ArPetrol Ltd. provides an update on sale of substantially all of its assets and announces first quarter 2016 financial and operating results

CALGARY, May 30, 2016 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV: RPT) provides an update on the sale of substantially all of its assets (the "Transaction") to a subsidiary of Empresa Nacional Del Petróleo, which closed on May 19, 2016. The Company also announces its financial and operating results for the three months ended March 31, 2016. The Company's interim condensed consolidated financial statements and management's discussion and analysis ("MD&A") for the reporting period have been filed on SEDAR at www.sedar.com and posted on the Company's website at www.arpetrol.com.

Update on Transaction

As previously announced, ArPetrol successfully closed the Transaction on May 19, 2016. The purchase price paid to the Company at closing of the Transaction was US$11.1 million (approximately CAN$14.5 million), including the net working capital at closing of the subsidiaries being sold of US$2.1 million. This net working capital amount is subject to a 90-day post-closing adjustment period. In addition, US$2.25 million of the purchase price was placed into an escrow account at closing and will be released to ArPetrol in November 2016 following the six-month indemnity period, subject to any negative adjustments to the working capital calculation or indemnity amounts being claimed against the escrowed funds.

As a result of the completion of the Transaction, the Company no longer has active business operations or assets other than the cash proceeds from the Transaction. ArPetrol now plans to focus on the efficient winding-up of the affairs of the Company, including the distribution of the net proceeds from the Transaction to the ArPetrol shareholders (the "Shareholders"). The Company plans to apply for delisting of the Company's common shares (the "Common Shares") from the TSX Venture Exchange ("TSXV") after the first distribution to Shareholders, but the TSXV may on its own initiative delist the Common Shares sooner or transfer the listing to the NEX Board.

The Company currently plans to make the distributions to Shareholders in three instalments as a return of capital on the Common Shares. The first distribution will be made from the immediately-available cash resources of the Company as soon as practicable following the completion of the 90-day post-closing adjustment period. The first distribution is expected to be in the range of 65% to 70% of total proceeds (subject to any adjustments or indemnity claims) and is expected to be paid in September 2016. The second distribution is expected to occur by year-end after expiry of the six month indemnity period and the release of the escrowed funds (subject to any indemnity claims).  The amount of the second distribution is uncertain due to, among other things, foreign exchange rates, potential claims under the indemnity provisions of the Transaction and the costs associated with Company's dissolution and settlement of all outstanding obligations. The Company plans to apply for a Canada Revenue Agency ("CRA") clearance certificate in connection with the dissolution of the Company and before the final distribution is made to Shareholders, and the timing for receipt of the CRA clearance certificate is unknown. The final distribution, which is anticipated to be nominal, is expected to be made after the CRA clearance certificate is received and all liabilities are settled.  While the total amount of the distributions is not certain, the Company expects that the total distributions to the Shareholders from the three instalments will be in the aggregate range of approximately $0.59 to $0.62 per Common Share. The ultimate distributions may be lower in the event of a negative change to the foreign exchange rate or if any significant liabilities or costs arise during the winding up and dissolution process which are not currently foreseen by the Company or its advisors. 

The Company will issue further press releases advising Shareholders of the timing and details of these various events and the record dates for distributions.

Summary of the First Quarter 2016

Operating and Financial

As a result of the closed Transaction, the operating results for the Company's foreign operations in Barbados and Argentina were classified as discontinued operations in the March 31, 2016 financial statements. The operating results of the Canadian parent company were classified as continuing operations in the March 31, 2016 financial statements.   

The net loss from continuing operations was $403,516 for the first quarter of 2016 compared to a net loss of $314,422 for the comparative period in 2015. The increase in the net loss is primarily due to increased costs related to the Transaction.

The net income from discontinued operations was $232,694 for the first quarter of 2016 compared to a net income of $533,026 for the comparative period in 2015.

The components of the net income from discontinued operations were:

About ArPetrol Ltd.

ArPetrol is a Calgary-based publicly traded company whose Common Shares are listed on the TSXV under the symbol "RPT". The Company has completed a sale of substantially all of its assets and no longer has active business operations.

Forward-Looking Information

Certain information provided in this press release constitutes forward-looking statements and information within the meaning of applicable securities laws. Specifically, and without limitation, this press release contains forward-looking statements and information relating to the anticipated timing for delisting of the Common Shares, the CRA clearance certificate process, and the expected timing and amount of distributions to Shareholders. Forward-looking information typically contains statements with words such as "anticipate", "believe", "forecast", expect", "plan", "intend", "estimate", "propose", "project", or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company's securities not to place undue reliance on forward-looking information as, by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company. In particular, liabilities, costs or obligations (including potential tax obligations) may arise, currency exchange rates may change or other events may transpire in the future not currently foreseen by the Company that may result in distributions to Shareholders that are lower than those discussed herein or occur at different times than those discussed herein. Shareholders and potential investors are heavily cautioned against relying on the anticipated timelines or estimated amounts of distributions provided in this press release.

In respect of the forward-looking statements and information set out in this press release, the Company has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the stability of currency exchange rates, the accuracy of estimated net working capital calculations at closing, the number of shares outstanding at the time of the distributions to Shareholders, the estimated amount of the transaction and dissolution costs and the liabilities and obligations of the Company, the estimated amount of net proceeds remaining for distribution to Shareholders, the delisting process of the TSXV and the process for obtaining the CRA clearance certificate.

There are a number of risk factors associated with the completion of the liquidation and dissolution of the Company, the delisting of the Common Shares and the amount and timing of distributions to be made to Shareholders that could cause actual results to differ materially from those anticipated by the Company, including but not limited to, risks of negative working capital adjustments and/or indemnity claims against the Company in connection with the Transaction, uncertainties regarding the actual transaction and dissolution costs and obligations and liabilities (including potential tax obligations) of the Company, changes in currency exchange rates and the risk of the TSXV delisting the Common Shares earlier than expected. Readers should also refer to "Forward Looking Statements" and "Meeting Matters – Approval of the Asset Sale Transaction  - Risk Factors Associated with the Asset Sale Transaction and – Approval of Voluntary Delisting of the Common Shares from the TSXV – Risk Factors for Delisting" in the Company's Information Circular dated April 4, 2016 filed on SEDAR at www.sedar.com for a further discussion of the risks associated with the distributions to be made to Shareholders and the delisting of the Common Shares.

The forward-looking information included herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and the Company assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.

Additional information relating to the Company is also available on SEDAR at www.sedar.com.

Neither the TSXV nor its Regulation Services Provider (as defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

SOURCE ArPetrol Ltd.