TSX Venture Exchange: CW.H
VANCOUVER, Nov. 29 /CNW/ - The Company is pleased to announce that it has
entered into a non-binding letter of intent to enter into a transaction with
Canadian Sub-Surface Energy Services Inc. ("CanSub"), a Calgary-based company
specializing in providing services to oil and gas exploration and production
companies in Western Canada. Under the terms of the transaction, the Company
will have an option to acquire all of the issued and outstanding shares of
CanSub. CanSub provides cased-hole wireline, slickline, production testing,
well optimization and swabbing services to junior, intermediate and senior oil
and gas exploration and production companies, with operations focused in
Western Canada. CanSub generated approximately $33 million in consolidated
revenue for the nine-month period ended September 30, 2005 to a diverse client
base consisting of over 500 different customers. The operations of CanSub are
comprised of approximately 250 employees working out of various field
locations in Alberta and Saskatchewan and its headquarters in Calgary.
Under the terms of the transaction, which is expected to be completed by
way of a statutory plan of arrangement, the Company intends to acquire an
option to acquire all of the outstanding shares of CanSub for an exercise
price to be agreed upon by both parties. Approximately one half of such
exercise price will be payable in cash with the balance payable in securities
of the Company. These securities may be subject to escrow or other
restrictions imposed by applicable stock exchanges. Completion of the
transaction is subject to the following conditions: (a) regulatory, and if
necessary, shareholder approval to the transaction; (b) completion of due
diligence; (c) completion of a 7:1 consolidation of the Company's shares; and
(d) completion of a brokered private placement to raise gross proceeds of
approximately $32.5 million. The Company intends to call a shareholder meeting
on or about January 30, 2006 to approve the plan of arrangement and related
transactions. As part of the transaction, the Company intends to complete a
non-brokered private placement of 3,000,000 non-voting preferred shares (pre-
consolidation) at a price of $0.50 per share to provide working capital. It is
expected that existing management of CanSub will assume substantially all of
the management duties at the Company. Additional details regarding the
transaction will be available upon execution of formal agreements, which are
required to be finalized on or before December 30, 2005.
Completion of the transaction is subject to a number of conditions,
including but not limited to, TSX Venture Exchange ("TSXV") acceptance and
disinterested shareholder approval. The transaction cannot close until the
required shareholder approval is obtained. There can be no assurance that the
transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management
information circular or filing statement to be prepared in connection with the
transaction, any information released or received with respect to the
transaction may not be accurate or complete and should not be relied upon.
Trading in the securities of the Company should be considered highly
speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the
contents of this press release.
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