. The cash issue price of the subscription receipts was negotiated and determined with sophisticated and informed investors;

The $10 million in cash contributed by Ember will be from existing lines of credit;

Ember's shareholders are required by securities law to approve the issuance of the Ember shares pursuant to the Ember subscription receipts. Ember's management and directors which control 9% of the outstanding shares would vote in favour of the issuance. Ember has been in contact with its shareholders and believes that the majority of remaining Ember shareholders would also vote in favour of the transaction;

Ember is prepared to enter into a mutually acceptable definitive arrangement agreement with Cordero to be negotiated in good faith between the parties. The form of this agreement is common to these types of arrangements and would be expected to be completed no later than June 20th, 2008. Ember presented a detailed draft of this definitive agreement to Cordero on June 6, 2008 concurrent with its revised proposal, which draft contained terms and conditions substantially similar to those contained in pre-acquisition agreement dated February 18, 2008 between Cordero and Enmax (the "Enmax Pre-Acquisition Agreement");

The Enmax offer has failed to reach the required approval levels, notwithstanding five extensions over the past 90 days including the May 28th extension where Enmax increased their cash offer to $4.75/share. Enmax has stated that the June 13th extension is their last extension and they have no intention of increasing their offer. Cordero will be able to terminate the Enmax Pre-Acquisition Agreement in the event that the Enmax Offer expires without Enmax taking up any Cordero shares. This will permit Ember to enter into unfettered negotiations with Cordero with respect to its proposal;

Ember has received commitment letters from shareholders representing an aggregate of 12,396,196 Cordero Shares, or approximately 33.4% of the outstanding Cordero Shares, pursuant to which such holders have agreed, subject to certain terms and conditions or to the receipt of a superior offer, to support Ember's acquisition of the Cordero Shares and not tender their Cordero Shares to the Enmax Offer. Ember's proposal may gain additional support after the expiry of the Enmax offer.

"With the expiry of the Enmax offer scheduled for June 13, 2008 Ember and Cordero will, subject to the termination of the Enmax Pre-Acquisition Agreement, be free to negotiate and finalize the Ember proposal. Ember's proposal benefits all shareholders of Cordero providing cash for those who wish to crystallize their investment now while providing participation in a new CBM focused growth Company for those shareholders that elect to take Ember shares" said Doug Dafoe, Chairman and CEO of Ember.

FirstEnergy Capital Corp. is acting as exclusive advisor to Ember on this transaction.

Ember Resources Inc. is a resource company specializing in coal bed methane (CBM) with extensive land and resource holdings in Alberta, Canada. Ember's shares are traded on the Toronto Stock Exchange under the trading symbol "EBR".

Further information concerning Ember's analysis of its proposed transaction with Cordero is available on Ember's website at www.emberresources.com.

Reader Advisory

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities of Ember within the United States. The securities of Ember 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, the shares may not 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 laws or an exemption from such registration is available.

Forward Looking Statements

This press release contains forward-looking statements. More particularly, this press release contains statements concerning the intention of Ember to seek to acquire all of the Cordero Shares and the manner in which such an acquisition would be structured and funded. These statements are based on certain key expectations and assumptions made by Ember, including expectations and assumptions concerning the response by Cordero, the Cordero Shareholders and third parties to the proposed acquisition, the receipt of necessary shareholder, regulatory and court approvals and the status of the Enmax Offer. Although Ember believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because inherent risks and uncertainties might result in Ember not proceeding with the proposed acquisition. These risks and uncertainties include a failure to obtain necessary shareholder or third party support or agreements, the emergence of a superior competing bid or the successful completion of the Enmax Offer.

This press release also contains forward-looking statements concerning the estimated annual cash flow of the combined company, the commercial viability of the Manville coals and the potential for production growth from anticipated drilling locations. These forward-looking statements are based on certain key expectations and assumptions made by Ember, including expectations and assumptions concerning prevailing commodity prices and exchange rates, availability and cost of labour and services, the timing of receipt of regulatory approvals, the performance of existing wells, the success obtained in drilling new wells, the performance of new wells and the sufficiency of budgeted capital expenditures in carrying out Ember's planned activities. Although Ember believes that the expectations and assumptions on which these forward-looking statements are based are reasonable, undue reliance should not be placed on these forward-looking statements because Ember can give no assurance that they will prove to be correct. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Ember's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and Ember 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.

Contact Information

  • Ember Resources Inc.
    Mr. Douglas A. Dafoe
    Chairman & CEO
    (403) 270-0803
    (403) 270-2850 (FAX)
    Ember Resources Inc.
    Mr. Terry S. Meek
    President & COO
    (403) 270-0803
    (403) 270-2850 (FAX)