Phoenix Oilfield Hauling Inc.
TSX VENTURE : PHN

Phoenix Oilfield Hauling Inc.

November 07, 2011 15:52 ET

Phoenix Oilfield Hauling Inc. Announces Recapitalization Transaction and Private Placement to Management

CALGARY, ALBERTA--(Marketwire - Nov. 7, 2011) -

THIS PRESS RELEASE IS NOT TO BE DISTRIBUTED TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Phoenix Oilfield Hauling Inc. ("Phoenix" or the "Company") (TSX VENTURE:PHN) is pleased to announce that it has entered into a non-binding letter of intent with Werklund Capital Corporation ("WCC"), a related party of Phoenix, with respect to a non-brokered private placement to WCC of (i) 38,500,000 common shares in the capital of the Company ("Common Shares") at a price of $0.08 per Common Share and (ii) secured convertible debentures ("Convertible Debentures") in the principal amount of $4,620,000, for combined gross proceeds of $7,700,000 (the "Recapitalization Transaction"). Phoenix has formed a special committee of the board of directors (the "Special Committee") for the purpose of reviewing the proposed Recapitalization Transaction. The Special Committee has retained Raymond James Ltd. as its financial advisor.

The Convertible Debentures will have a term of three (3) years, will bear interest at a rate of 4% per annum, payable quarterly in arrears, and will be convertible into Common Shares at a price of $0.085 per Common Share. The Convertible Debentures will be secured by way of a general security interest against all present and after acquired property of the Company and will be subordinate to the interests of the Company's senior lenders.

The Common Shares and Convertible Debentures issued pursuant to the Recapitalization Transaction will be subject to a four (4) month hold period in accordance with applicable Canadian securities laws. WCC will receive a work fee of $115,500 in connection with the Recapitalization Transaction.

WCC is a related party of Phoenix because David Werklund, the principal of WCC, is a director and interim officer of Phoenix, and Blake Lyon, an officer of WCC, is a director of Phoenix. WCC is also a major shareholder of Phoenix.

The closing of the Transaction is expected to occur in December, 2011. Assuming completion of the Recapitalization Transaction on the terms described above and the Management Private Placement (as described below), WCC will own or control 107,720,434 Common Shares or 49.2% of the outstanding Common Shares, and assuming the conversion of the Convertible Debentures in full, WCC will own or control 162,073,375 Common Shares or 59.3% of the outstanding Common Shares.

Use of Proceeds

The proceeds of the Recapitalization Transaction will be used by the Company to re-pay amounts owing under the previously announced credit facility obtained from WCC, to expand Phoenix's U.S. operations and for general working capital purposes.

Management Private Placement

Phoenix is also pleased to announce a private placement of up to 7,500,000 Common Shares at a price of $0.08 per Common Share to certain members of management (the "Management Private Placement"), for gross proceeds of up to $600,000, which is expected to close concurrently with the Recapitalization Transaction. The proceeds from the Management Private Placement will be used for general working capital purposes.

Approvals

The Recapitalization Transaction and Management Private Placement are subject to the approval of the TSX Venture Exchange. The Recapitalization Transaction is also subject to corporate approvals of both Phoenix and WCC, including the receipt of disinterested shareholder approval for Phoenix.

About Phoenix Oilfield Hauling Inc.

Phoenix is a public energy services transportation corporation operating in Western Canada, Texas and Pennsylvania.

Reader Advisory

This news release contains certain forward-looking statements, including the terms of the Recapitalization Transaction, the use of proceeds from the Recapitalization Transaction and Management Private Placement and the receipt of regulatory approval for the Recapitalization Transaction and Management Private Placement and the receipt of corporate approvals for the Recapitalization Transaction. These forward-looking statements are based on reasonable assumptions of the management of the Company.

The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with loss of markets, volatility of commodity prices, fluctuations in foreign exchange or interest rates, environmental risks, competition from other companies, ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, the lack of availability of qualified personnel or management, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these 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, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All forward-looking statements contained in this press release are expressly qualified in their entirety by these cautionary statements.

The forward-looking statements contained in this news release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither 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.

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