Maple Leaf Royalties Corp.

Maple Leaf Royalties Corp.

November 20, 2015 09:20 ET

Maple Leaf Royalties Corp. Announces Arrangement with Eagle Energy Trust

CALGARY, ALBERTA--(Marketwired - Nov. 20, 2015) -


Maple Leaf Royalties Corp. ("Maple Leaf") (TSX VENTURE:MPL) is pleased to announce that it has entered into a binding arrangement agreement (the "Arrangement Agreement") with Eagle Energy Trust (the "Trust" or "Eagle") pursuant to which Eagle will acquire all of the issued and outstanding shares of Maple Leaf by way of a plan of arrangement (the "Arrangement"). Eagle will also convert into a dividend-paying corporation ("New Eagle") as part of the Arrangement.

Eagle is an oil and gas energy trust which owns and operates oil and gas properties in both the U.S. and Canada. Current assets include a 50% interest in the Montney C Pool in the Dixonville field of northern Alberta, Pekisko-focused production in the Twining field of southern Alberta, and operations in the Salt Flat and Hardeman properties of Texas and Oklahoma. Eagle's units are traded on the TSX under the symbol "EGL.UN". New Eagle, which will be called "Eagle Energy Inc.", will operate the existing businesses of the Trust and its subsidiaries and of Maple Leaf. The existing board and management of Eagle will become the board and management of New Eagle. Subject to approval of the Toronto Stock Exchange, it is expected that New Eagle will be listed on the Toronto Stock Exchange under the trading symbol EGL.

Under the terms of the Arrangement Agreement, all of Maple Leaf's issued and outstanding common shares will be exchanged for common shares of New Eagle on the basis of 0.0947 New Eagle shares for each Maple Leaf share. In addition, each Eagle unit will be exchanged for common shares of New Eagle on a one for one basis. Upon completion of the Arrangement, existing Maple Leaf shareholders and Eagle unitholders will own approximately 18% and 82% of New Eagle, respectively.

Based on the closing price of Eagle's units on the TSX of $1.72 on November 18, 2015, the exchange ratio implies consideration of $0.163 per Maple Leaf share which represents a premium of approximately 36% to the closing price of Maple Leaf's shares of $0.12 on November 18, 2015 and a premium of approximately 30% based on the volume weighted average prices of each entity for the 20 trading day period ending on November 18, 2015. Based on the exchange ratio and the November 18, 2015 closing price of Eagle units, the total consideration payable to Maple Leaf's shareholders in exchange for their Maple Leaf Shares will be $12.3 million. Additional transaction costs and assumption of working capital are expected to be incurred by Eagle as part of the Arrangement.

The mailing of a joint management information circular to Maple Leaf shareholders and the Trust unitholders is expected to occur on or about December 21, 2015, for special meetings of the securityholders of each of Maple Leaf and Eagle that are expected to be held on or about January 25, 2016, with closing expected to occur shortly thereafter.

"Maple Leaf views the proposed transaction with Eagle as highly positive for Maple Leaf shareholders. In this challenging oil and gas environment, scale is very important," commented Maple Leaf CEO Dan Gundersen. "Eagle has a high quality management team, reasonable leverage ratios, and a production base with a low decline profile. These attributes lead us to believe that the combined entity is well positioned to navigate this stage of the business cycle and, importantly, likely to perform well as market conditions improve."

Maple Leaf's shareholders will benefit from the transaction through:

  • An immediate up-front premium, while maintaining exposure to future value creation through meaningful equity participation in the combined entity;
  • Access to an attractive dividend;
  • Expanded asset base and asset diversification;
  • Significantly increased trading liquidity and broadened capital markets profile; and
  • Estimated combined Canadian tax pools of $194 million.

Additional information regarding certain pro-forma metrics in respect of New Eagle are included in Eagle's news release dated November 19, 2015.

Details of the Arrangement

The Arrangement will occur pursuant to a statutory plan of arrangement under section 193 of the Business Corporations Act (Alberta). Under the Arrangement, Maple Leaf shareholders will receive 0.0947 common shares of New Eagle for every common share of Maple Leaf held on the closing of the Arrangement.

The Arrangement contemplates that Maple Leaf will continue (the "Continuance") from British Columbia to Alberta under the Business Corporations Act (Alberta).

Also, under the Arrangement, Eagle will convert from a trust into a corporation. Eagle unitholders will receive one common share of New Eagle in exchange for every unit of the Trust held on the effective date of the Arrangement.

The Arrangement is subject to the approval of the Court of Queen's Bench of Alberta and of not less than 66 2/3% of the votes cast by Maple Leaf shareholders and Eagle unitholders at the respective securityholder meetings called to approve, among other things, the Arrangement. The Arrangement is also subject to obtaining approval by way of a majority of votes cast by shareholders of Maple Leaf after excluding votes cast in respect of Maple Leaf shares over which certain directors and officers of Maple Leaf exercise control or direction in accordance with Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions. Officers and directors of Maple Leaf, representing approximately 11% of the Maple Leaf shares, have entered into voting support agreements, pursuant to which they will vote their common shares held in favour of the Arrangement and related matters. The Arrangement Agreement includes in favour of Eagle customary deal-protection provisions including non-solicitation provisions, a right to match competing offers and a $350,000 termination fee payable to Eagle under certain circumstances. In addition, the Arrangement Agreement also provides for a $350,000 termination fee payable to Maple Leaf under certain circumstances.

