CALGARY, Jul 26, 2011, 2011 (Canada NewsWire via COMTEX) --
Plan of Arrangement Obtains Court Approval
Compton Petroleum Corporation (TSX: CMT)
("Compton") is pleased to announce that the required majority of
holders of the outstanding US$193.5 million of Compton Petroleum
Finance Corporation ("Compton Finance" and with Compton, the
"Corporation") 10% Senior Notes due 2017 and US$48.8 million of Compton
Finance 10% Mandatory Convertible Notes due September 2011 (together,
the "Notes") have approved the proposed recapitalization transaction
(the "Recapitalization") under which all of the Notes are to be
converted into equity. In addition, the required majority of
shareholders have approved the resolutions voted upon at the Special
Meeting of shareholders of Compton held on July 25, 2011, which were as
follows:
-- to consolidate its issued and outstanding Common Shares on the
basis of one (1) new Common Share for every two hundred (200)
Common Shares as described in the joint management proxy
circular of Compton and Compton Finance dated June 24, 2011
(the "Circular");
-- to issue Common Shares, Rights, Backstop Rights and Cashless
Warrants to the holders of the Notes under the
Recapitalization, as more particularly described in the
Circular; and
-- to approve a reduction of the stated capital account maintained
for the Common Shares, as more particularly described in the
Circular.
The results of voting have been filed with regulatory authorities and
can be found on SEDAR at www.sedar.com. In addition, Compton has received a final order of the Court of
Queen's Bench of Alberta approving the Recapitalization.
The Recapitalization is subject to certain conditions which are typical
of transactions of this nature. Compton believes all of those
conditions will be satisfied and that the Recapitalization will be
completed along the timeline described below.
Next Steps & Capital Structure Post Recapitalization
Compton will now focus on finalizing and mailing the Short Form
Prospectus (the "Prospectus") in respect of, among other things, the
Rights Offering to stakeholders. Compton anticipates that the record
date for the share consolidation will be on or around August 5, 2011,
and that the consolidated Common Shares will begin trading on the
Toronto Stock Exchange ('TSX') on or around August 10, 2011.
Post consolidation as of the shareholder distribution date (on or around
August 16, 2011), stakeholders will receive (i) one Right for each
Common Share held, which will enable them to participate in the Rights
Offering, and (ii) two Cashless Warrants for each Common Share held,
each of which will be automatically converted into one Common Share if
the Warrant Trigger Price is reached during their three-year term. For
every 2.0612181 Rights, a stakeholder may purchase one Common Share.
If a shareholder wishes to minimize the dilution which shall result from
the Rights Offering, the shareholder should fully exercise the Rights
issued to that shareholder to subscribe for and purchase Common
Shares. If a shareholder does not fully exercise such Rights, or
elects to sell or transfer those Rights, the dilution to that
shareholder's current percentage ownership in Compton will be greater
than if such shareholder had exercised all its Rights.
The Prospectus outlining, among other things, the details of the
offering of Rights and Cashless Warrants to the stakeholders is in the
process of being completed and filed with Canadian securities
regulatory authorities. It is anticipated to be available on Compton's
website, www.comptonpetroleum.com, and via www.sedar.com on or around August 4, 2011, and mailed to Compton's stakeholders on or
around August 19, 2011. Additional information pertaining to how
stakeholders can obtain information to exercise their Rights will be
outlined on Compton's website.
Completion of the Recapitalization is expected to provide the following
key benefits to the Corporation:
-- Normalizes Compton's capital structure to be competitive with
industry peers in the continuing low natural gas price
environment
o Reduces the ratio of debt to trailing four quarter adjusted EBITDA
from 4.4 times to 1.5 times (pro forma) at March 31, 2011
-- Substantially improves financial strength and reduces financial
risk
o Retires approximately $274.3 million of debt, including the
Mandatory Convertible Notes due in September 2011 and the Senior
Notes due in 2017
o Reduces the drawings on Compton's Credit Facility by the amount of
the net proceeds of the Rights Offering, after deducting costs
incurred in completing the Recapitalization
o Increases the total credit capacity under the Senior Bank Facility
to $160.0 million
o Improves Compton's financial liquidity
-- Positions the Corporation to more aggressively invest in its
asset base
o Decreases annual cash interest and financing expenses by
approximately $25.5 million, which can be reallocated to asset
development
o Provides the opportunity for accretive growth using only internally
generated cash flow over a multi-year horizon
''We're pleased to receive approval of the Recapitalization by both
noteholders and shareholders," said Tim Granger, President and CEO.
