HFG Holdings Inc.
TSX VENTURE : HFG.P

December 15, 2008 20:22 ET

HFG Holdings Inc. Announces Filing of Filing Statement Regarding Acquisition of Certain Montney Assets of Sabretooth Energy Ltd. as Its Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Dec. 15, 2008) -

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HFG Holdings Inc. ("HFG") (TSX VENTURE:HFG.P) is pleased to announce that, further to its news release of November 26, 2008, it has entered into an acquisition agreement (the "Agreement") dated effective December 15, 2008 with Sabretooth Energy Ltd. ("Sabretooth"), an Alberta company, for the acquisition (the "Transaction") of 59 net sections of Montney petroleum and natural gas rights located in Northeastern British Columbia and Northwestern Alberta and a $1.0 million tie-in commitment at Red Creek in addition to certain Montney wells and seismic information (collectively, the "Assets"). It is anticipated that the Transaction will constitute HFG's Qualifying Transaction pursuant to the applicable policies of the TSX Venture Exchange (the "Exchange") and, in that regard, HFG has posted a filing statement dated December 15, 2008 under its profile on www.sedar.com, which describes the Transaction in greater detail.

The common shares of HFG, halted November 26, 2008, will return to trading effective as of market open on December 16, 2008. From and after the closing of the Transaction, the trading in the common shares will be halted for four months and one day after which they will return to trading. The Exchange has granted its conditional approval to close the Transaction. The expected closing date of the Transaction is December 24, 2008 and in any event not later than December 31, 2008.

Pursuant to the terms of the Transaction, HFG will acquire the Assets of Sabretooth for $31.3 million in exchange for 156,546,590 common shares of HFG at a deemed issue price of $0.20 per common share. In addition, as a condition of the Transaction, Sabretooth has agreed to subscribe for $1.0 million of common shares of HFG at a deemed issue price of $0.20 per common share (the "Sabretooth Private Placement"). The common shares of HFG to be issued to Sabretooth under the Transaction and the Sabretooth Private Placement will be issued pursuant to exemptions from the prospectus requirements of applicable securities legislation, will be subject to resale restrictions as required under applicable securities legislation and will be subject to escrow conditions as required by the Exchange.

Contemporaneously with closing of the Transaction, HFG will complete a private placement of common shares issued on a flow-through basis pursuant to the provisions of the Income Tax Act (Canada) at a price of $0.25 per common share for gross proceeds of approximately $15.0 million (the "Private Placement"). Dundee Securities Corporation, as lead agent, together with Tristone Capital Inc. and Research Capital Corporation (collectively, the "Agents") have been retained as the agents for the Private Placement on a best efforts basis. The Agents will receive compensation in the amount of 6.0% of the gross proceeds of the Private Placement. The common shares of HFG to be issued under the Private Placement will be issued pursuant to exemptions from the prospectus requirements of applicable securities legislation and will be subject to resale restrictions as required under applicable securities legislation.

Upon closing of the Transaction, HFG will have no debt and an aggregate of approximately $15.2 million (net of fees and expenses of the Private Placement and the Transaction) of capital available, which will be used to fund its Montney exploration projects, tie-in expenses and G&A.

HFG would also like to announce the resignation of J.G. (Jeff) Lawson as a director of HFG effective December 12, 2008.

Sabretooth is a public oil and gas exploration and development company, located in Calgary, Alberta and carrying out operations in Western Canada. Sabretooth trades on the Toronto Stock Exchange under the symbol "SAB".

HFG, a capital pool company within the meaning of the policies of the Exchange, was incorporated in March 2007 and was listed on the Exchange in November 2007. HFG does not have any operations and has no assets other than cash. HFG's business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction under the policies of the Exchange. HFG has been granted an exemption from the applicable sponsorship requirements of the Exchange.

Except for statements of historical fact, all statements in this news release, including, but not limited to, statements regarding future plans, objectives and payments are forward-looking statements that involve various risks and uncertainties.

Investors are cautioned that, except as disclosed in the filing statement prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

FORWARD LOOKING INFORMATION

Certain information in this news release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among other things, information with respect to HFG's beliefs, plans, expectations, anticipations, estimates and intentions, the completion of a private placement of common shares by HFG, HFG's acquisition of certain assets of Sabretooth in exchange for common shares of HFG pursuant to prospectus and registration exemptions, the execution of a definitive agreement for the Transaction, the establishment of a new HFG board of directors, and the activities of HFG after the Transaction. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes HFG's expectations as of the date of this news release.

The results or events anticipated or predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from such forward-looking information include, among others, risks arising from general economic conditions and adverse industry events, risks arising from operations generally, reliance on contractual rights such as licences and leases in the conduct of its business, reliance on third parties, reliance on key personnel, possible failure of the business model or business plan or the inability to implement the business model or business plan as planned, competition, environmental matters, and insurance or lack thereof.

HFG cautions that the foregoing list of material factors is not exhaustive. When relying on HFG's forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. HFG has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF HFG AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE HFG MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • HFG Holdings Inc.
    Timothy Halter
    Chief Executive Officer, Chief Financial Officer & Director
    (972) 233-0300
    (904) 455-7337 (FAX)
    Email: thalter@halterfinancial.com