CALGARY, April 13 /CNW/ - Resilient Resources Ltd. ("Resilient")
(TSX:RRL) and Guardian Exploration Inc. ("Guardian") announced today that
Guardian completed its previously announced equity financing (the "Guardian
Private Placement"), issuing 5,333,333 flow-through shares at a price of $0.75
per flow-through share and 1,480,000 common shares at a price of $0.65 per
common share for net proceeds of $4,495,685. With the net proceeds from the
Guardian Private Placement, Guardian completed its previously announced
acquisition (the "Acquisition") of a working interest in northeast B.C. gas
assets in one of Guardian's core areas for $4,000,000. The Acquisition added
approximately 2.8 Bcf of proved plus probable reserves to Guardian's
properties (based on forecast pricing of McDaniel & Associates Consultants
Ltd. ("McDaniel") and discounted at 10%) and McDaniel assigned approximately
$12.3 million to the net present value of future net revenues from the assets
acquired under the Acquisition, both effective as of September 1, 2005. The
completion of the Guardian Private Placement and the Acquisition were both
conditions precedent to the completion of the amalgamation (the
"Amalgamation") between Resilient and Guardian.
In order for the amalgamated company to have sufficient working capital,
Guardian entered into a letter agreement with a third party (the "Lender"),
subject to the Lender's final due diligence, for a convertible debenture
financing (the "Debenture Financing"). Under the Debenture Financing, Guardian
will issue to the Lender a secured convertible debenture (the "Debenture") in
the principal amount of $4,500,000. The Debenture will mature 18 months from
issuance, bear interest at a rate of 7% per annum (increasing to 10% per annum
if the principal amount has not been re-paid within one year of its issuance
and increasing to 14% per annum during an event of default) and be convertible
into shares at a conversion price of $0.75 per Guardian common share. The
Lender will also receive in connection with the Debenture Financing, 650,000
Guardian common shares as a finance fee and warrants to acquire 1,600,000
Guardian common shares at an exercise price of $0.75 per Guardian common share
with an expiry date of 42 months from issuance. Under the Debenture Financing,
upon notice to the Lender, the principal amount of the Debenture can be pre-
paid in its entirety prior to the maturity of the Debenture if the amalgamated
company is not in default under the terms of the Debenture; however, upon the
Lender receiving such notice it will have five business days to determine
whether to accept such pre-payment or convert the Debenture into shares. If
the amalgamated company raises new equity or debt capital (excluding proceeds
from warrant and option exercises) subsequent to the completion of the
Debenture Financing, the Lender has the right to require that these funds be
used to repay all or part of the outstanding principal amount of the
Debenture, excluding the first $4,000,000 of funds received from the issuance
of flow-through shares by the amalgamated company. In connection with the
Debenture Financing, Wellington West Capital Markets Inc. will receive a
commission of 6% cash and warrants to acquire 113,333 Guardian common shares
at an exercise price of $0.75 per Guardian common share with an expiry date of
18 months from issuance. The Debenture Financing is expected to close
immediately prior to the closing of the Amalgamation. The net proceeds from
the Debenture Financing are expected to be used to repay Guardian's bank
indebtedness of $900,000 and for capital expenditures and general working
capital purposes.
As previously announced, the number of common shares of the amalgamated
company ("Amalco Shares") each shareholder of Resilient and Guardian would
receive for each of their common shares under the Amalgamation is determined
by the following formulas (where W is the net proceeds from the Guardian
Private Placement, Y is the total purchase price paid by Guardian under the
Acquisition, X is the number of common shares of Guardian issued under the
Guardian Private Placement and V is the number of Guardian common shares
issued after March 3, 2006 and prior to the effective date of the
Amalgamation):
Resilient
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20,000,000 x ((3,000,000) (divided by) (31,850,000 + W -Y))
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12,015,841
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Guardian
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20,000,000 x ((28,850,000 + W - Y) (divided by) (31,850,000 + W -Y))
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(29,516,771 + X + V)
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As the Guardian Private Placement and Acquisition have been completed by
Guardian, the W, X and Y variables are now known. W is $4,495,685, X is
6,813,333 and Y is $4,000,000. 68,853 Guardian common shares were issued as a
finders' fee in connection with the Guardian Private Placement, so V will be
718,853 (assuming 650,000 Guardian common shares are issued under the
Debenture Financing). Accordingly, each shareholder of Resilient is expected
to receive 0.154376 of an Amalco Share for each Resilient common share held
and each shareholder of Guardian is expected to receive 0.489758 of an Amalco
Share for each Guardian common share. This will result in the Resilient
shareholders and Guardian shareholders holding approximately 9.3% and 90.7% of
the Amalco Shares, respectively, upon completion of the Amalgamation.
If the Debenture Financing is completed, the amalgamated company will
have 20,000,000 Amalco Shares outstanding upon completion of the Amalgamation,
with approximately 8,265,000 Amalco Shares reserved for issuance upon exercise
of warrants, broker's warrants and stock options which may be granted under
the amalgamated company's stock option plan.
The special meetings of the Resilient and Guardian shareholders to
approve the Amalgamation will be held on April 13, 2006 and the Debenture
Financing and Amalgamation are expected to close on April 20, 2006. The
completion of the Amalgamation requires approval of the shareholders of each
of Resilient and Guardian and completion of the Debenture Financing, among
other conditions.
The Toronto Stock Exchange advised yesterday that they were not prepared
to list the Amalco Shares. As a result, discussions were had with the TSX
Venture Exchange regarding the listing of the Amalco Shares on such exchange
and, based on such discussions, Resilient and Guardian are confident that the
TSX Venture Exchange will approve the listing of the Amalco Shares.
Conditional listing approval of the TSX Venture Exchange for the Amalco Shares
is expected to be obtained by April 19, 2006, provided the TSX Venture
Exchange is satisfied with its review of the required documentation.
Forward-Looking Statements Advisory
This news release contains statements concerning the terms of the
Debenture Financing and the expected closing thereof; the expected exchange
ratios in respect of the Amalgamation and the Amalgamation and the expected
closing thereof, listing of the Amalco Shares on the TSX Venture Exchange or
other expectations, plans, goals, objectives, assumptions, information or
statements about future events, conditions, results of operations or
performance that may constitute forward-looking statements or information
under applicable securities legislation. Such forward-looking statements or
information are based on a number of assumptions which may prove to be
incorrect. Such assumptions include, among other things: the Debenture
Financing closing, TSX Venture Exchange approval of the listing of the Amalco
Shares and the approvals and conditions in respect of the Amalgamation being
obtained when expected. Although Resilient and Guardian believe that the
expectations reflected in such forward-looking statements or information are
reasonable, undue reliance should not be placed on forward looking statements
because neither Resilient nor Guardian can give assurance that such
expectations will prove to be correct. Forward-looking statements or
information are based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause actual results
to differ materially from those anticipated by Resilient and Guardian and
described in the forward looking statements or information. These risks and
uncertainties include, but are not limited to: the Debenture Financing
closing, the necessary approvals in respect of the TSX Venture Exchange and
Amalgamation being obtained, the state of the capital markets and general
economic and business conditions. The forward-looking statements or
information contained in this news release are made as of the date hereof and
neither Resilient nor Guardian undertake any obligation to update publicly or
revise any forward looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by applicable
securities laws.
%SEDAR: 00002500E
