TORONTO, ONTARIO and JERSEY, CHANNEL ISLANDS--(Marketwire - Nov. 8, 2012) -
Not for distribution to United States wire services or dissemination in the United States. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Longreach Oil and Gas Limited (TSX VENTURE:LOI) ("Longreach") and APIC Petroleum Corporation (TSX VENTURE:API) ("APIC") are pleased to announce that APIC, Longreach and a wholly owned subsidiary of APIC incorporated in Jersey, Channel Islands ("Jersey") have entered into an arrangement agreement dated November 7, 2012 (the "Arrangement Agreement") and APIC has obtained an interim court order from the Royal Court of Jersey, Channel Islands, Samedi Division (the "Royal Court") with respect to a proposed scheme of arrangement (the "Arrangement") between APIC and Longreach in accordance with the laws of Jersey.
The Arrangement Agreement was entered into to provide for the Arrangement which will involve, among other things, the transfer of the whole of the undertaking, property and liabilities of APIC to Longreach, with Longreach being the surviving legal entity and APIC dissolving and de-listing from the TSXV.
The terms of the Arrangement Agreement will be summarized in APIC's management information circular (the "Circular") which will be filed and mailed to APIC's shareholders in connection with its special meeting referred to below.
In connection with entering into the Arrangement Agreement, all of the directors of APIC, together with certain significant shareholders of APIC who together own or control an aggregate of approximately 33 million shares of APIC ("APIC Shares") representing approximately 42% of the issued and outstanding APIC Shares, entered into a voting agreement with Longreach in respect of the Arrangement, pursuant to which, among other things, such directors and shareholders agreed to vote their shares in favour of any resolutions as may be required to approve or implement the Arrangement.
Interim Court Order and Special Meeting of APIC Shareholders
On November 2, 2012, APIC received an interim order from the Royal Court ordering, among other things, that APIC hold a meeting of shareholders to approve the Arrangement. A special meeting of shareholders of APIC is scheduled to be held on Tuesday, December 4, 2012 at 8:00 a.m. (Toronto time), to approve, among other things, the continuance of APIC into Jersey and the Arrangement. Should the Arrangement be approved by the requisite majority at the special meeting of shareholders, APIC will seek the sanction of the Royal Court of the Arrangement in a final court hearing described below.
Court Hearing for Final Order
A hearing of the application (the "Final Hearing") to seek a final order (the "Final Order") sanctioning the Arrangement will be held on December 19, 2012 at 10:00 a.m. (Jersey, Channel Islands time) at the Royal Court, located at the Royal Court Building, Royal Square, St. Helier, Jersey, Channel Islands JE1 1BA. An earlier court date was requested to hear the Final Order application, however due to scheduling issues outside the control of APIC, the earliest date which the Royal Court could hear the matter was December 19, 2012. The closing of the Arrangement is expected to occur on or about December 20, 2012.
APIC shareholders have a right to appear and be heard at the Final Hearing provided that they have filed with the Royal Court and served upon the Jersey advocates for APIC and Longreach their written materials, on or before the close of business on the December 17, 2012 (Jersey, Channel Islands time). Details of the requirements for APIC shareholders appearing at the Final Hearing are set out in the Circular and in the Chairman's letter accompanying the Circular.
Subscription Receipts Financing
In connection with the Arrangement, as previously disclosed by press release on November 1, 2012, APIC completed a non-brokered offering ("Offering") of subscription receipts ("Subscription Receipts") on October 31, 2012. An aggregate of 230,786,918 Subscription Receipts were sold under the Offering at a price of C$0.13 per Subscription Receipt for total gross proceeds of C$30,002,299.73. At the special meeting, APIC shareholders will be asked to ratify the Offering and the participation of certain APIC insiders in the Offering.
The joint press release of APIC and Longreach dated November 1, 2012 stated that Mr. Sheldon Inwentash had subscribed for 3,500,000 Subscription Receipts, when in fact he has control and direction over a total of 7,000,000 Subscription Receipts, with 3,500,000 Subscription Receipts owned by an associate of Mr. Inwentash and 3,500,000 Subscription Receipts owned by Pinetree Resources Partnership.
