ARN

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES OF AMERICA


Arcan Resources Ltd. (TSX VENTURE:ARN) ("Arcan" or the "Corporation") is pleased
to announce that it has entered into an arrangement agreement (the "Arrangement
Agreement") with Aspenleaf Energy Limited ("Aspenleaf") pursuant to which
Aspenleaf and Arcan will complete a plan of arrangement under the Business
Corporations Act (Alberta) (the "Arrangement") which will, subject to receipt of
all necessary approvals, result in the following transactions occurring:




--  Arcan will form a new junior oil and gas exploration and production
    company ("Spinco") which will hold 12.5% of Arcan's interest in the Swan
    Hills oil and gas assets and be spun out to Arcan's shareholders. Each
    common share of Arcan will be exchanged for one common share of Spinco
    ("Spinco Share") and 0.1 of a Spinco common share purchase warrant
    ("Spinco Warrant"). Each whole Spinco Warrant will entitle the holder to
    acquire one Spinco Share at an exercise price of $0.43 per share at any
    time on or before the date that is nine months following the closing of
    the Arrangement. 
    
--  Aspenleaf will fund Arcan's redemption and cancellation of all of its
    outstanding 6.25% Convertible Unsecured Subordinated Debentures due
    February 28, 2016 (the "2016 Debentures") and 6.50% Convertible
    Unsecured Subordinated Debentures due October 31, 2018 (the "2018
    Debentures, and together with the 2016 Debentures, the "Debentures"),
    pursuant to which debentureholders will receive aggregate consideration
    of $141,281,250 plus accrued but unpaid interest as of the closing date,
    representing approximately $825 per $1,000 principal amount of
    Debentures, and holders of Debentures will receive 100 Spinco Warrants
    per $1,000 principal amount of Debentures. 
    
--  Following the transaction, Aspenleaf will retain all amounts owing under
    Arcan's $180 million credit facility which was drawn at $150.8 million
    as at March 31, 2014, other than $10 million which will be repaid by
    Spinco at closing pursuant to a new credit facility to be entered into
    by Spinco. 
    
--  Aspenleaf will subscribe for $3 million of Spinco Shares at a purchase
    price of $0.43 per Spinco Share, representing approximately 6.7% of the
    issued and outstanding Spinco Shares upon completion of the Arrangement,
    and will receive 0.1 Spinco Warrants per Spinco Share subscribed for. 
    
--  Upon completion of the arrangement, reorganization of Arcan's share
    capital and the recapitalization of Arcan's outstanding debt, Aspenleaf,
    either directly or through a subsidiary, will hold all of the shares of
    Arcan, which will retain 87.5% of Arcan's interest in the Swan Hills oil
    and gas assets. 



Terry McCoy, CEO of Arcan, stated "Aspenleaf shares the same vision as we do in
terms of the potential of the Swan Hills assets, and are not only committed to
their development, but have the financial backing to realize that potential.
Through Spinco and the warrants, all securityholders will benefit from
Aspenleaf's continued development."


"After an extensive and thorough review of alternatives," continued Doug Penner,
President of Arcan, "we are very pleased to move forward with this transaction
as it provides an opportunity for shareholders to continue to participate in the
growth of Arcan through Spinco and for debentureholders to monetize their
investment at a significant premium to both historic and recent trading levels."


TRANSACTION RATIONALE 

Arcan's board of directors and management believes the Arrangement is
advantageous for Arcan's stakeholders after examining a variety of financial and
strategic alternatives. In determining to proceed with the Arrangement, Arcan's
board considered the following factors:




--  Arcan has succeeded in optimizing drilling, operating and G&A costs but
    remains severely constrained and undervalued compared to its peers due
    to its current capital structure and limited credit capacity. 
    
--  Arcan believes that it is difficult to realize full value from its
    inventory of Swan Hills opportunities due to the significant curtailment
    of capital spending. As a result of interest payment obligations, it is
    difficult to grow the company's production base and reserve base from
    internally generated cash flow. 
    
--  Arcan has examined a variety of financial and strategic alternatives
    which have failed to generate acceptable proposals. 
    