"This was a critical step to its implementation, providing firm footing
to move forward with the development of the company and its assets.
With the additional funds available due to the reduction in interest
expenses, we will be able to focus on not only maintaining current
production levels but growth as natural gas prices improve. We will
finally be in the position to effectively access the potential of our
large asset base and turn it into future value for shareholders."
Key Dates & Information
Key dates related to the Recapitalization are as follows:
Event Anticipated Date
Prospectus for Rights Offering On or about August 4, 2011
Consolidation Record Date On or about August 5, 2011
Consolidated Shares Trade On or about August 10, 2011
Shareholder Distribution Record On or about August 16, 2011
Date
Effective Date of Arrangement, On or about August 17, 2011
including Note Exchange
Mailing of Prospectus On or about August 19, 2011
Rights Expiry Date On or about September 14, 2011
Completion of Rights Offering On or about September 21, 2011
It is imperative that stakeholders who wish to exercise their Rights
provide direction to Compton regarding their Rights. To subscribe for
Common Shares, a completed Rights Certificate, together with payment in
full of the Subscription Price for each Common Share subscribed for,
must be received by Computershare Investor Services Inc. (the
"Subscription Agent") as follows:
By registered mail, by hand or by courier: By regular mail:
Computershare Investor Services Inc. Computershare
100 University Avenue, 9th Floor Investor Services
Toronto, Ontario M5J 2Y1 Inc.
P.O. Box 7021, 31
Attention: Corporate Actions Adelaide Street E
Toll Free: 1-800-564-6253 Toronto, Ontario
Facsimile: 1-905-771-4082 M5C 3H2
E-Mail:
corporateactions@computershare.com Attention: Corporate
Actions
If a stakeholder does not return a completed Rights Certificate as
described above, the Rights will expire on or around September 14, 2011
and the stakeholder will have been deemed to have given up their
Rights. It is expected that documents relating to the Rights Offering
will be mailed out to stakeholders on or around August 19, 2011. Should
a stakeholder not receive their voting package, the Prospectus will be
posted on Compton's website and the Rights Certificate can be obtained
as follows:
-- Registered shareholders (i.e. hold a stock certificate) should
contact the Subscription Agent:
Computershare Investor Services Inc.
1-800-564-6253
www.computershare.com
-- Beneficial Shareholders (i.e. trade through a broker) should
contact their brokers, who will provide the Rights Certificate.
-- Noteholders should contact either Compton or the Note Trustee,
Bank of Nova Scotia Trust Company of New York (Telephone:
212-225-5000).
A holder of Rights who exercises all such Rights by subscribing for the
maximum number of Common Shares to which such holder is entitled to
subscribe, may subscribe for additional whole Common Shares, if
available, at the Subscription Price. Shareholders who require
assistance in exercising their Rights should please contact Compton or
Computershare as outlined at the end of this release.
Further information about the Recapitalization is available on SEDAR (www.sedar.com) and Compton's website (www.comptonpetroleum.com).
Advisories
Non-GAAP Financial Measures
Included in this document are references to terms used in the oil and
gas industry such as, cash flow, cash flow per share, debt and
capitalization. Non-GAAP measures do not have any standardized meaning
and therefore reported amounts may not be comparable to similarly
titled measures reported by other companies. These measures have been
described and presented in this document in order to provide
shareholders and potential investors with additional information
regarding the Company's liquidity and its ability to generate funds to
finance its operations.
Cash flow should not be considered an alternative to, or more meaningful
than, cash provided by operating, investing and financing activities or
net earnings as determined in accordance with Canadian GAAP, as an
indicator of the Corporation's performance or liquidity. Cash flow is
used by Compton to evaluate operating results and the Corporation's
ability to generate cash to fund capital expenditures and repay debt.
