TORONTO, Feb. 1, 2019 /CNW/ - CGX
Energy Inc. (TSXV: OYL) ("CGX" or the
"Corporation") announced today that it will be offering
rights (each, a "Right") to holders of its common shares (
"Common Shares") at the close of business on the record date
of February 11, 2019, on the basis of
one (1) Right for each Common Share held (the "Rights
Offering"). Each one (1) Right will entitle the holder to
subscribe for one (1) Common Share upon payment of the subscription
price of C$0.25 (the "Basic
Subscription Privilege"). There are currently 116,102,318
Common Shares issued and outstanding. The Rights Offering will
raise gross proceeds of C$29,025,579.50 (equivalent of approximately
US$21,823,744). Frontera Energy
Corporation ("Frontera") has provided a standby commitment
to purchase any unexercised Rights in connection with the Rights
Offering as detailed below.
The Rights Offering will expire at 5:00
p.m. (Toronto time) on
March 12, 2019 (the "Expiry
Time"), after which time unexercised Rights will be void and of
no value. The Rights Offering includes an additional subscription
privilege (the "Additional Subscription Privilege") under
which eligible holders of Rights who fully exercise their Rights
under the Basic Subscription Privilege will be entitled to
subscribe, on a pro rata basis with other shareholders who
exercise their Additional Subscription Privilege, for Common Shares
that remain available for subscription at the Expiry Time after the
exercise of the Rights. The Corporation expects to close the Rights
Offering on or about March 13, 2019
(the "Closing Date").
Details of the Rights Offering will be set out in the rights
offering notice and rights offering circular which will be
available on CGX's website at www.cgxenergy.ca and under CGX's
SEDAR profile at www.sedar.com. The rights offering notice and the
rights certificate will be mailed to each registered eligible
shareholder as at the record date. Registered shareholders who wish
to exercise their Rights must provide the completed rights
certificate, together with the applicable funds, to the depositary,
TSX Trust Company, at or before the Expiry Time. Beneficial
shareholders who own their Common Shares through an intermediary,
such as a bank, trust company, securities dealer or broker (a
"CDS Participant"), will receive materials and instructions
from them directly. CDS Participants may have an earlier deadline
for receipt of instructions and payment than the Expiry Time.
The Rights Offering will be conducted in all provinces of
Canada (except Québec) and in each
state of the United States (except
Arizona, Arkansas, California, Minnesota, Ohio, and Wisconsin) (the "Qualified
Jurisdictions"). Certain holders of Common Shares in
jurisdictions outside the Qualified Jurisdictions may be able to
participate in the Rights Offering where they can establish that
the transaction is exempt under applicable legislation. If you are
a holder of Common Shares and reside outside of Canada, please see the rights offering notice
and rights offering circular to determine your eligibility and the
process and timing requirements to receive and exercise your
rights.
CGX intends to use approximately US$7,900,000 of the net proceeds of the Rights
Offering to settle its debt to Japan Drilling Co., Ltd.
("JDC") in connection with historic legacy indebtedness, as
previously disclosed in a news release of the Corporation on
October 31, 2018. The remainder of
the net proceeds of approximately US$13,923,744 along with additional funding
obtained through joint venture agreements to be entered into with
Frontera or with a subsidiary thereof, in respect to the
exploration and development of the Corentyne and Demerara blocks in
Guyana, as previously disclosed,
as well as additional financing alternatives, are expected to
provide the funds necessary to meet all of the Corporation's
short-term liquidity requirements over the next 12 months. There is
no assurance that the additional financing will be available to the
Corporation or on terms acceptable to the Corporation.
Standby Commitment
Frontera has provided a standby commitment in connection with
the Rights Offering. Frontera will acquire any Common Shares
available as a result of any unexercised Rights under the Rights
Offering, such that CGX will be guaranteed to issue 116,102,318
Common Shares in connection with the Rights Offering, for aggregate
gross proceeds of C$29,025,579.50
(equivalent of approximately US$21,823,744).
In consideration for the standby commitment, Frontera will
receive 5-year warrants to purchase 25% of the Common Shares
Frontera has agreed to acquire under the standby commitment, at an
exercise price equal to $0.415 per
Common Share.
Frontera currently owns 56,066,214 Common Shares, which
represents approximately 48.3% of the issued and outstanding Common
Shares. Frontera also has a right to convert certain debt owed by
CGX, which if converted would result in the issuance of additional
Common Shares. As a result of the Rights Offering, Frontera could
increase its ownership of outstanding common shares of CGX from its
current ownership of approximately 48.3% to up to approximately
77.9% if no other shareholder participates in the Rights Offering
and Frontera elects to exercise the foregoing conversion right.
Related Party Transaction
The Rights Offering is a related party transaction with respect
to JDC under Multilateral Instrument 61-101 as JDC holds over 10%
of the issued and outstanding Common Shares and is expected to
receive proceeds from the Rights Offering in payment of obligations
owed to it. However, CGX is exempt from obligations to obtain a
formal valuation and approval from a minority of shareholders. The
material change report to be filed by CGX in connection with this
news release will contain required disclosure regarding such
exemptions.
About CGX Energy:
CGX Energy is a Canadian-based
oil and gas exploration company focused on the exploration of oil
in the Guyana- Suriname
Basin.
NEITHER THE 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 NEWS
RELEASE.
NEITHER THE RIGHTS NOR THE COMMON SHARES HAVE BEEN APPROVED
OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION
AND NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS NEWS RELEASE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Advisories: Fasken Martineau DuMoulin LLP is Canadian
legal advisor to CGX. McMillan LLP is legal advisor to
Frontera.
Cautionary Note Concerning Forward-Looking
Statements
This news release contains statements that constitute
"forward-looking information" or "forward- looking" statements"
(collectively "forward-looking information") within the meaning of
applicable securities legislation. Forward-looking information is
often, but not always, identified by the use of words such as
"anticipate", believe", "expect", "plan", "intend", "forecast",
"target", "project", "guidance", "may", "will", "should" "could",
"estimate", "predict" or similar words suggesting future outcomes
or language suggesting an outlook. These forward-looking statements
include, among other things, statements relating to: (i) the funds
to be raised under the Rights Offering; (ii) closing of the Rights
Offering; (iii) available funds to the Corporation after expenses
of the Rights Offering and the payment of amounts owing to JDC;
(iv) additional sources of required funding for the Corporation;
and (v) the use of the funds raised under the Rights
Offering.
Forward-looking statements and information contained in this
press release are based on CGX's current beliefs as well as
assumptions made by, and information currently available to, CGX,
including estimated costs of the Rights Offering, entering into
definitive agreements with Frontera as disclosed in the
Corporation's December 4, 2018 press
release, estimated G&A requirements and costs of completing
drilling and other exploration activity. Although CGX considers
these assumptions to be reasonable based on information currently
available to the Corporation, they may prove to be
incorrect.
By their very nature, the forward-looking statements included
in this press release involve inherent risks and uncertainties,
both general and specific, and risks that predictions, forecasts,
projections and other forward-looking statements will not be
achieved. The Corporation cautions readers not to place undue
reliance on these statements as a number of important factors could
cause the actual results to differ materially from the beliefs,
plans, objectives, expectations and anticipations, estimates and
intentions expressed in such forward-looking statements, including
the risk factors outlined in the Corporation's continuous
disclosure documents filed under the Corporation's profile at
www.sedar.com.
Furthermore, the forward-looking statements contained in this
press release are made as of the date of this document and CGX 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 required by
applicable law. The forward- looking statements contained in this
press release are expressly qualified by this cautionary
statement.
SOURCE CGX Energy Inc.