Universal Energy Group Ltd.
TSX : UEG

Universal Energy Group Ltd.

April 13, 2009 06:00 ET

Universal Energy Group Announces Takeover Discussions With Energy Savings Income Fund

TORONTO, ONTARIO--(Marketwire - April 13, 2009) - Universal Energy Group Ltd. (the "Company") (TSX:UEG) announces that on March 20, 2009 it entered into a letter of intent (the "LOI") with Energy Savings Income Fund ("ESIF") with respect to a potential acquisition of the Company by ESIF. This announcement is being made in response to recent unusual trading activity in the Company's common shares in the absence of any material news from UEG.

The LOI is non-binding, including in respect of all proposed transaction terms, except for a 30-day "exclusivity period" which expires on April 19, 2009 and certain non-material matters.

The potential transaction contemplates the acquisition of the Company's common shares in exchange for trust units of ESIF at a mutually agreed exchange ratio of 0.58 of an ESIF trust unit for each UEG share for an approximate value of $7.05 per share based on the $12.16 closing price of ESIF trust units on April 9, 2009. If a definitive agreement is reached, the parties would expect to propose to UEG shareholders an exchange of their UEG common shares for shares of a subsidiary of ESIF exchangeable for ESIF trust units to provide a tax deferral for UEG shareholders.

Any such transaction would, if completed, result in a corresponding adjustment to the conversion feature of the Company's outstanding 6% convertible debentures (TSX:UEG.DB) in accordance with their terms.

Without limitation of the non-binding nature of the LOI, each party's obligation to proceed with the transaction is subject to satisfaction or waiver of the following conditions by 5:00 pm (Toronto time) on April 19, 2009: (a) negotiation of a mutually satisfactory definitive agreement including lock-up agreements with key UEG shareholders; (b) each party completing and being satisfied, in its sole discretion with its due diligence review of the other party; (c) approval of the transaction and definitive agreement by the parties' respective boards of directors; and (d) receipt of necessary regulatory and other third party approvals.

The Company cautions that no definitive agreement has been entered into and accordingly no assurance can be given that the process contemplated by the LOI will lead to a definitive agreement relating to the transaction contemplated above or otherwise or any other transaction.

The Company does not intend to make any further announcements or communications regarding this potential transaction until either a definitive agreement has been reached or discussions are terminated without such an agreement being reached.

Universal Energy Group's common shares and convertible subordinated debentures are listed on the Toronto Stock Exchange under the symbol "UEG" and "UEG.DB", respectively. Universal Energy Group sells natural gas and electricity to residential, small to mid-size commercial and small industrial customers in Canada and the United States, sells long-term water heater rental programs to Ontario residential customers and operates an ethanol manufacturing facility in Belle Plaine, Saskatchewan. Additional information about Universal Energy Group is available on SEDAR (www.sedar.com).

Contact Information

  • Universal Energy Group Ltd.
    Mark L. Silver
    Chief Executive Officer
    (416) 221-9066 ext. 244
    Email: masilver@universalenergy.ca
    or
    Universal Energy Group Ltd.
    Stephen Plummer
    Chief Financial Officer
    (416) 673-1160
    Email: splummer@uegl.ca
    or
    Universal Energy Group Ltd.
    Shawn Dym
    Senior Vice President, Business Development
    (416) 673-4761
    Email: sdym@universalenergy.ca