Ember Resources Inc.
TSX : EBR

Ember Resources Inc.

November 11, 2010 17:48 ET

Ember Resources Inc. Reports Credit Facility Update

CALGARY, ALBERTA--(Marketwire - Nov. 11, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Ember Resources Inc. ("Ember") (TSX:EBR) announced today that it has entered into an agreement to amend its credit facility with its lenders. The key provisions contained in the credit facility are as follows:

  • The facility totals $86,575,625 consisting of a fully drawn production facility of $86,000,000 and a working capital facility providing for issued letters of credit totaling $575,625.
  • The facility is in the term out phase and requires a bullet payment of $86,575,625 on April 29, 2011 to pay out the facility.
  • During the term out phase, Ember will make payments of interest only.
  • The facility is collateralized by a $250 million fixed and floating debenture.
  • Any proceeds from the disposition of assets or the receipt of proceeds from the sale of drill credits during term out will be applied to further reduce the production facility.
  • Interest rate pricing terms during the term out phase of the facility are as follows:
    • Prime based loans bearing interest at the prime bank rate plus, depending on the ratio of funded debt to trailing cash flow, up to 400 basis points per annum;
    • Banker's acceptances, bearing interest at the banker's acceptance rate plus, depending on the ratio of funded debt to trailing cash flow, a stamping fee of up to 500 basis points per annum; and,
    • An additional 175 basis points applies to the above interest rates during the term out phase of the facility.
    • Expected borrowing costs during the term out phase will be approximately 8.0% for Banker's acceptance borrowing, and 8.75% for prime borrowing.

Strategic Alternatives

Ember previously announced that, after a review of its current share price, reserves, production, cash flows and debt levels, among other matters, its board of directors has decided to initiate a process to identify and consider strategic alternatives with a view to enhancing shareholder value. Strategic alternatives may include, but are not limited to, a sale of the Corporation, recapitalization, merger or other business combination, a sale of a material portion of the Company's assets or, farmin or farmout transactions, among other alternatives.

Ember continues to trade at a substantial discount to its net asset value despite having a significant reserve base, land position, production and infrastructure in low cost, long life, natural gas CBM resources in the province of Alberta. The board of directors will consider all alternatives and has appointed a special committee made up of independent directors to direct the process. The Company has engaged Macquarie Capital Markets Canada Ltd. as its financial advisor to conduct a full analysis and investigation of Ember's strategic alternatives. Ember does not intend to disclose developments with respect to the strategic review process until the board of directors has approved a definitive transaction or strategic option, unless otherwise determined or required by law. There are no guarantees that the process will result in a transaction or, if a transaction is entered into, as to its terms or timing.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements including anticipated levels of bank debt, interest rates, anticipated capital expenditures, development plans expectations pertaining to various matters related to the credit facility and anticipated financing arrangements and other alternatives. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (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 prices and exchange rate fluctuation, uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures and uncertainties related to the extension of the credit facilities and the implementation of alternative transactions. Actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward looking statements and accordingly, no assurances can be given that any of the events anticipated by the forward looking statements will transpire or occur. Except as required by law, Ember undertakes no obligation to update or revise any forward-looking statements. Additional information on these and other factors that could affect the Company's operations or financial results are included in the Company's filings with Canadian securities regulatory authorities.

Ember Resources Inc. is a resource company specializing in coalbed 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".

Contact Information

  • Ember Resources Inc.
    Mr. Douglas A. Dafoe
    President & CEO
    403 270-0803
    403 270-2850 (FAX)
    or
    Ember Resources Inc.
    Mr. Terry S. Meek
    Executive Vice-President & COO
    403 270-0803
    403 270-2850 (FAX)
    or
    Ember Resources Inc.
    Mr. Bruce C. Ryan
    Vice-President Finance & CFO
    403 270-0803
    403 270-2850 (FAX)