Glamis Resources Ltd.

Glamis Resources Ltd.

July 15, 2009 18:44 ET

Glamis Resources Ltd. Announces Recapitalization Transaction and New Management Group

CALGARY, ALBERTA--(Marketwire - July 15, 2009) - Glamis Resources Ltd. ("Glamis") (TSX VENTURE:GLM.A) (TSX VENTURE:GLM.B) is pleased to announce that it has entered into a reorganization and investment agreement (the "Agreement") with Trent Yanko, Paul Colborne, Dale Mennis and Matt Janisch (the "Investor Group") which provides for up to approximately $15.6 million non-brokered private placement (the "Private Placement"), the appointment of a new management team and board of directors (the "New Management Group") and a rights offering to the current holders of Class A Shares of Glamis (the "Rights Offering"). Among other conditions, the Private Placement, the Rights Offering and the appointment of the New Management Group is subject to the approval of the TSX Venture Exchange (the "TSXV").

New Management Group

The New Management Group will be appointed upon the completion of the Private Placement or earlier in the event that the closing of the portion of the Private Placement being subscribed for by the New Management Group is completed in escrow pending receipt of approval of the Private Placement by the shareholders of Glamis.

The New Management Group will be led by Trent Yanko as President and Chief Executive Officer, Matt Janisch as Vice-President, Finance and Chief Financial Officer, Curtis Labelle as Vice-President, Production and Dale Mennis as Vice-President, Land. The new Board of Directors of Glamis will be comprised of Paul Colborne as Chairman, Trent Yanko, James Pasieka, Randal Brockway, James Bertram and Scott Dawson. Scott Dawson is currently a director of Glamis.

The New Management Group has a solid track record of creating value in high-growth, junior oil and gas companies. Trent Yanko has over 20 years experience in the founding, technical management and leadership of a number of private and public oil and gas companies. Mr. Yanko was most recently President and Chief Executive Officer of Mission Oil & Gas Inc., which grew from 500 boe/d to more than 7,000 boe/d in two years, primarily due to its success in the Bakken light oil resource play in southeast Saskatchewan, before being sold to Crescent Point Energy Trust for $670 million in February 2007. Before Mission, Mr. Yanko was Vice-President, Production of StarPoint Energy Ltd., helping grow production from 250 boe/d to 9,000 boe/d in 13 months. Matt Janisch has over 25 years of oil and gas and financial experience and was most recently Executive Vice-President and Chief Financial Officer of Bow Valley Energy Ltd., an international oil and gas producer, and has twelve years of investment banking and equity research experience with BMO Capital Markets. Curtis Labelle is a Professional Engineer with over 27 years experience, most recently as Vice-President, Operations of Bonus Resources Ltd. Dale Mennis has over 25 years of varied industry experience, including a role as Vice-President, Exploration and Development for Calpine Canada Holdings Ltd.. Mr. Mennis was most recently Vice-President, Business Development & Land for Daylight Resources Trust.

Paul Colborne is currently the President of StarValley Oil and Gas Ltd., a private, Calgary-based oil and gas company and also the Chairman of TriStar Oil & Gas Ltd., a 24,000 boe/d publicity traded oil and gas company. He serves on the Board of Directors of Crescent Point Energy Corp., Breaker Energy Ltd., Twin Butte Energy Ltd., Westfire Energy Ltd., Priviti Capital Corporation and Seaview Energy Inc. Mr. Colborne is the former President and CEO of StarPoint Energy Trust, Crescent Point Energy Ltd. and Startech Energy Ltd.

Randal Brockway is a Chartered Accountant and independent businessman since July 2004 and is currently the President of Carvis Holdings Inc., a private holding company. Previously, Mr. Brockway was Vice President, Finance and CFO of Cequel Energy Inc., and Vice President, Finance and CFO of Cypress Energy Inc. Mr. Brockway was also the former Senior Vice President, Finance and CFO of Big Bear Exploration Ltd., and the former Vice President, Finance and CFO of Stampeder Exploration Ltd.

Jim Pasieka is a partner with the Calgary office of Heenan Blaikie LLP and has extensive experience in structuring and negotiating transactions for capital projects, joint ventures, corporate financings, mergers, acquisitions and divestitures. Currently, Mr. Pasieka practices in all segments of the energy sector, in corporate/commercial law generally, and in corporate finance, including early-stage and venture capital financing, mergers, acquisitions and take-overs, and has excellent experience in Alberta's electricity sector as well. Mr. Pasieka is an officer and director of a number of public energy companies, as well as chairman of the board of several oil and gas companies.

