CALGARY, ALBERTA--(Marketwired - Feb. 8, 2016) - Long Run Exploration Ltd. ("Long Run" or the "Company") (TSX:LRE) is pleased to announce that it has mailed an information circular and proxy statement to Long Run securityholders in connection with the special meeting to be held on February 29, 2016 (the "Special Meeting"). At the Special Meeting, Long Run shareholders and debentureholders will be asked to pass a resolution approving the plan of arrangement as initially announced on December 21, 2015 (the "Arrangement") involving Long Run, Long Run securityholders and Calgary Sinoenergy Investment Corp. (the "Purchaser"). Closing of the arrangement remains on track to occur in April 2016.
Pursuant to the Arrangement, the Purchaser will acquire: (i) all of Long Run's outstanding common shares ("Long Run Shares") for cash consideration of $0.52 per Long Run Share; and (ii) all of Long Run's outstanding 6.40% convertible unsecured subordinated debentures due January 31, 2019 (the "Debentures") for cash consideration of $750 per $1,000 principal amount of Debentures plus accrued and unpaid interest. Assuming the Arrangement closes on April 30, 2016 and the Debentures are acquired by the Purchaser, the accrued and unpaid interest payable on the Debentures would be approximately $48 per $1,000. This includes the deferred semi-annual interest payment that was payable on February 1, 2016.
After an extensive review of the Company's strategic and financial options to improve its capital structure, Long Run's Board of Directors and management believe that pursuing the Arrangement is in the best interest of Long Run and its stakeholders.
The cash consideration offered under the Arrangement represents an approximate 215% premium to the closing price of the Long Run Shares and an approximate 257% premium to the closing price of the Debentures on the Toronto Stock Exchange on the last trading day prior to the announcement of the Arrangement. As of February 5, 2016, the cash consideration offered represents an approximate 39% premium to the closing price of the Long Run Shares and an approximate 67% premium to the closing price of the Debentures.
In addition to the premiums offered, the Arrangement provides certainty of value and near-term liquidity to Long Run shareholders and debentureholders in a challenging commodity price environment. If the shareholders and debentureholders do not approve the Arrangement, the Purchaser has the right to terminate the Arrangement which would trigger an event of default under Long Run's credit facilities. The event of default under the credit facilities would allow the bank syndicate to accelerate the repayment of Long Run's outstanding bank debt of approximately $580 million. If the Arrangement is not completed, Long Run will be significantly challenged to continue as a going concern.
Long Run's Board of Directors unanimously recommends that shareholders and debentureholders vote in favor of the Arrangement.
Further details can be found in the Company's February 2016 investor presentation available on Long Run's website at www.longrunexploration.com. In addition, the Company's information circular and proxy statement dated January 29, 2016 will be filed on Long Run's SEDAR profile at www.sedar.com.
FOR FURTHER INFORMATION
Visit the Company's website at www.longrunexploration.com.
ADVISORY
Forward Looking Statements
Certain information set forth in this press release, including information and statements which may contain words such as "could", "plans", "should", "anticipates", "expects", "believes", "will" and similar expressions and statements relating to matters that are not historical facts, contain forward-looking statements, including but not limited to statements regarding: the proposed Arrangement and anticipated closing of the Arrangement, the timing for the holding of the Special Meeting, the estimated amount of the accrued and unpaid interest on the Debentures that will be payable on closing of the Arrangement and the filing of the information circular on SEDAR. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Long Run's control. Completion of the Arrangement is subject to a number of conditions. Failure to satisfy any of these conditions, the emergence of a superior proposal or the failure to obtain approval of Long Run's shareholders or debentureholders may result in the termination of the Arrangement. The foregoing list is not exhaustive. Additional information on these and other risks that could affect completion of the Arrangement will be set forth in the information circular, which will be available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Particularly, the estimated amount of the accrued and unpaid interest on the Debentures that will be payable on closing of the Arrangement is based on the assumption that the Debentures are acquired pursuant to the Arrangement and that the Arrangement will close on April 30, 2016. The actual amount of the accrued and unpaid interest shall change in the event that closing of the Arrangement occurs on a date other than April 30, 2016. The actual results, performance or achievement of Long Run could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Long Run will derive therefrom. Long Run disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.