TORONTO, March 14, 2019 /CNW/ - CGX
Energy Inc. (TSXV: OYL) ("CGX" or the
"Corporation") is pleased to announce that it has
completed its previously announced rights offering (the
"Offering"). Pursuant to the Offering, the Corporation
issued to holders of its outstanding common shares (the "Common
Shares") of record as at the close of business on February 11, 2019 an aggregate of 116,102,318
transferable rights (each, a "Right") to subscribe for,
until 5:00 p.m. (Toronto time) on March
12, 2019 (the "Expiry Date"), an aggregate of
116,102,318 Common Shares. Each Right entitled the holder thereof
to subscribe for one Common Share upon payment of the subscription
price of $0.25 per Common Share prior
to the Expiry Date. The Offering was over-subscribed and the
Corporation issued 116,102,318 Common Shares, the maximum number of
Common Shares available for issuance under the terms of the
Offering, based on shareholders' exercise of the basic subscription
privilege and the additional subscription privilege, allocated
pro-rata, for aggregate gross proceeds to the Corporation of
$29,025,579.50 (equivalent of
approximately US$21,823,744).
Following the closing of the Offering, CGX has 232,204,636 Common
Shares issued and outstanding.
Frontera Energy Corporation ("Frontera"), an insider and
the Corporation's largest shareholder, acquired an aggregate of
101,316,916 Common Shares in connection with the Offering pursuant
to the exercise of Rights under the Offering. Frontera now owns an
aggregate of 157,383,129 Common Shares on a non-diluted basis,
which represents approximately 67.78% of the issued and outstanding
Common Shares following closing. In consideration for the standby
commitment provided by Frontera under the Offering, Frontera
received 5-year warrants to purchase up to 15,009,026 Common Shares
at an exercise price equal to $0.415
per Common Share. As a result, Frontera holds an aggregate of
212,392,155 Common Shares on a partially-diluted basis (assuming
conversion of the US$8.8 million
principal amount under the bridge loan agreement between CGX and
Frontera), which represents approximately 73.95% of the issued and
outstanding Common Shares on a partially-diluted basis.
CGX will use US$ 7,904,036 of the
net proceeds of the Offering to settle its debt to Japan Drilling
Co., Ltd. ("JDC") in connection with historic legacy
indebtedness. The remainder of the net proceeds of approximately
US$13,923,744 along with the
additional funding obtained through a farm-in joint venture
agreement with Frontera 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.
Professor Suresh Narine,
Executive Chairman of CGX stated "The successful completion of the
Offering, in which CGX sought to ensure that its shareholders were
provided an opportunity to participate in the Corporation's
restructuring of its debt and advancing its exploration program in
Guyana, signals strong support for
CGX in its ongoing operations and prospects. The completion of the
Offering, which was oversubscribed, along with the joint venture
that was previously announced between CGX and Frontera, one of the
company's largest shareholders, also further enhances CGX's
position in the Guyana basin. I
wish to thank our loyal shareholders and the Government and People
of Guyana for their continued
support for CGX, which is widely regarded as Guyana's "indigenous" oil company. CGX is
delighted with this latest endorsement of its activities in the
basin.
Related Party Transaction
The Offering is a related
party transaction with respect to JDC under Multilateral Instrument
61-101 Protection of Minority Security Holders in Special
Transactions ("MI 61-101") as JDC holds over 10% of the
issued and outstanding Common Shares and will receive proceeds from
the Offering in payment of obligations owed to it. However, CGX is
exempt from obligations of MI 61-101 to obtain a formal valuation
and approval from a minority of shareholders. The Corporation filed
a material change report dated February 11,
2019 and an amended and restated material change report
dated of the same date in respect of the required disclosure
relating to an exemption from the formal valuation requirement and
in respect of an exemption from seeking approval from a minority of
shareholders. The Corporation will also file a material change
report in connection with this news release.
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 use of
the proceeds raised under the Offering; (ii) availability of
additional sources of funding; (iii) the payment of amounts owing
to JDC and its receipt thereof in satisfaction of debt owed; and
(iv) the Corporation's operations and prospects in Guyana.
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 Offering, 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.