ProspEx Resources Ltd.

April 08, 2011 08:30 ET

ProspEx Resources Ltd. Announces Arrangement With Paramount Resources Ltd.

CALGARY, ALBERTA--(Marketwire - April 8, 2011) -


ProspEx Resources Ltd. (TSX:PSX) ("ProspEx") is pleased to announce that it has entered into an arrangement agreement (the "Agreement") with Paramount Resources Ltd. ("Paramount") pursuant to which Paramount has agreed to acquire all of the issued and outstanding voting common shares of ProspEx not currently owned by Paramount (the "ProspEx Shares") by way of plan of arrangement (the "Arrangement"). Under the Arrangement, each ProspEx shareholder may elect to receive either: (i) $2.40 in cash per ProspEx Share; or (ii) 0.07162 of a Paramount Class A Common Share per ProspEx Share, subject to pro ration, such that 2,000,000 Paramount shares will be issued to ProspEx shareholders pursuant to the Arrangement. The transaction values ProspEx at approximately $186 million, including net debt and transaction costs.

"ProspEx is pleased to announce this Agreement with Paramount, which is the successful result of a comprehensive review of the strategic alternatives available to ProspEx announced in January," said John Rossall, President and Chief Executive Officer of ProspEx. "The Arrangement with Paramount recognizes the significant value in ProspEx's asset base."

The board of directors of ProspEx has unanimously approved the Arrangement and has determined that the Arrangement is fair to ProspEx shareholders and is in the best interests of ProspEx, and will recommend that the ProspEx shareholders vote in favour of the Arrangement. The directors and officers of ProspEx have entered into support agreements with Paramount pursuant to which they have agreed to vote their ProspEx Shares in favour of the Arrangement.

Cormark Securities Inc. is acting as exclusive financial advisor to ProspEx and has provided a verbal opinion that, as of the date hereof and subject to review of final documentation, the consideration to be received by the ProspEx shareholders pursuant to the Arrangement is fair, from a financial point of view, to ProspEx shareholders.

The Agreement, among other things, provides for a non-completion fee of up to $6.5 million payable by ProspEx to Paramount in the event the Arrangement is not completed in certain circumstances. The Arrangement will be subject to the approval of at least 66 2/3% of the votes cast by ProspEx shareholders at a special meeting of shareholders, expected to be held in May 2011. Closing is subject to certain conditions, including the receipt of court and other regulatory approvals. Closing of the Arrangement is expected in late May, 2011. An information circular is expected to be mailed to ProspEx shareholders in early May, 2011.


ProspEx is a Calgary based junior oil and gas company focused on exploration for natural gas in the Western Canadian Sedimentary Basin.

Certain statements contained in this release regarding ProspEx including management's assessments of future plans and operations, timing of receipt of shareholder approval, timing of completion of the Arrangement and the effect of the Arrangement on ProspEx shareholders may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond ProspEx's control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements.

Such factors include, but are not limited to: the impact of general economic conditions in Canada and the United States; industry conditions including changes in laws and regulations; and obtaining required approvals of regulatory authorities. The forward-looking statements and information are based on certain key expectations and assumptions made by ProspEx, including the timing of receipt of shareholders and regulatory approval. Accordingly, ProspEx gives no assurance nor makes any representations or warranties that the expectations conveyed by the forward-looking statements will prove to be correct, and actual results may differ materially from those anticipated in the forward looking statements.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on ProspEx's current and future operations and such information may not be appropriate for other purposes. ProspEx undertakes no obligation to publicly update or revise any forward-looking statements, unless required by applicable securities laws. The forward looking statements in this release are expressly qualified by this cautionary statement.

Contact Information

  • ProspEx Resources Ltd.
    John Rossall
    President and CEO
    (403) 269-3940

    ProspEx Resources Ltd.
    George Yee
    Vice President, Finance and Chief Financial Officer
    (403) 269-3940