Jim Bertram is President & CEO of Keyera Facilities Income Fund, an integrated energy company focused on the natural gas midstream and marketing business in Canada. Previously, Mr. Bertram was employed at Gulf Canada as Vice President - Marketing for Gulf Canada's worldwide operations. Prior to joining Gulf Canada, he was Vice President - Marketing of Amerada Hess Canada Ltd. for seven years. Mr. Bertram has over 25 years experience in the oil and gas industry.

Mr. Dawson is a Professional Engineer with over 26 years of extensive experience in Western Canadian oil and natural gas engineering. Mr. Dawson is the President and CEO of Open Range Energy Corp. Previously he was President and CEO of Tempest Energy Corp. and led Tempest to a plan of arrangement with Daylight Energy Trust and the formation of Open Range in November, 2005. Previously Mr. Dawson was co-founder, President and CEO of Tier One Energy Corp., a public oil and gas company, which commenced operations in 1996 and was sold in 1999.

It is anticipated that the shareholders of Glamis will be asked to approve a change of the company's name to Legacy Oil & Gas Inc. at the next meeting of shareholders.

Private Placement

Pursuant to the Private Placement, the Investor Group, together with certain additional subscribers identified by the Investor Group, will subscribe for up to 27,663,995 units ("Units") of Glamis at a price of $0.38 per Unit and up to 13,341,668 class A shares of Glamis ("Class A Shares") at a price of $0.38 per Class A Share for total proceeds to Glamis of approximately $15.6 million. Each Unit will be comprised of one Class A Share and one share purchase warrant ("Warrant") entitling the holder to purchase one Class A Share at a price of $0.54 for a period of five years. The Warrants will vest and become exercisable as to one-third upon the 20 day weighted average trading price of the Class A Shares ("Market Price") equaling or exceeding $0.80, an additional one-third upon the Market Price equaling or exceeding $1.10 and a final one-third upon the Market Price equaling or exceeding $1.40.

The Units issued under the Private Placement will be issued to members of the New Management Group and other prospective service providers of Glamis and will be subject to contractual escrow with one-third of such Units released each year following the closing date of the Private Placement. It is anticipated that the members of the New Management Group will purchase an aggregate of approximately 24,117,320 Units under the Private Placement with the result that they will hold approximately 32.71% of the basic outstanding Class A Shares and 44.39% of the Class A Shares on a fully-diluted basis following the completion of the Private Placement and after giving effect to the Rights Offering, assuming that all of the rights issued thereunder are exercised.

The Class A Shares issued under the Private Placement will be issued to third party investors and will be subject to contractual escrow with one third of such Class A Shares released each six months following the closing date of the Private Placement.

The proceeds of the Private Placement will be used to pay down debt and for general corporate purposes.

Rights Offering

The Agreement also provides that, subject to Glamis receiving the Written Consent (as defined below) on or before July 29, 2009, Glamis will initiate the Rights Offering by way of a rights offering circular pursuant to which holders of Class A Shares as at the record date for the Rights Offering (the "Record Date") will, in respect of each Class A Share held, be issued one right to purchase Class A Shares. Each four rights will entitle the holder to purchase one Class A Share at an exercise price to be determined by the board of directors of Glamis prior to the Record Date and approved by the TSXV. The exercise price under the Rights Offering shall, subject to board of directors and regulatory approval be $0.38, being equal to the price of the Units and Class A Shares under the Private Placement. The number of Class A Shares to be issued pursuant to the Rights Offering is the maximum permitted by applicable securities laws to be issued pursuant to a rights offering circular. Subscribers for Class A Shares or Units pursuant to the Private Placement will not be entitled to participate in the Rights Offering with respect to any securities acquired under the Private Placement. The Rights Offering is subject to applicable regulatory approval, including the approval of the TSXV.

Shareholder and Stock Exchange Approvals

Completion of the Private Placement is subject to a number of conditions and approvals including, but not limited to, the approval of the TSXV. Under the policies of the TSXV, the completion of the Private Placement would result in the creation of a Control Person and accordingly, unless such requirement is waived by the TSXV, is subject to the approval of the shareholders of Glamis. The required disinterested shareholder approval may be obtained by Glamis either by receipt of written consents by holders of more than 50% of the issued and outstanding voting shares of Glamis (the "Written Consent") or by approval of a resolution at a special meeting of shareholders (the "Glamis Meeting"). Pursuant to the Agreement, Glamis has agreed to obtain the Written Consent on or before July 29, 2009, failing which the Investor Group has the right to terminate the Agreement. In the event that the Written Consent is not obtained on or before July 29, 2009, Glamis has agreed to convene and hold the Glamis Meeting on or before September 11, 2009.

Board of Directors Recommendation

The board of directors of Glamis has determined that the transactions contemplated by the Agreement are in the best interests of its shareholders, unanimously approved such transactions and recommends that the shareholders approve the Private Placement and execute the Written Consent. Any shareholder of Glamis wishing to obtain and execute the Written Consent should contact Glamis as set out below.

