TORONTO, ONTARIO--(Marketwired - Sept. 17, 2015) - Candax Energy Inc. ("Candax" or the "Company") (TSX:CAX) announces that it has entered into an Arrangement Agreement (the "Agreement") with Geofinance N.V. ("Geofinance"), pursuant to which the Company will be taken private by Geofinance pursuant to a statutory plan of arrangement (the " Arrangement"). Geofinance owns approximately 80.7% of the issued and outstanding common shares (the "Shares") in the capital of the Company and will acquire under the Arrangement all of the Shares that it does not already own.
Pursuant to the Agreement, Geofinance will pay Cdn. $0.002 per Share in cash (the "Offer Price") to holders of all of the issued and outstanding Shares that are not owned by Geofinance. The total cash consideration for these Shares will be approximately Cdn. $411,250.
The Company announced on January 28, 2015 that it had initiated a process to identify, examine and implement strategic and financial alternatives available to the Company. The Company entered into the Arrangement to address the lack of liquidity in the Shares and the effect of low oil prices, which have caused reduced revenues and inadequate working capital posing a challenge for the Company to continue as a going concern.
Additional Debt Waiver Extension
Geofinance is a secured creditor of the Company and has waived since January 31, 2015 payment default by the Company on U.S. $3.5 million owed to Geofinance pursuant to a credit facility. The Company does not have the financial resources to pay the amounts currently owed to Geofinance.
The most recent waiver from Geofinance expires on September 18, 2015. In connection with the Arrangement, Geofinance has agreed to a further extension of the waiver until the outside date under the Agreement, being January 29, 2016, unless otherwise agreed to by the parties subject to the terms and conditions of the waiver. As a result, Geofinance has agreed not to seek any remedy under the facility agreement in respect of the U.S. $3.5 million unpaid amount until January 29, 2016, except in case of specific circumstances. The standstill period will immediately end upon, among other things, a breach by the Company of any of its obligations in respect of the Arrangement or upon the termination of the Agreement. Geofinance may terminate the Agreement upon termination of the standstill period.
Board Recommendation and Shareholder Support
The board of directors of the Company (the "Board") formed a special committee (the "Special Committee") comprised of independent directors Jean-Claude Boubee (Chair) and M'hamed Ali Bouleyman to evaluate the Arrangement and make recommendations to the Board. Upon recommendation of the Special Committee, the Company retained Peterson & Company LLP as legal advisors for the Special Committee.
Upon recommendation of the Special Committee, the Company retained Union Securities International Ltd. of London, England, as an independent advisor to the Special Committee to prepare a fairness opinion (the "Fairness Opinion") with respect to the proposed Arrangement. The Fairness Opinion concludes that the Offer Price is fair, from a financial point of view, to the minority shareholders of the Company. Having given due consideration to a number of factors including the Fairness Opinion, the ongoing payment default by the Company under the credit facility with Geofinance, the lack of liquidity in the Shares and other economic factors, the Special Committee unanimously recommended the Arrangement to the Board, and the Board determined that the Arrangement is in the best interests of the Company and approved the entering into of the Agreement and the making of a recommendation that the shareholders vote in favour of the Arrangement.
Geofinance has entered into support agreements with holders of Shares who represent approximately 7.76% of all the issued and outstanding Shares (or approximately 40.28% of all the issued and outstanding Shares not owned by Geofinance) pursuant to which such shareholders have agreed to vote all of their Shares in favour of the Arrangement, subject to the terms and conditions of their respective agreements.
Details of the Transaction
The Arrangement will be carried out pursuant to a statutory plan of arrangement under the Business Corporations Act (British Columbia) whereby Geofinance will acquire all the issued outstanding Shares it does not already own.
The Arrangement, if consummated, will constitute a "business combination" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") because Geofinance is an insider of the Company. Pursuant to MI 61-101, the Arrangement is subject to the approval of the "majority of the minority" shareholders. For this purpose, the votes of Geofinance and any other interested parties are excluded. In addition, the Arrangement will be exempt from the formal valuation requirements of MI 61-101 on the basis that the Shares will not be listed on the Toronto Stock Exchange ("TSX") or any other senior exchange, and also on the basis of the "Previous Arm's Length Negotiation Exemption" because of the previously announced arm's length share purchase completed by Geofinance in the prior twelve months below the Offer Price.
The Company will convene a special meeting of shareholders (the "Meeting") for shareholders to consider and, if thought appropriate, to approve the Arrangement. Details of the terms and conditions of the Arrangement, together with a summary of the Agreement and the Fairness Opinion, will be included in a management information circular, which will be mailed to the shareholders as soon as practicable and will also be available for download at www.sedar.com together with the notice of meeting.
The completion of the Arrangement is subject to a number of conditions precedent that are customary to this type of transaction, including, but not limited to, there being no material adverse change with respect to the Company, the approval of at least two-thirds of the votes cast by holders of Shares at the Meeting, the approval by the "majority of the minority" shareholders, and the approval of the British Columbia Supreme Court pursuant to the terms of the Arrangement.
Assuming the satisfaction of all conditions, the proposed transaction is expected to close as soon as practicable following the Meeting. However, there can be no assurances that the Arrangement, or any other transaction with Geofinance, will be completed.
Following the Arrangement, if consummated, the Company will be a wholly-owned subsidiary of Geofinance and cease to be a reporting issuer in Canada.
As previously announced, the Shares will be delisted from the TSX at the close of the markets today September 17, 2015 following a delisting review by the TSX. The Company does not intend to cause the Shares to be listed on any other market.
Candax is an international energy company with offices in Toronto and Tunis. The Candax group is engaged in exploration and the production of oil and gas in Tunisia and holds a royalty interest in an exploration permit in Madagascar.
Geofinance is a European holding company, incorporated in the Netherlands as a public limited liability company, with a diversified portfolio of investments including interests in oil and gas companies.
Neither the Toronto Stock Exchange nor any other securities regulator accepts responsibility for the adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks and uncertainties relating to the negotiation and consummation of the definitive agreements with respect to the Arrangement, the completion of the Arrangement or related transactions, receipt of requisite legal and financial opinions with respect to the Arrangement and applicable regulatory approvals required with respect to the Arrangement. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. The Company disclaims any intent or obligation to update forward-looking statements or information except as required by law, and the reader is referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada at www.sedar.com.