--  Based upon current financial projections and expectations, there is some
    uncertainty as to Arcan having adequate cash on hand to repay the
    Debentures at maturity from internally generated cash flow, and the
    prospects for obtaining external financing to repay the Debentures at
    maturity are limited. 
    
--  The cash payable to holders of Debentures under the Arrangement provides
    for a premium of approximately 25% over the closing price of the 2016
    Debentures, and approximately 33% over the closing price of the 2018
    Debentures, in each case on the trading date prior to the announcement
    of the Arrangement.  
    
--  The Arrangement will provide an opportunity for Arcan's securityholders
    to continue to participate in the future upside in Arcan's Swan Hills
    play through ownership in Spinco pursuant to the Spinco Shares and
    Spinco Warrants issued in connection with the transaction. Aspenleaf has
    advised Arcan that it intends to exploit the significant drilling and
    waterflood opportunities on the overall land base. Through its financial
    partners, Aspenleaf has significant access to capital to accelerate
    development of the Swan Hills play. 



ABOUT SPINCO 

Spinco will be a new junior oil and gas exploration and production company led
by certain members of Arcan's current management team, including Arcan's
President Doug Penner, Executive Vice President Andy Fisher and Chief Financial
Officer Graeme Ryder. Arcan expects that some members of its existing Board of
Directors will join the board of Spinco. 


Spinco will be a growth-oriented company with initial assets that comprise an
interest in 12.5% of Arcan's Swan Hills assets. The Arrangement Agreement
provides that Spinco will enter into a joint development agreement ("JVA") with
Aspenleaf at closing of the Arrangement which will govern the joint development
of the Swan Hills assets. Terms of the JVA will include customary industry
operating standards for the operation of the assets in the area including an
area of mutual interest in the Swan Hills, whereby Spinco will have the
opportunity to participate in any future acquisitions or developments made by
Aspenleaf, on a 12.5% interest basis.


The Arrangement Agreement provides that Spinco will pay $10 million to Arcan at
closing of the Arrangement, with such funds to be drawn on a new credit facility
to be entered into by Spinco (the "Spinco Facility"), the proceeds of which will
be used to repay a portion of the existing Arcan bank debt. Aspenleaf has agreed
that, concurrent with closing, it will subscribe for 6,976,744 Spinco Shares at
a price of $0.43 per Spinco Share for total consideration of $3.0 million and
receive 0.1 Spinco Warrants for each Spinco Share subscribed for. If all holders
of Spinco Warrants exercise their Spinco Warrants in full, Spinco will have net
cash on hand of approximately $4.9 million. 


To provide increased certainty of future cash flows, Spinco will be assigned
12.5% of Arcan's outstanding commodity hedging contracts. 


At closing of the Arrangement, Spinco will have the following characteristics: 



--  12.5% of Arcan's interest in the Swan Hills assets. 
    
--  Production of approximately 450 barrels of oil equivalent ("BOE") per
    day (95% light oil). 
    
--  Proved reserves of 3.1 million BOE ("MMboe") and proved plus probable
    reserves of 4.9 MMboe, as evaluated by GLJ Petroleum Consultants Ltd. in
    its report dated March 26, 2014, effective as at December 31, 2013 (the
    "GLJ Report"). 
    
--  Proved reserve net present value of $50.2 million and proved plus
    probable reserve net present value of $72.9 million as at December 31,
    2013 (based upon a 10% discount rate, before tax), per the GLJ Report. 
    
--  $7 million of net debt, before considering exercise of the Spinco
    Warrants; $4.9 million of cash assuming full exercise of the Spinco
    Warrants. 
    
--  104.8 million common shares outstanding (132.4 million assuming full
    exercise of the Spinco Warrants) 
    
--  The net asset value ("NAV") per common share of Spinco is estimated to
    be $0.63 per share based on an independent engineering evaluation
    whereby the net present value of proved plus probable reserves are
    discounted at 10% before tax.  
    

