WSG Group Systems Inc.

September 08, 2005 16:51 ET

WSG Group Systems Inc. Updates Status of Reverse Takeover with Duinord Petroleum, Inc.

CALGARY, ALBERTA--(CCNMatthews - Sept. 8, 2005) - WSG Group Systems Inc. ("WSG") (TSX VENTURE:WSG):


WSG Group Systems Inc. ("WSG") (TSX Venture: WSG-X) today announces the following further details concerning its proposed reverse takeover (the "Business Combination") with Duinord Petroleum, Inc. ("Duinord"). The post-Business Combination company will be renamed "GFI Oil & Gas Corporation" ("GFI").


WSG has entered into a formal engagement with Jennings Capital Inc. ("Jennings") pursuant to which Jennings has agreed to act as a sponsor for the Business Combination and to provide a sponsor report to the TSX Venture Exchange Inc. ("TSX Venture"), in accordance with the policies of the TSX Venture.

Duinord Financing

Duinord has completed its previously announced US $6,000,000 private placement financing (the "Duinord Financing"). Pursuant to the Duinord Financing, Duinord issued 16,305,588 common shares in the capital of Duinord ("Duinord Common Shares") at a price of CDN $0.44 per share and warrants ("Duinord Warrants") to purchase 16,305,588 Duinord Common Shares, at an exercise price of CDN $0.80 per share exercisable for a period of one year from the effective date of the Business Combination. The Duinord Common Shares and the Duinord Warrants were sold to EnCap Energy Capital Fund V, L.P. and Encap Energy Capital Fund V-B, L.P. (collectively, "EnCap") for aggregate gross proceeds of US $6,000,000.

"We are pleased to have such a well respected oil and gas investment firm as EnCap Investments join our existing slate of investors, which includes top industry names Northern Rivers Capital Management Inc., RAB Special Situations LB and Front Street Investment Management Inc. We would also like to thank Jennings for their valued support," stated Mark Witt, Chief Financial Officer of GFI Oil & Gas (USA) Inc., the operating subsidiary of WSG.

Pursuant to the Duinord Financing, EnCap appointed Robert L. Zorich and Brent R. Bechtol to the board of directors of Duinord. In addition, WSG has agreed, pursuant to the Amalgamation Agreement (defined below), to include these two individuals in the slate of directors to be elected to the board of directors of GFI at the meetings of the shareholders of WSG and Duinord, respectively, that will be called to approve the Business Combination. Brief biographies of Messrs. Zorich and Bechtol are set forth below.

Amalgamation Agreement

WSG and Duinord have entered into an amalgamation agreement (the "Amalgamation Agreement") setting out the terms of the Business Combination, which is anticipated to be effected by statutory amalgamation of WSG and Duinord. Pursuant to the Amalgamation Agreement, the following three individuals will be added to the board of GFI in addition to the five directors described in the press release of WSG dated August 16, 2005:

Robert L. Zorich

Mr. Zorich, a resident of Houston, Texas, is Managing Director and co-founder of EnCap Investments L.P. ("EnCap Investments"), an investment manager and provider of private equity capital to the upstream sector of the oil and gas industry. Since its inception in 1988, EnCap Investments has successfully raised and invested institutional capital in 11 separate funds, the most recent being a US $825 million fund raised in 2004. EnCap Investments currently manages over US $1.5 billion of capital provided by insurance companies, banks, pension funds and endowments.

Prior to the formation of EnCap Investments, Mr. Zorich was a Senior Vice President in charge of the Houston office of Trust Company of the West, a large, privately held pension fund manager. Prior to joining Trust Company of the West, Mr. Zorich co-founded MAZE Exploration, Inc. ("MAZE"), serving as its Co-Chief Executive Officer. MAZE, headquartered in Denver, was actively involved in oil and gas exploration, development and reserve acquisitions. During the first seven years of Mr. Zorich's career, he was employed by RepublicBank Dallas ("Republic") as a Vice President and Division Manager in the Energy Department. Approximately half of his tenure with Republic was spent managing Republic's energy office in London, where he assembled a number of major project financings for development in the North Sea.

Mr. Zorich received his B.A. in Economics from the University of California at Santa Barbara in 1971. He also received a Masters Degree in International Management with distinction in 1974 from the American Graduate School of International Management in Phoenix, Arizona. Mr. Zorich currently serves on the Board of Directors of Enerplus Resources Fund and several EnCap Investments portfolio companies. Mr. Zorich also serves on the Investment Committee of JOG Capital Inc., a Canadian private equity fund. Mr. Zorich is a member of the Independent Petroleum Association of America, Houston Producer's Forum and TIPRO.

Brent R. Bechtol

Mr. Bechtol, a resident of Houston, Texas, is a Vice President of EnCap Investments L.P. (described above). Prior to joining EnCap Investments in July 2000, Mr. Bechtol spent three years at Enron Capital & Trade Resources. Previously, he was in the Energy Corporate Finance group at Jefferies & Company.

Mr. Bechtol received a Master of Business Administration in Finance from Rice University and holds a Bachelor of Arts from The University of Texas at Austin. Mr. Bechtol currently serves on the Board of Directors of several EnCap Investments portfolio companies and is a member of the Independent Petroleum Association of America, Houston Producer's Forum and TIPRO.

William Mark Meyer

William Mark Meyer, a resident of The Woodlands, Texas, is currently employed as a portfolio manager/energy analyst with CastleArk Management, LLC, an institutional investment organization headquartered in Chicago.

From August 1999 through August 2005, Mr. Meyer was employed as a senior equity research analyst covering the independent exploration and production sector with Simmons & Company International (8/1999-12/2001; 1/2003-8/2005) and Goldman Sachs (12/2001-1/2003). Prior to his equity research career, Mr. Meyer was a management consultant with A.T. Kearney, Inc., based in Dallas. From 1985 through 1994, Mr. Meyer was a practicing petroleum engineer with Chevron, Exxon and Union Texas Petroleum.

Mr. Meyer received a Bachelor of Science in Petroleum Engineering in 1986 from Texas A&M University and a Masters of Business Administration from the University of Chicago Graduate School of Business.

After the completion of the Business Combination, the board of directors of GFI will consist of Gregory C. Campbell, Raymond L. LaGarde, Alex D. Warmath, Richard E. McDougal, James H. Coleman, Brent R. Bechtol, Robert L. Zorich and William Mark Meyer.

The common shares of WSG (the "WSG Shares") were halted for trading on the TSX Venture in connection with the announcement of the Business Combination. The WSG Shares will remain halted until WSG has completed certain filings with TSX Venture.

As indicated above, completion of the Business Combination is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Business Combination cannot close until the required shareholder approval is obtained. There can be no assurance that the Business Combination will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Information Circular of WSG to be prepared in connection with the Business Combination, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of WSG should be considered highly speculative.

The securities of Duinord and WSG being offered have not been, nor will be, registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold within the U.S. or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the U.S.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Business Combination and has neither approved nor disapproved the contents of this press release.

Contact Information

  • WSG Group Systems Inc.
    Gregory C. Campbell
    (403) 209-3381
    Duinord Petroleum, Inc.
    Raymond L. LaGarde
    (281) 877-7299