Profound Energy Inc.
TSX : PFX

Profound Energy Inc.

April 13, 2009 08:00 ET

Profound Energy Inc. Announces Approval of Private Placement

CALGARY, ALBERTA--(Marketwire - April 13, 2009) - Profound Energy Inc. (TSX:PFX) ("Profound") announces that the Toronto Stock Exchange (the "TSX") has conditionally approved a private placement of special warrants ("Special Warrants") of Profound (the "Private Placement") to Paramount Energy Trust ("Paramount") and has conditionally approved the listing of the common shares issuable on conversion of the Special Warrants.

Pursuant to the Private Placement, Paramount has agreed to purchase 9,224,310 Special Warrants at a price of $0.75 per Special Warrant, a premium in excess of 15% of Profound's closing price on March 30, 2009, for total subscription proceeds of approximately $6.9 million. The Special Warrants are convertible into common shares of Profound on a one-for-one basis. Profound and Paramount expect to close the Private Placement on or about April 14, 2009. The Special Warrants will automatically convert into Common Shares if the offer made by Paramount to acquire all the issued and outstanding shares of Profound (the "Offer") is not completed. The proceeds from the Private Placement are intended to provide Profound with necessary funding to continue operations if the Offer is not completed.

As previously announced, the Offer is being made pursuant to a support agreement between Paramount and Profound entered into on March 30, 2009. The consideration to be offered for each common share of Profound under the Offer will be, at each shareholder's option, (i) $1.34 in cash; (ii) 0.394 of a Paramount trust unit; or (iii) a combination of cash and Paramount trust units, subject to proration on the basis of a maximum of $15 million in cash and approximately 11.6 million Paramount trust units. Profound currently has 37,977,008 common shares and in-the-money stock options outstanding and it is expected that approximately 10.6 million Paramount trust units will be issued pursuant to the Offer. Based on the maximum cash condition and assuming exercise of all of Profound's in-the-money options, Profound shareholders will each receive 0.278 of a Paramount trust unit and approximately $0.395 in cash for each common share of Profound on a prorated basis. The Offer represents an approximately 100% premium over the closing price of Profound on March 30, 2009. The total purchase price offered by Paramount will total approximately $112.9 million, including the assumption of outstanding debt and working capital deficiency estimated at $61.5 million, but prior to Paramount's closing costs.

The Board of Directors of Profound has approved the Offer and has agreed to recommend that its shareholders tender their shares in acceptance of the Offer. FirstEnergy Capital Corp. has provided a verbal fairness opinion to the Board of Directors of Profound indicating that the consideration to be received by Profound shareholders under the Offer is fair from a financial point of view. The Board of Directors of Profound has agreed that it will not solicit or initiate discussions or negotiations with any third party concerning any sale of any material portion of the assets of Profound, or any business combination involving Profound, and Profound has granted Paramount the right to match any subsequent offer. Profound has agreed to pay Paramount a non-completion fee of $1.25 million in certain circumstances.

Paramount anticipates mailing the Offer to all registered Profound shareholders on or before April 24, 2009 and the Offer will expire approximately 35 days thereafter. The Offer will be subject to a number of conditions, including its acceptance by holders of at least 66 2/3% of the outstanding common shares of Profound (the "Minimum Tender Condition"). At Paramount's option the Minimum Tender Condition can be waived provided that Paramount takes up a minimum of 50.1% of the common shares of Profound (excluding any common shares issued on the conversion of the Special Warrants). Certain directors, officers and shareholders of Profound, collectively holding approximately 11% of the issued and outstanding common shares of Profound, have entered into agreements to tender all of their common shares to the Offer, except in certain limited circumstances.

Profound Energy Inc. is a junior oil and natural gas company based in Calgary, Alberta. Profound's common shares are listed on the TSX under the symbol "PFX". Further information with respect to Profound can be found at its website at www.profoundenergy.ca.

FORWARD LOOKING INFORMATION

This press release contains statements that constitute forward-looking information within the meaning of applicable securities legislation. This forward-looking information includes, among others, statements regarding the expected timing for closing the Private Placement, mailing date of the Offer, expiry date of the Offer and the use of proceeds. Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this press release. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Profound and described in the forward-looking information contained in this press release. Undue reliance should not be placed on forward-looking information. The material risk factors include, but are not limited to: failure to complete the Private Placement, failure to mail the Offer and failure to complete the Offer. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Forward-looking information is based on the estimates and opinions of Profound's management at the time the information is released.

The TSX has neither approved nor disapproved the information contained herein.

Contact Information

  • Profound Energy Inc.
    William T. Davis
    President & Chief Executive Officer
    (403) 237-6102
    (403) 237-6103 (FAX)
    or
    Profound Energy Inc.
    Evelyn Burnett
    Chief Financial Officer
    (403) 237-6102
    (403) 237-6103 (FAX)
    or
    Profound Energy Inc.
    Suite 380, 435 - 4th Avenue SW
    Calgary, Alberta, Canada T2P 3A8
    (403) 237-6102
    (403) 237-6103 (FAX)
    Website: www.profoundenergy.ca