----------------------------------------------------------------------------
                                                                   Proved + 
                                                                   Probable 
                                            Proved Reserves        Reserves 
----------------------------------------------------------------------------
Reserves - NPV 10% ($ million)(1)               $      50.2     $      72.9 
----------------------------------------------------------------------------
Assumed Debt ($ million)                        $     (10.0)    $     (10.0)
----------------------------------------------------------------------------
Equity issued to Aspenleaf                      $       3.0     $       3.0 
----------------------------------------------------------------------------
NAV(2) ($ million)                              $      43.2     $      65.9 
----------------------------------------------------------------------------
Spinco Shares (million shares)                        104.8           104.8 
----------------------------------------------------------------------------
Net Asset Value per Share ($/share)             $      0.41     $      0.63 
----------------------------------------------------------------------------



Notes:

(1) Net present value is calculated using a discount rate of 10% before taxes,
per the GLJ Report. 


(2) Net asset value is derived from the net present value of reserves,
calculated using a discount rate of 10% before taxes, per the GLJ Report. 


INFORMATION REGARDING THE ARRANGEMENT 

Following an extensive review and analysis of the proposed transaction and
consideration of other available alternatives, the Board of Directors of Arcan
has unanimously determined that the Arrangement is in the best interests of
Arcan and is fair to Arcan's securityholders. The Board of Directors of Arcan
has unanimously approved the transaction and determined to recommend that
Arcan's shareholders and holders of Debentures vote in favour of the
Arrangement. All of the directors and senior executive officers of Arcan have
entered into lock-up agreements with Aspenleaf supporting the transaction,
pursuant to which they have agreed to vote their common shares (representing
approximately 2.8% of the outstanding Arcan common shares) and convertible
debentures held in favour of the approval of the Arrangement. 


Scotiabank is acting as the lead financial advisor to Arcan and has provided the
Board of Directors of Arcan with a fairness opinion regarding the proposed
transaction. RBC Capital Markets is also acting as a financial advisor to Arcan.
A copy of Scotiabank's fairness opinion will be included in the information
circular to be sent to Arcan securityholders for the special meeting to be
called to consider the arrangement. Blake, Cassels and Graydon LLP is acting as
legal counsel to Arcan. 


TD Securities Inc. is acting as exclusive financial advisor to Aspenleaf. Osler,
Hoskin & Harcourt LLP is acting as legal counsel to Aspenleaf. 


The Arrangement Agreement provides for, among other things, a non-solicitation
covenant on the part of Arcan, subject to customary "fiduciary out" provisions
that entitle Arcan to consider and accept a superior proposal and a right in
favour of Aspenleaf to match any superior proposal. The Arrangement Agreement
provides for a $6.0 million termination fee payable by Arcan in certain
circumstances if the transaction is not completed. 


Completion of the transaction is subject to receipt of court approval, approval
by Arcan's shareholders and debentureholders, and receipt of all necessary
regulatory approvals, including the approval of the TSXV, as well as other
customary closing conditions. Arcan's securityholders will be asked to vote on
the transaction at a special securityholders' meeting and the completion of the
transaction will require the approval of two-thirds of the votes cast in person
or by proxy at the meeting by shareholders and holders of each series of
debentures. 


An information circular regarding the Arrangement is expected to be mailed to
securityholders in July for a special meeting of the holders of common shares
and Debentures to take place in August, with closing expected to occur as soon
as reasonably practicable following the securityholder vote and regulatory
approval. 


A copy of the arrangement agreement and the information circular and related
documents will be filed with Canadian securities regulators and will be
available on Arcan's profile at www.sedar.com. 


About Arcan Resources Ltd.

Arcan Resources Ltd. is an Alberta, Canada corporation that is principally
engaged in the exploration, development and acquisition of petroleum and natural
gas located in Canada's Western Sedimentary Basin. 


About Aspenleaf Energy Limited

Aspenleaf Energy Limited is a private oil and gas company that is focused on the
acquisition and exploitation of light oil and liquids-rich gas assets in Western
Canada. Aspenleaf is run by a highly experienced team, with combined industry
experience of well over 100 years and headed by President & CEO, Bryan Gould.
The company is backed by ARC Financial Corp, a Canadian energy-focused private
equity manager, and Ontario Teachers' Pension Plan, one of Canada's most active
pension investors.