Details of Arrangement
The Arrangement will result in: (i) each holder of APIC Shares being issued one (1) share of Longreach ("Longreach Share") for every 5.3846 APIC Shares (the "Exchange Ratio"); (ii) each holder of options to purchase APIC Shares ("APIC Options") being issued one (1) option to purchase Longreach Shares pursuant to the Longreach's stock option plan ("Replacement Options") in exchange for every 5.3846 APIC Options in accordance with the Exchange Ratio (and the price of each Replacement Option being the price of the former APIC Option exchanged therefor multiplied by the Exchange Ratio); and (iii) each holder of warrants to purchase APIC Shares ("APIC Warrants") being issued one (1) warrant to purchase Longreach Shares ("Replacement Warrants") in exchange for every 5.3846 APIC Warrants in accordance with the Exchange Ratio (and the price of each Replacement Warrant being the price of the former APIC Warrant exchange therefor multiplied by the Exchange Ratio). The Arrangement is subject to the satisfaction or waiver of the conditions set out in the Arrangement Agreement, including, among other things, the continuance of APIC as a corporation from Canada to Jersey, and obtaining all regulatory and shareholder approvals.
Pursuant to the Arrangement, approximately 854,288 Replacement Options with an exercise price of approximately $1.18 will be issued to holders of APIC Options in exchange for 4,600,000 APIC Options with an exercise price of $0.22 and approximately 579,430 "in-the-money" Replacement Options with an exercise price of approximately $0.54 will be issued to holders of APIC Options in exchange for 3,120,000 "in-the money" APIC Options with an exercise price of $0.10. In addition, pursuant to the Arrangement, approximately 580,358 Replacement Warrants with an exercise price of approximately $0.65 will be issued to holders of APIC Warrants in exchange for 3,125,000 APIC Warrants with an exercise price of $0.12.
On completion of the Arrangement, current holders of Longreach Shares will hold approximately 23,465,398 Longreach Shares, current holders of APIC shares will hold approximately 14,503,197 Longreach Shares and holders of Subscription Receipts will hold approximately 42,860,550 Longreach Shares, representing approximately 29.03%, 17.94% and 53.02%, respectively, of the outstanding Longreach Shares on a non-diluted basis.
The Exchange Ratio of 5.3846 was negotiated at arm's length between the parties and it was based on the prevailing market prices of each of Longreach and APIC's share prices over a significant period of time. The fair market value of the parties' share prices of $0.70 for the Company and $0.13 for APIC was determined by Longreach and APIC by looking to a number of variables including the volume-weighted average price of the shares of APIC and the Company over different periods of time.
On completion of the Arrangement, Dennis A. Sharp will be named Executive Chairman of the board of Longreach, Andrew Benitz, currently Chief Operating Officer of Longreach, will be named Chief Executive Officer of Longreach and Thomas Vukovich will be appointed to the board of Longreach (and within 30 days from the date of the completion of the Arrangement, one director on the board of Longreach will resign resulting in a board of eight directors).
CAUTIONARY STATEMENTS RE FORWARD-LOOKING INFORMATION
Statements in this press release contain forward-looking information within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "contemplates", "intends", "plan", "expect", "project", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to completion of the Arrangement, the receipt of APIC shareholder approval, the continuance of APIC into Jersey and the Final Hearing and granting of the Final Order. Readers are cautioned that assumptions used in the preparation of forward-looking information may prove to be incorrect. Although Longreach and APIC each believes that the expectations reflected in the forward-looking information is reasonable, there can be no assurance that such expectations will prove to be correct. Neither Longreach nor APIC can guarantee future results, level of activity, or performance of achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of Longreach and APIC) that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to, the risks that the parties will not proceed with the Arrangement and associated transactions, that the ultimate terms of the Arrangement and associated transactions will differ from those that currently are contemplated, and that the Arrangement and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). Industry related risks could include, but are not limited to: operations with foreign entities; delays or changes in plans; competition for, among other things, capital, acquisitions, skilled personnel and supplies; governmental regulation of the oil and gas industry; technical problems; the uncertainty of estimates and projections of costs and expenses; unanticipated operating events or performance which can reduce productivity; the need to obtain required approvals from regulatory authorities; stock market volatility; liabilities inherent in oil and gas operations; access to capital; and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The statements in this news release are made as of the date of this release. Neither Longreach nor APIC undertakes any obligation to comment on analyses, expectations or statements made by third parties in respect of either of them, or their respective financial or operating results or (as applicable), their securities.
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.