Full details of the Arrangement will be included in the joint information circular of Maple Leaf and Eagle expected to be mailed to their respective securityholders in December 2015, for special meetings of securityholders that are expected to be held on or about January 25, 2016. Closing of the Arrangement is expected to occur shortly thereafter. The Arrangement is also subject to various customary commercial conditions, including the receipt of regulatory approvals, which include the approval of the TSX Venture Exchange, The Toronto Stock Exchange and the continuance of Maple Leaf from British Columbia to Alberta under the Business Corporations Act (Alberta).

If the Eagle unitholders approve the Arrangement, but Maple Leaf shareholders do not, Eagle still intends to proceed with the conversion of the trust into a corporation.

Complete details of the terms of the Plan of Arrangement are set out in the Arrangement Agreement that will be filed by Maple Leaf under its issuer profile on SEDAR (

Fairness Opinion

The Special Committee of the Board of Directors of Maple Leaf retained Paradigm Capital Inc. ("Paradigm") to act as its financial advisor in connection with the Arrangement. Pursuant to this mandate, Paradigm provided the Special Committee with its verbal opinion that the consideration to be received by shareholders of Maple Leaf pursuant to the Arrangement is fair, from a financial point of view, to such shareholders. The full text of Paradigm's fairness opinion, along with the assumptions, limitations and considerations upon which it was based, will be appended to the joint management information circular and proxy statement to be mailed to Maple Leaf's shareholders.

Recommendations of the Board of Directors

The Board of Directors of Maple Leaf has determined that the Arrangement and the Continuance is in the best interests of Maple Leaf and its shareholders. The Board of Directors unanimously recommends that shareholders approve the Arrangement and the Continuance. The verbal opinion from Paradigm referred to above was one of a number of factors taken into consideration by the Board of Directors in supporting its determination that the Arrangement is in the best interests of Maple Leaf and its shareholders.

Advisors and Counsel

Paradigm acted as financial advisor to the Special Committee and DLA Piper (Canada) LLP acted as legal advisor to Maple Leaf.


Not an Offering under US Securities Laws

The securities of New Eagle that will be received by securityholders of Maple Leaf and the Trust in exchange for securities of Maple Leaf and the Trust, respectively, under the Arrangement 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 U.S. state securities laws and may not be offered or sold in the United States absent registration or an available exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Note Regarding Forward-Looking Statements

Certain information provided in this news release constitutes forward-looking statements. Specifically, this news release contains forward-looking statements relating to the Arrangement, including but not limited to the anticipated benefits of the Arrangement for Maple Leaf and its shareholders; estimated reserves; estimated tax pools; the expectation that the New Eagle will pay monthly dividends; receipt of court, security holder and regulatory approvals of the Arrangement; acquisition costs; and completion of the customary Arrangement closing conditions.

Assumptions have been made regarding, among other things, receipt of security holder, regulatory and court approval of the Arrangement will be obtained, future crude oil, natural gas liquid and natural gas prices and weighting; future recoverability of reserves; future capital expenditures; and estimates of anticipated future production, which is based on the proposed drilling program with a success rate that, in turn, is based upon historical drilling success and an evaluation of the particular wells to be drilled; future distribution and dividend levels and the regulatory framework governing taxes in the US and Canada. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect.

Actual results achieved will vary from the information provided in this news release as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in Maple Leaf's Canadian securities filings, including its Annual Information Form dated April 30, 2015 available on Maple Leaf's website at or on SEDAR at Such factors include, but are not limited to: the failure to obtain necessary Eagle or Maple Leaf security holder, regulatory or court approval of the Arrangement; the failure to satisfy the conditions to closing the Arrangement; general economic, market and business conditions; risks associated with oil and gas operations; fluctuations in oil and natural gas prices; the uncertainty of reserve estimates; and other factors, many of which are beyond the control of Maple Leaf. There is no representation by Maple Leaf that actual results achieved will be the same as those forecast. Except as may be required by applicable securities laws, Maple Leaf assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise.

Oil and Gas Measures and Estimates

This news release contains disclosure expressed as "boe" or "boe/d". All oil and natural gas equivalency volumes have been derived using the conversion ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio 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 well head. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf:1 bbl would be misleading as an indication of value.

About Maple Leaf

Maple Leaf is a company focused on oil and gas royalty interests in Canada. Maple Leaf owns royalties on oil and gas production with its current asset base concentrated in west central Alberta and including a mixture of oil, natural gas, and natural gas liquids from numerous producing wells. Common shares of Maple Leaf are traded on the TSX Venture Exchange under the symbol MPL.

About Eagle

Eagle is an energy trust owning stable, oil producing properties with development and exploitation potential located in both the United States and Canada. Eagle strives to deliver predictable monthly income from a sustainable business which delivers stable production and overall growth through accretive acquisitions. Eagle's units are traded on the Toronto Stock Exchange under the symbol EGL.UN.

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

  • Dan Gundersen
    Chief Executive Officer
    Maple Leaf Royalties Corp.
    (403) 852-4423

    Adam Thomas
    Maple Leaf Royalties Corp.
    (403) 830-7995