CALGARY, April 18 /CNW/ - Proprietary Industries Inc. ("Proprietary") and
Loon Energy Inc. ("Loon") today announced that Proprietary has acquired all of
the issued and outstanding shares of Frontier Holdings Limited ("Frontier")
from Loon and from Nemmoco Petroleum Limited ("Nemmoco", and together with
Loon, the "Vendors"). Prior to the acquisition of such shares, each of Loon
and Nemmoco owned 50% of Frontier. Frontier, a private Bermuda company, is a
party to a series of farm-in agreements, which, subject to the approval of
various government agencies, involve the acquisition by Frontier
(collectively, with the purchase and sale of the Frontier shares, the
"Acquisition") of the following oil and gas interests in Asia:
- a 37.5% interest in a development and production lease (the
"Development and Production Lease") covering a gas field; and
- a 47.5% to 50% interest in five exploration blocks.
As consideration for the shares of Frontier, Proprietary has issued and
deposited into escrow, an aggregate of 14,958,838 common shares of Proprietary
(the "Proprietary Shares"). The Proprietary Shares will be released from
escrow (the "Escrow Release") and distributed to the Vendors, 7,479,419 to
each of Loon and Nemmoco, upon receipt of the necessary government approval
for the Acquisition which is currently expected to occur within 120 days. In
addition, Propriety has agreed to issue to the Vendors an aggregate of an
additional 500,000 Proprietary Shares (250,000 to each of Loon and Nemmoco)
for each 100 billion cubic feet of reserves of gas proven during the 5 years
following the Escrow Release, up to a maximum of an aggregate of an additional
7,681,918 Proprietary Shares, in each case, subject to regulatory approval. In
certain circumstances, Proprietary may be required to pay cash to the Vendors
in lieu of issuing such additional Proprietary Shares. Proprietary plans to
commission a technical report in compliance with National Instrument 51-101 in
connection with its interest in the gas field subject to the Development and
Production Lease.
In connection with the Acquisition, subject to the Escrow Release,
Proprietary has granted options to acquire an aggregate of 4.3 million
Proprietary Shares to certain directors, officers and employees of Frontier
who will have key roles in the project.
The Frontier agreements call for payments to be made in respect of the
reimbursement of prior expenses and finder's fees together with the obligation
by Frontier to fund, in varying amounts, 10 exploration wells and 7
development wells over the next 36 months.
Total expenditures by Frontier in respect of the foregoing are currently
expected to be approximately US$60 million during such period.
As part of the agreement, Nigel McCue will join the board of Proprietary.
Upon receipt of governmental approval for the Acquisition, it is expected that
Mr. McCue will be appointed President & Chief Executive Officer of
Proprietary.
Mr. McCue has thirty years experience in the upstream sector of the
petroleum industry. He is a director and Chief Executive Officer of Nemmoco, a
private exploration and production company with interests located principally
in Central and Eastern Europe. Prior to this he was a Director and Chief
Financial Officer of Lundin Oil Plc., a public company with interests in over
twenty countries with specific experience in mergers & acquisitions, equity,
corporate and project debt finance, and stock exchange listings including AIM.
Prior to this, he held various positions with Chevron Overseas Petroleum Inc.
and Gulf Oil Corporation. Mr. McCue is a non-executive director of Dragon Oil
Plc. and is Chairman of its audit committee and a member of the remuneration
and nomination committees.
In the event the government approvals are not obtained within 120 days,
the Acquisition will be unwound, the Frontier shares will be returned to the
Vendors and the Proprietary Shares will be returned to Proprietary and
cancelled. Further, in such instance, Mr. McCue, has agreed to resign as a
director and officer of Proprietary.
About Proprietary:
Proprietary is a principal merchant bank based in Calgary, Alberta. It is
listed on the Toronto Stock Exchange trading under the symbol PPI.
About Loon:
Loon is an internationally focused oil and gas exploration company with
offices in Calgary, Alberta & Dubai, United Arab Emirates. Loon, with current
projects in Colombia, Slovenia and Brunei, is listed on the TSX Venture
Exchange trading under the symbol LEY.
About Nemmoco:
Nemmoco is a private Bermuda company at arms length to Loon and
Proprietary. Tim Elliott, an officer of Loon, owns an approximate 3% interest
in Nemmoco.
Forward-looking statements: This document may contain statements about
expected or anticipated future events and financial results that are forward-
looking in nature and, as a result, are subject to certain risks and
uncertainties, such as general economic, market and business conditions, the
regulatory process and actions, technical issues, new legislation, competitive
and general economic factors and conditions, the uncertainties resulting from
potential delays or changes in plans, the occurrence of unexpected events, and
the capability of Proprietary or Loon to execute and implement their future
plans. Actual results may differ materially from those projected by
management. For such statements, we claim the safe harbour for forward-looking
statements within the meaning of the Private Securities Legislation Reform Act
of 1995.
Neither of the TSX nor the TSX-V have reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
%SEDAR: 00002870E
