EMBER RESOURCES INC. ANNOUNCES ARRANGEMENT OF $120 MILLION CREDIT FACILITY
Ember Resources Inc. ("Ember") announced today that is has arranged a syndicated credit facility of $120 million that will be available to the Company on closing of Ember’s acquisition of Cordero Energy Inc. (“Cordero”) which is expected to occur on or about September 5, 2008.
The credit facility, which is conditional upon the closing of the Cordero acquisition and subject to certain terms and conditions, will be a $120 million revolving credit facility led by the Bank of Montreal and includes the Canadian Imperial Bank of Commerce.
At closing of the Cordero acquisition, Ember estimates that its combined net debt, including break-fees and transaction costs associated with the Cordero acquisition, will be approximately $100 million. Post closing, Ember intends to divest of certain non core assets for estimated proceeds of $25 million. These assets are not included in the borrowing base supporting the credit facility. “Ember will have a strong balance sheet with significant flexibility post the Cordero acquisition and non-core divestitures. With $75 million drawn on our $120 million facility we could pursue other acquisitions or expand drilling programs” said Doug Dafoe Chairman and CEO of Ember.
ACQUISITION OF CORDERO
Ember has entered into an agreement with Cordero to acquire all of the outstanding common shares of Cordero (“Cordero shares”) by way of a plan of arrangement under the Business Corporations Act (Alberta) (the “Arrangement”) for total consideration of $5.50 per Cordero Share, payable, at the election of each Cordero shareholder, in cash or 2.683 common shares of Ember.
A maximum aggregate of $70 million and a minimum aggregate of $55 million in cash will be payable to the Cordero shareholders under the Arrangement. To fund the cash component of the Arrangement, Ember has entered into subscription agreements to issue a total of 26,829,269 subscription receipts at a price of $2.05 each for gross aggregate proceeds of $55 million. Each subscription receipt would be converted into one Ember share upon the completion of the Arrangement with Cordero.
The Cordero shareholders will vote on the arrangement at a special meeting to be held on September 3, 2008. The directors and officers of Cordero, and certain other shareholders of Cordero representing approximately 36.4% of the outstanding Cordero shares, have agreed to vote their shares in favor of the Arrangement, subject to certain terms and conditions or the receipt of a superior offer. The Ember shareholders will vote on the Arrangement and subscription receipts financing at a special meeting to be held on September 3, 2008.
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FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements including expectations of future production, cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect the Company’s operations or financial results are included in the Company’s reports on file with Canadian securities regulatory authorities.
Ember Resources Inc. is a resource company specializing in coal bed methane (CBM) with extensive land and resource holdings in Alberta, Canada. Ember’s shares are traded on the Toronto Stock Exchange under the trading symbol “EBR”.
FOR FURTHER INFORMATION PLEASE CONTACT
Mr. Douglas A. Dafoe
President & C.E.O.
Ember Resources Inc.
Telephone: 403 270-0803
Facsimile: 403 270-2850
Mr. Terry S. Meek
Executive Vice President & C.O.O.
Ember Resources Inc.
Telephone: 403 270-0803
Facsimile: 403 270-2850
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