Debt is comprised of floating rate bank debt and fixed rate senior term
notes. Capitalization is defined as bank debt plus shareholder's
equity.
Forward-Looking Statements
Certain information regarding the Corporation contained herein
constitutes forward-looking information and statements and financial
outlooks (collectively, "forward-looking statements") under the meaning
of applicable securities laws, including Canadian Securities
Administrators' National Instrument 51-102 Continuous Disclosure
Obligations and the United States Private Securities Litigation Reform
Act of 1995. Forward-looking statements include estimates, plans,
expectations, opinions, forecasts, projections, guidance, or other
statements that are not statements of fact, including statements
regarding (i) the completion of the Recapitalization and its impact on
the Corporation, (ii) cash flow and capital and operating expenditures,
(iii) exploration, drilling, completion, and production matters, (iv)
results of operations, (v) financial position, and (vi) other risks and
uncertainties described from time to time in the reports and filings
made by Compton with securities regulatory authorities. Although
Compton believes that the assumptions underlying, and expectations
reflected in, such forward-looking statements are reasonable, it can
give no assurance that such assumptions and expectations will prove to
have been correct. There are many factors that could cause
forward-looking statements not to be correct, including risks and
uncertainties inherent in the Corporation's business. These risks
include, but are not limited to: crude oil and natural gas price
volatility, exchange rate fluctuations, availability of services and
supplies, operating hazards, access difficulties and mechanical
failures, weather related issues, uncertainties in the estimates of
reserves and in projection of future rates of production and timing of
development expenditures, general economic conditions, and the actions
or inactions of third-party operators, and other risks and
uncertainties described from time to time in the reports and filings
made with securities regulatory authorities by Compton. Statements
relating to "reserves" and "resources" are deemed to be forward-looking
statements, as they involve the implied assessment, based on estimates
and assumptions, that the reserves and resources described exist in the
quantities predicted or estimated, and can be profitably produced in
the future.
The forward-looking statements contained herein are made as of the date
of this news release solely for the purpose of generally disclosing
Compton's Recapitalization transactions, and prospective activities.
Compton may, as considered necessary in the circumstances, update or
revise the forward-looking statements, whether as a result of new
information, future events, or otherwise, but Compton does not
undertake to update this information at any particular time, except as
required by law. Compton cautions readers that the forward-looking
statements may not be appropriate for purposes other than their
intended purposes and that undue reliance should not be placed on any
forward-looking statement. The Corporation's forward-looking
statements are expressly qualified in their entirety by this cautionary
statement.
About Compton Petroleum Corporation
Compton Petroleum Corporation is a public company actively engaged in
the exploration, development and production of natural gas, natural gas
liquids, and crude oil in western Canada. Our strategy is focused on
creating value for shareholders by providing appropriate investment
returns through the effective development and optimization of assets.
The majority of the Corporation's operations are located in the Deep
Basin fairway of the Western Canada Sedimentary Basin. In this large
geographical region, we pursue four deep basin natural gas plays: the
Rock Creek sands at Niton in central Alberta, the Basal Quartz sands at
High River in southern Alberta, the shallower Southern Plains sand play
in southern Alberta and an exploratory play at Callum/Cowley in the
Foothills area of southern Alberta. Being in the Deep Basin, all areas
have multi-zone potential, providing future development and exploration
opportunity. We are also focusing on developing our emerging oil
potential in the Southern Plains area and in the Montana lands. Natural
gas represents approximately 84% of production. Compton's shares are
listed on the Toronto Stock Exchange under the symbol CMT.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/July2011/26/c7615.html
SOURCE: Compton Petroleum Corporation
Susan J. Soprovich Director, Investor Relations Ph: (403) 668-6732 Fax: (403)
237-9410 Email:investorinfo@comptonpetroleum.com Website:www.comptonpetroleum.com
Tim Granger President & CEO Ph: (403) 205-7480 Noteholders:
Shareholders: Mackenzie Partners Information Agent Ph: (212) 929-5500
Toll-free: (800) 322-2885 Email:proxy@mackenziepartners.com Computershare
Investor Services Inc. Subscription Agent Ph: (905) 771-4082 Toll-free:(800)
564-6253 Email:corporateactions@computershare.com