Business
Western Canada Energy Ltd. To Repay CWB Credit Facility
Western Canada Energy Ltd. To Repay CWB Credit Facility
About this update from Wescan Energy Corp.
[{"type":"text","content":"\nWestern Canada Energy Ltd. To Repay CWB Credit Facility\n\n\n Nov. 4, 2009 (Filing Services Canada) -- Western Canada Energy Inc. (WCE - TSX Venture), has experienced a major decrease in operating income and a diminished ability to meet its financial obligations due to the collapse of oil and gas prices related to the recent global financial crisis. As a result, WCE's banker, Canadian Western Bank (\"CWB\"), reduced WCE's credit facility and began the process to recover all amounts owing. The board of directors of WCE concluded that the best alternative for all stakeholders (the debenture holders, preferred shareholders, common shareholders and creditors) was to sell sufficient assets to repay the CWB but retain enough assets to form the basis of an on-going entity. On November 3, 2009 the CWB delivered a demand for payment in the amount of $3,281,728.52 as of that date with per diem interest of $611.78.WCE has entered into agreements with two arms-length private companies, Tallahassee Petroleum Inc. (\"Tallahassee\") and Dewpoint Resources Ltd. (\"Dewpoint\"), to sell producing oil and natural gas assets for total proceeds of $3.0 million. These assets represent about 70% of the value of WCE's proved plus probable reserves, as determined by independent evaluation. The net proceeds of these sales, after costs and adjustments, would reduce the amount outstanding on the CWB loan to approximately $400,000. The remaining proved producing reserves of WCE have been valued at $1.8 million and the total proved plus probable reserves have been valued at $5.8 million.In order to fully repay the CWB, WCE plans to raise up to $500,000 in short term, bridge financing from accredited investors, secured by the issuance of a new debenture having a principal amount of not more than $500,000, bearing interest at the rate of 12% per annum, and becoming due six months after funding. This new debenture would rank ahead of the existing deed of trust and mortgage (the \"Indenture') between WCE and Olympia Trust Company, which would continue as a second charge on WCE's remaining assets. The consent of the current debenture holders under the Indenture to the sale of the assets and the priority of the new debentures is required by November 12, 2009 in order for these transactions to close. The board of directors believes that the assets which WCE would...