Longview Oil Corp LGVWF

News Release

[Al42]

Advantage unloading at $4.45 ....

Longview Oil Corp. and Advantage Oil & Gas Ltd. Announce $94.1 million Secondary Offering of Longview Common Shares

Tuesday, February 04, 2014

 

Longview Oil Corp. and Advantage Oil & Gas Ltd. Announce $94.1 million Secondary Offering of Longview Common Shares

16:33 EST Tuesday, February 04, 2014

CALGARY, ALBERTA--(Marketwired - Feb. 4, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

As announced in a separate press release issued by Advantage Oil & Gas Ltd. (TSX:AAV) ("Advantage") which provided an update to Advantage's strategic review process, Longview Oil Corp. (TSX:LNV) ("Longview") and Advantage announce that Advantage has entered into an agreement relating to the sale of 21,150,010 Common Shares of Longview (the "Common Shares") owned by Advantage to a syndicate of underwriters led by RBC Capital Markets and FirstEnergy Capital Corporation at a price of $4.45 per share for gross proceeds of CDN$94.1 million. Closing of the offering is anticipated to be on or about February 26, 2014.

Longview will not receive any proceeds from the sale of the Common Shares. Following closing, Advantage will not hold any Common Shares of Longview. Longview currently pays a monthly dividend in the amount of $0.04 per Common Share. The first dividend that purchasers under this offering shall be eligible to participate in if declared by the Board of Directors of Longview, will be for the month of February, anticipated to be paid on March 17, 2014 to shareholders of record as at February 28, 2014.

All net proceeds from the offering will be received by Advantage and will immediately be used to retire a portion of Advantage's existing bank indebtedness.

With the continued progression of both Advantage's and Longview's business plans, the companies have terminated the Technical Services Agreement ("TSA"). The termination of the TSA and disposition of the Common Shares will reduce financial and operational complexity and simplify Advantage's organizational structure.

The TSA has existed between Advantage and Longview since April 2011 whereby Advantage provided the necessary personnel and technical services to manage Longview's business. Appropriate staffing and systems are now in place to enable both organizations to run independently following termination of the TSA.

Consistent with the termination of the TSA, Craig Blackwood has resigned as Chief Financial Officer of Longview and will remain as Vice President Finance and Chief Financial Officer of Advantage. Carey Baker has been appointed Chief Financial Officer of Longview. Carey was previously Controller for Longview and has 25 years of experience in the oil and gas sector.

[Nawaralsaadi]

Expect the stock to take a hit tomorrow, and will probably underperform for a couple of quarters. The only silver lining is that Advantage is finally out of the way, however the way this divorce has been handled is quite disconcerting. Longview should have participated in the secondary and purchased back at least 10% of the shares or 2m shares, such a transaction would have been very accretive and

[Seppelt]

LNV has no free cash to purchase 2 mil. shares and what difference would that make? In any event, if shares decline, then can always file for normal course issuer bid. I cannot believe the demand is so poor that AAV had to agree to $4.45. I guess, they tried but settled for best. For us it may be a chance to add a light oil dividend paying producer. Will se how it trades tomorrow.

[terroir]

If I read the announcement right AAV nets $4.45 less 4%, or $4.29. Pretty obvious they are not having success selling themselves or generating their own cash to give up the dividend cash flow that has to be more than debt carrying costs for that price. terr

[Nawaralsaadi]

2m shares would cost the company $8.9m at the offering price. They have ample room on their credit lines to spend this amount, and considering, the dividend on those shares is 10.8%, while the interest on the loan is around 3%, they would be saving at least 7% or $620K a year in cash outlays. This offering was very poorly handled; no stock can handle an offering of 45% of its shares, no matter

[terroir]

I am with you Nawar, But surely the share buy back would have occurred to them. Of course they may need time for a board decision and perhaps a word with the bankers, plus I think they need to get approval from the stock exchange. They do for ongoing buy backs. Not sure of the rules surrounding a one time purchase, you probably know. Anyway it is not too late, a little damage today, but if you

[roscoe74]

All in all, its good news. The overhang of the AAV 45% ownership was a drag on LNV because the market was concerned about the scenario that unfolds today. Kelly Drader was transferred to LNV for this reason and he is intimately familiar with the processes so its not like LNV was caught unaware. Now, LNV will perform on its own merits and the market will adapt. Back up the truck and load up.

[Seppelt]

I agree, the overhang for LNV is over. Investors should use this opportunity to average down or establish new positions. I placed orders for $1.37 and $1.38 - probably filled. I believe, Kelly Drader bought shares about a month ago so not surprised he will run the company. I think, AAV shareholders got shorthanded. The board was probably tired of this lengthy process and took the

[Seppelt]

oops, i meant to say $4.37-4.38.

[Nawaralsaadi]

I have added today as well,  while I am disappointed with the way the offering was handled. The assets of the company continue to retain their value. This coming year is a make or break for the company, and the management is very well aware of that. The stock price will ultimately trade between $7 and $8, but it is unclear if this will happen organically or inorganically at this point

[Al42]

Also picked up a few more shares, didn't really want to as i'm overweight this name but couldn't resist.

[roscoe74]

While there will be some volatility, once the AAV overhang is gone I doubt we will see these prices again so I sold off my PPY at a tidy profit and added to LNV. With this sale disappointment, it looks like there is time to wait for NG stocks and LNV pays a hansome dividend.