n such dates as determined by the Initial Investor Group.
Proceeds from the Private Placement will be used to reduce Alexander’s indebtedness and for general corporate purposes.
In conjunction with the completion of the Initial Closing, Alexander shall grant options to acquire up to 21,090,614 Common Shares of Alexander (assuming the issuance of 140 million Units pursuant to the Private Placement), 18,770,647 of which will be granted to the new directors and officers of Alexander. Each grant of options will be for a five year term. The options will vest over three years (1/3 on each of the first, second and third anniversary of the grant date). The options will be exercisable at a price of $0.20 Common Share.
Upon completion of the Private Placement, and subject to Alexander receiving the Written Consent (as defined below) on or before December 11, 2013, Alexander shareholders will be entitled to participate in the Rights Offering, which is expected to be conducted by way of a Rights Offering Circular. Pursuant to the Rights Offering, each shareholder as of the record date for such offering (the “Record Date“) will be issued one right (“Right“) for each Common Share held on the Record Date, entitling that holder to purchase one (1) Common Share for every eight (8) Rights held at a price of $0.15 per Common Share at or before the expiry time of the Rights Offering, following which all outstanding Rights shall terminate and expire. Subscribers of Common Shares under the Private Placement will not be entitled to participate in the Rights Offering with respect to any securities acquired pursuant to the Private Placement. The Rights Offering is subject to applicable regulatory approval, including the TSXV.
Shareholder and Stock Exchange Approvals
Completion of the Transaction is subject to a number of conditions and approvals including, but not limited to, the approval of the TSXV and shareholder approval. Under the policies of the TSXV, the completion of the Private Placement is subject to the approval of the shareholders of Alexander as the completion of the Private Placement will result in the creation of a new “control person” (as defined under the policies of the TSXV). In addition thereto, the appointment of the New Management Team is subject to shareholder approval under the policies of the TSXV. The required disinterested shareholder approval may be obtained by Alexander either by receipt of written consents by holders of more than 50% of the issued and outstanding voting shares of Alexander (the “Written Consent“) or by approval of a resolution at a special meeting of shareholders (the “Alexander Meeting“). Pursuant to the Agreement, Alexander has agreed to obtain the Written Consent on or before December 11, 2013, failing which the Initial Investor Group has the right to terminate the Agreement. In the event that the Written Consent is not obtained on or before December 11, 2013 and the Initial Investor Group waives its termination right, Alexander has agreed to convene and hold the Alexander Meeting on or before January 31, 2014.
Alexander consists of approximately 625 boepd of production (60% oil) in central Alberta and has approximately 70.9 million Common Shares outstanding on a fully diluted basis and current net debt of approximately $7.5 million, excluding the costs of the Transaction. Upon completion of the Private Placement and assuming the exercise of all Rights issued in connection with the Rights Offering, Alexander will have approximately 256 million Common Shares, and assuming the exercise of all Warrants issued in connection with the Private Placement, there will be approximately 396 million Common Shares outstanding on a fully diluted basis.
Board of Directors’ Recommendation
The board of directors of Alexander has determined that the transactions contemplated by the Agreement are in the best interests of its shareholders, has unanimously approved such transactions and recommends that Alexander’s shareholders approve the Agreement and the Transaction and execute the Written Consent. Any shareholder of Alexander wishing to obtain and execute the Written Consent should contact Alexander as set forth below.
Directors and officers of Alexander who, in aggregate, own, directly or indirectly or exercise control or direction over approximately 14.8% of the Common Shares, have entered into support agreements or agreed to enter into support agreements pursuant to which they have agreed or will agree, among other things, to execute a Written Consent.
The Agreement contains a number of customary representations, warranties and conditions and provides for a non-completion fee of $125,000 payable by Alexander to the Initial Investor Group, and a non-completion fee of $125,000 payable by the Initial Investor Group to Alexander, in certain circumstances. The Agreement also provides that the Initial Investor Group shall receive an expense reimbursement fee of up to $125,000 in the event the Written Consent is not obtained and Alexander shareholders do not approve the Transaction at the Alexander Meeting. The complete Agreement will be accessible on Alexander’s SEDAR profile at www.sedar.com.
Clarus Securities Inc. is acting as strategic advisor to the Initial Investor Group.
Peters & Co. Limited is acting as strategic advisor to Alexander with respect to the Transaction.
Alexander Energy Ltd. is a Calgary, Alberta based company engaged in the oil and gas exploration and development industry. The Corporation’s Common Shares are listed on the TSX Venture Exchange under the trading symbol “ALX”.
Forward-Looking and Cautionary Statements
This news release may include forward-looking statements including opinions, assumptions, estimates, the New Management Team’s assessment of future plans and operations, and, more particularly, statements concerning the completion of the Transaction contemplated by the Agreement, the number of securities issued by way of the Private Placement, the business plan of the New Management Team, the change of name of the Corporation, use of proceeds, debt levels and production following completion of the Transaction.
When used in this document, the words “will,” “anticipate,” “believe,” “estimate,” “expect,” “intent,” “may,” “project,” “should,” and similar expressions are intended to be among the statements that identify forward-looking statements.
The forward-looking statements are founded on the basis of expectations and assumptions made by Alexander which include, but are not limited to, the timing of the receipt of the required shareholder, regulatory and third party approvals, the future operations of, and transactions completed by Alexander as well as the satisfaction of other conditions pertaining to the completion of the Transaction.
Forward-looking statements are subject to a wide range of risks and uncertainties, and although Alexander believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized.
Any number of important factors could cause actual results to differ materially from those in the forward -looking statements including, but not limited to, shareholder, regulatory and third party approvals not being obtained in the manner or timing set forth in the Agreement, the ability to implement corporate strategies, the state of domestic capital markets, the ability to obtain financing, changes in general market conditions and other factors more fully described from time to time in the reports and filings made by Alexander with securities regulatory authorities.
Except as required by applicable laws, neither Alexander nor the Initial Investor Group undertake any obligation to publicly update or revise any forward-looking statements.
The term “boe” may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf: 1 bbl is based upon an energy equivalency conversion method primarily applicable at the burner tip and it does not represent a value equivalency at the well head.
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.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Alexander Energy Ltd.
Director and Chief Executive Officer
(403) 264-1348 (FAX)
Alexander Energy Ltd.
Richard (Rick) McHardy
(403) 264-1348 (FAX)