Shoreline Energy Corp. Enters Into Plan of Sponsorship and Reorganization Agreement With Highbridge Energy Inc.
17:58:51 10/05/2015
CALGARY, ALBERTA, Oct 05, 2015 (Marketwired via COMTEX News Network) -- Shoreline Energy Corp. ("Shoreline" or the "Company") announced
today that the Company has entered into a Plan of Sponsorship and
Reorganization Agreement with Highbridge Energy Inc. ("Highbridge"),
a private Alberta company.
Pursuant to Shoreline's application under the Companies' Creditors
Arrangement Act (the "CCAA"), Shoreline is currently subject to an
order dated April 13, 2015 granted by the Court of Queen's Bench of
Alberta (the "Court") which, amongst other matters, has appointed
Grant Thornton Limited as the Monitor for Shoreline.
Readers are cautioned that the terms of the Plan of Sponsorship and
Reorganization Agreement (the "Agreement") may be varied or amended.
Accordingly, readers are cautioned that it would be inappropriate to
rely on the following summary of the Agreement in making an
investment decision or otherwise as a source of factual, business or
operational information about the parties or their respective
affiliates. This summary also contains forward looking statements and
readers are cautioned to review the section entitled "Forward Looking
and Cautionary Statements" below.
The Plan of Sponsorship and Reorganization
Under the Plan of Sponsorship and Reorganization (the "Plan"),
Highbridge intends, and on or about October 9, 2015, to raise up to
$500,000 by issuing common shares ("Highbridge Common Shares") at a
price of $0.20 per Highbridge Common Share (the "Initial Private
Placement") and, subsequently, and on or about October 23, 2015, to
raise not less than $5,000,000 by issuing units of Highbridge
("Highbridge Units") at a price of $0.70 per Highbridge Unit (the
"Secondary Private Placement"). Each Highbridge Unit will consist of
one Highbridge Common Share and one Warrant. Each Warrant will
entitle the holder to acquire one Highbridge Common Share at an
exercise price of $0.70 for a period of two years from issuance.
Pursuant to the Agreement all proceeds of the Initial Private
Placement and Secondary Private Placement are to be allocated to
consummation of the Plan. In connection with the implementation of
the Plan, all options, warrants and other rights to purchase
Shoreline common shares will be cancelled. Upon the implementation of
the Plan, Shoreline will amalgamate with Highbridge under the
Business Corporations Act (Alberta) (the "Amalgamation") and the
resulting issuer's name will be Highbridge Energy Inc. (the
"Resulting Issuer").
If successfully implemented, as a result of the Plan and
Amalgamation, among other reorganization matters (i) each outstanding
Highbridge shareholder, will receive one Resulting Issuer common
share for each Highbridge Common Share held; and (ii) each
outstanding Shoreline shareholder, will receive one Resulting Issuer
common share for every 35 Shoreline common shares held, resulting in
a deemed consolidation of the Shoreline common shares at a ratio of
35:1.
It is proposed that upon implementation of the Plan (i) the secured
Shoreline creditors shall each receive cash in satisfaction of their
debt up to an amount equal to seventy percent (70%) of the proven
claim amount in the Creditor List and the balance of the debt is to
be converted to Resulting Issuer common Shares at a deemed price of
$5.00 per share; and (ii) each unsecured Shoreline creditor shall
receive cash equal to the lesser of (A) its proven claim; and (B)
$2,500 per claim in satisfaction of its proven claim and the balance
of the proven claim will be converted into Resulting Issuer common
shares at a deemed price of $5.00 per share. The Creditor List is the
list of claims made by secured and unsecured creditors provided by
Shoreline and reviewed by the Monitor, which consists of proven
claims and those claims in the process of being proven, disallowed,
resolved and settled in accordance with the Claims Process and Stay
Extension Order of the Court dated May 13, 2015. It is anticipated
that the Shoreline debentureholders will be dealt with as describe
below under "Conditions to Implementation - Highbridge Conditions".
Conditions to Implementation
The implementation of the Plan is subject to the satisfaction of
conditions customary for transactions of this nature, subject to
waiver by the applicable party(ies) and/or Court approval, including:
Mutual Conditions
-- receipt of the approval of the Plan by the Shoreline creditors in accordance with Section 6(1) of the CCAA on or before November 13, 2015; -- the completion of the Initial Private Placement and the Secondary Private Placement; and -- final Court approval (i.e. the Sanction Order) shall have been granted by no later than November 27, 2015.
Shoreline Conditions
-- the receipt of all regulatory, court and third party consents, approvals and authorizations as may be required.
Highbridge Conditions
-- the Agreement and the performance of all of Shoreline's obligations thereunder, including, without limitation, Shoreline's obligation to pay a break fee, shall have been approved by the Court by not later than October 13, 2015; -- the receipt of all regulatory, court and third party consents, approvals and authorizations as may be required; and -- prior to the implementation of the Plan, the Shoreline debentureholders shall have converted their debentures into Shoreline common shares such that they shall receive equivalent Resulting Issuer common shares on the same basis as the other unsecured Shoreline creditors and otherwise in accordance with the Shoreline debentureholder indenture.
Additional Terms and Conditions
The Agreement also contains other terms and conditions customary for
a transactions of this nature including representations and
warranties of each of Shoreline and Highbridge, covenants regarding
the conduct of business prior to implementation of the Plan, negative
covenants relating to the issuance of securities or the amendment of
the parties' constating documents and the agreement to replace the
board of directors and officers of Shoreline with nominees specified
by Highbridge at closing.
Each of Shoreline and Highbridge have given non-solicitation
covenants subject to provisions providing for superior proposals. In
the event Shoreline or Highbridge terminates the Agreement in order
to enter into a binding written agreement with respect to a Superior
Proposal the party terminating the Agreement must pay a break fee of
$100,000.
Further news releases will be provided on an ongoing basis throughout
the CCAA process and in respect of the Agreement as may be determined
necessary.