The board of directors and officers of Glamis, who, in the aggregate, control approximately 15.18% of the Class A Shares and 4.25% of the Class B Shares of Glamis, have entered into support agreements or agreed to enter into support agreements pursuant to which they have agreed, among other things, to approve the Private Placement.

The Agreement

The Agreement contains a number of customary representations, warranties and conditions and provides for a reciprocal non-completion fee of $400,000 payable by either Glamis or the Investor Group to the other party in certain circumstances. The complete Agreement will be accessible on Glamis' SEDAR profile at

Financial Advisors

National Bank Financial Inc. is acting as financial advisor to Glamis with respect to the Private Placement, and has provided the board of directors of Glamis an opinion that the consideration to be received by Glamis pursuant to the transactions contemplated by the Agreement is fair, from a financial point of view, to Glamis.

Macquarie Capital Markets Canada Ltd. and GMP Securities L.P. are acting as co-financial advisors and FirstEnergy Capital Corp. is acting as strategic advisor to the New Management Group with respect to the Agreement.

Strategic Rationale and Corporate Strategy

The New Management Group believes that downturn in the Canadian energy sector that resulted from the dramatic drop in oil and gas prices from their 2008 highs has created an attractive entry point in the cycle. In the wake of this downturn, existing companies, especially the micro-cap and junior producers, are dealing with reduced cashflows, tightened to non-existent access to capital and stretched balance sheets. At the same time, decreased industry activity has resulted in the drop in the cost of services, materials and land.

The New Management Group believes that the number of consolidation opportunities, the reduced capital and operating cost structure and the leverage to any potential oil price increase, create an excellent initiation point for a new, high-growth junior oil and gas company. The New Management Group represents an experienced management team with a proven track record of aggressively growing oil and gas companies on a cost-effective per share basis. The recapitalized Glamis will be strategically focused on both a geographic and commodity basis and will maintain prudent fiscal management which will allow us to be well-positioned to profit from the current environment. The New Management Group believes that a strategic imperative exists to aggressively grow the company to a size that, when combined with high-netback production and a strong balance sheet, will differentiate Glamis from our peer-group competitors.

Following completion of the Private Placement, Glamis expects to focus on predominately light oil opportunities in Saskatchewan and Manitoba, growing through a targeted acquisition and consolidation strategy coupled with development and exploration drilling. The Glamis light oil production base (current production approximately 525 boe/d) and recapitalized corporate structure will allow for the exploitation of the current drilling inventory and expansion of the company's opportunity suite through internally generated prospects and strategic light oil acquisitions.

The New Management Group expects Glamis to become one of the few publicly traded, light oil focused companies in the Canadian junior oil and gas sector and will be one of the only companies that will be operating in provincial jurisdictions with more certain and favourable royalty regimes. The recapitalized Glamis represents an opportunity to participate in a uniquely positioned, well-capitalized junior oil and gas company with a proven management team committed to aggressive, cost-effective growth of light oil reserves and production in Saskatchewan and Manitoba.

About Glamis Resources Ltd.

Glamis Resources Ltd. is a junior oil and gas company formed to generate and develop its own prospects, acquire oil and gas properties and participate with joint venture partners in oil and gas exploration and development in the Western Canadian Sedimentary Basin. Glamis' Class A Shares and Class B Shares trade on the TSX Venture Exchange under the symbols GLM.A and GLM.B. Glamis currently has 24,257,109 Class A shares and 922,500 Class B shares outstanding.

Note Regarding Forward Looking Statements

This document contains forward-looking statements. More particularly, this document contains statements concerning the completion of the transactions contemplated by the Agreement.

The forward-looking statements are based on certain key expectations and assumptions made by Glamis, including expectations and assumptions concerning timing of receipt of required shareholder and regulatory approvals and third party consents and the satisfaction of other conditions to the completion of the transactions.

Although Glamis 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 Glamis can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. 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 that required shareholder, regulatory and third party approvals and consents are not obtained on terms satisfactory to the parties within the timelines provided for in the Agreement and risks that other conditions to the completion of the transactions are not satisfied on the timelines set forth in the Agreement or at all.

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

The term "boe" may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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 accuracy of this release.

Contact Information

  • Glamis Resources Ltd.
    Brent McKercher
    President & CEO
    (403) 265-7200 ext. 222
    (403) 265-7150 (FAX)
    Glamis Resources Ltd.
    Trent Yanko
    (403) 265-7200
    (403) 265-7150 (FAX)
    Glamis Resources Ltd.
    440, 333 - 5th Avenue SW
    Calgary, AB T2P 3B6