Legal Advisories 

BOEs may be misleading, particularly if used in isolation. The calculation of
BOEs is based on a conversion ratio of six Mcf of natural gas to one bbl of oil
based on an energy equivalency conversion primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. In addition, given
that the value ratio based on the current price of oil as compared to natural
gas is significantly different from the energy equivalent of six to one,
utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be misleading as an
indication of value.


Additional information about the Corporation, including the Corporation's
financial statements, management discussion and analysis, and annual information
form for the year ended December 31, 2013, is available under Arcan's profile on
SEDAR at www.sedar.com. 


Forward-Looking Information and Statements 

This press release contains certain forward-looking information and statements
within the meaning of applicable securities laws. The use of any of the words
"will", "continue", "expect" and similar expressions are intended to identify
forward-looking information or statements. In particular, but without limiting
the foregoing, this press release contains forward-looking information and
statements pertaining to, among other things, the following: the terms of the
Arrangement and the JVA, the anticipated closing date of the Arrangement, the
anticipated mailing date of the information circular and proxy materials in
connection with the Arrangement, Spinco's ability to obtain the Spinco Facility,
Arcan's ability to repay the Debentures at maturity, the future upside of the
Swan Hills play, that Aspenleaf will have significant access to capital to
accelerate development of the Swan Hills Play, that Spinco will be able to
participate in future acquisitions and developments by Aspenleaf, future
production of the Swan Hills assets, the future exercise of the Spinco Warrants
. 


The forward-looking information and statements contained in this press release
reflect several material factors and expectations and assumptions of Arcan
including, without limitation, expectations and assumptions relating to the
Corporation and Spinco being able to receive all required regulatory approvals
to consummate the Arrangement, the ability of the Corporation to obtain the
required levels of securityholder approval for the Arrangement, Aspenleaf's, the
Corporation's and Spinco's future access to capital; and certain commodity price
and other cost assumptions. 


Arcan believes the material factors, expectations and assumptions reflected in
the forward-looking information and statements are reasonable at this time but
no assurance can be given that these factors, expectations and assumptions will
prove to be correct. The forward-looking information and statements included in
this press release are not guarantees of future performance and should not be
unduly relied upon. Such information and statements involve known and unknown
risks, uncertainties and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking information
or statements including, without limitation: failure to realize the anticipated
benefits of the transaction, failure to obtain the necessary approvals, or to
otherwise satisfy the conditions of the transaction, in a timely manner, or at
all; and certain other risks detailed from time to time in Arcan's public
disclosure documents including, without limitation, those risks identified in
this press release, and in Arcan's annual information form, copies of which are
available on Arcan's SEDAR profile at www.sedar.com. 


The forward-looking information and statements contained in this press release
speak only as of the date of this press release, and Arcan does not assume any
obligation to publicly update or revise them to reflect new events or
circumstances, except as may be required pursuant to applicable laws. 


Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.




    Any questions and requests for assistance may be directed to Arcan's    
                             information agent:                             
                                                                            
                            CST Phoenix Advisors                            
                                                                            
                       North American Toll Free Phone:                      
                                                                            
                               (800) 239-6513                               
                                                                            
               Banks, Brokers and collect calls: 201-806-2222               
                     Toll Free Facsimile: 1-888-509-5907                    
                   Email: inquiries@phoenixadvisorscst.com                  



FOR FURTHER INFORMATION PLEASE CONTACT: 
Arcan Resources Ltd.
Terry McCoy
Chief Executive Officer
tmccoy@arcanres.com


Arcan Resources Ltd.
Douglas Penner
President
dpenner@arcanres.com


Arcan Resources Ltd.
Suite 2200, 500 - 4th Avenue S.W.
Calgary, AB T2P 0H7
(403) 262-0321

Grafico Azioni (TSXV:ARN)
Storico
Da Apr 2024 a Mag 2024

Grafico Azioni (TSXV:ARN)
Storico
Da Mag 2023 a Mag 2024