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Information Releases

July 24, 2015

Laricina Energy Ltd. Updates CCAA Process and Advises Marketing and Claims Process and Settlement Agreement


Laricina Energy Ltd. (“Laricina” or the “Company”), advises stakeholders that it received on July 22, 2015 approval from the Court of Queen’s Bench of Alberta (the “Court”) under its previously announced Companies’ Creditors Arrangement Act (Canada) (“CCAA”) proceedings for:

  1. Laricina’s proposed capital repayment process (the “Marketing Process”);
  2. a second cash repayment of $31.4 million (the “Second Cash Payment”) to CPP Credit Investments Inc. (“CPP Credit”) the sole holder of the Company’s outstanding 11.5% senior secured notes (the “Notes”) issued pursuant to the note indenture governing the Notes dated March 20, 2014 (the “Indenture”); and
  3. a claims process under its CCAA proceedings (the “Claims Process”).

The Company also advises that on July 20, 2015 it entered into a definitive agreement and related documents (the “Settlement Agreement”) with CPP Credit in respect of a settlement transaction (the “Settlement Transaction”) as previously communicated to shareholders in Laricina’s information release on July 6, 2015, which agreement will be presented to the Court for approval on August 5, 2015.

BMO Capital Markets, Peters & Co. Limited and Morgan Stanley Canada Limited have been engaged as financial advisors to assist the Company with the Marketing Process. Laricina and its advisors have prepared an asset and corporate sales process information memorandum and a fully-updated virtual data room for access to due diligence materials concerning the Company and its assets and have commenced canvassing interested parties to sign non-disclosure agreements and receive access to the data room.

The goal of the Marketing Process is to raise sufficient funds to repay CPP Credit. The Settlement Transaction provides that Laricina may conduct the Marketing Process but if a transaction or transactions sufficient to repay the Notes are not secured by November 30, 2015 the Settlement Transaction will be concluded. As such, time is of the essence in implementing the Marketing Process.

As approved by the Court the Second Cash Payment will be made directly to CPP Credit from Laricina’s cash on hand following which the amount owing to CPP Credit will be the outstanding principal amount of the Notes of approximately $113.7 million plus the reasonable costs reimbursable to CPP Credit under the Indenture and related documents. It is this amount (subject to adjustments as described below) that is expected to be satisfied under the Settlement Transaction if another transaction or financing alternative is not secured pursuant to the Marketing Process.

The remaining amount of the Notes together with interest thereon and reasonable costs reimbursable to CPP Credit will be repaid under the terms of the Settlement Agreement as follows:

  • $30 million of the principal amount of the Notes (less 50% of net proceeds of certain anticipated receivables when they are received) will remain outstanding until the maturity date of such remaining Notes on March 20, 2018 and continue to be governed by the Indenture, as amended by a supplemental indenture. Future interest payable pursuant to the terms of the Notes and CPP Credit’s costs and expenses reimbursable pursuant to the terms of the Indenture until December 31, 2015 shall be added to the principal amount of the Notes; and
  • the remaining amount of the Notes, less the aggregate proceeds of a pro rata equity private placement to Laricina shareholders (described below) (the “Offering”), will be converted to common shares of the Company at a price of $0.12 per Common Share (the “Note Conversion”).

In order to reduce the amount of Notes that would be converted under the Note Conversion to common shares and to allow shareholders to participate at the same price to prevent dilution to them, the Company intends to proceed with, and the Settlement Transaction contemplates, the Offering to permit shareholders to subscribe for common shares of the Company on a pro rata basis at $0.12 per common share. Details in respect of the Offering are expected to be mailed to shareholders in August 2015.

The number of common shares that will be issued to CPP Credit pursuant to the Note Conversion will depend on: (i) whether any transaction is completed under the Marketing Process and (ii) the total proceeds received pursuant to the Offering. If no transaction is completed or the Offering proceeds are minimal the number of common shares of the Company that could be issued to CPP Credit under the Note Conversion would be highly dilutive to existing shareholders.

Laricina’s estimated pro-forma cash and cash equivalents as of July 22, 2015 after giving effect to the Second Cash Payment, is approximately $73 million.

Under the CCAA, a Claims Process is required, and was approved by the Court, so that Laricina has a definitive understanding of the totality of claims against the Company to ensure a fair and proper distribution to the Company’s unsecured creditors. It will also be necessary for the tabulation of votes of creditors, in the event Laricina decides to present a plan of arrangement to its unsecured creditors. The Claims Process will address claims, excluding that of CPP Credit, and is needed whether or not the Settlement Agreement is approved on August 5, 2015 and the Settlement Transaction is subsequently completed.

The Company remains committed to continuing to work hard to achieve the best outcome for all stakeholders. Under the CCAA proceedings the Company’s operations are continuing uninterrupted and it is expected that obligations to employees and key suppliers of goods and services will continue to be met on an ongoing basis and that the Company’s management will remain responsible for the day-to-day operations of the Company.

The current stay of proceedings under the CCAA expires on August 7, 2015 and at the August 5, 2015 hearing application will be made to further extend the stay period until and including December 11, 2015, which may be extended thereafter as the Court deems appropriate.

PricewaterhouseCoopers Inc. (“PwC”) has been appointed by the Court as monitor under the CCAA proceedings (the “Monitor”). All of the materials filed with the Court are available on the Monitor’s website (www.pwc.com/car-laricina).

About Laricina Energy Ltd.
Laricina is a non-public, Calgary based, responsible energy company that will contribute supply to the growing demand for crude oil through in situ oil sands development.

Laricina’s goal is to create value by developing Canada’s oil sands using innovative in situ technologies. The Company has a diverse portfolio of oil sands assets at varied stages of development, and experienced people with the requisite technical expertise. Our current focus is on the Company’s two core producing projects – Saleski and Germain. Laricina’s asset base, holds 0.5 billion barrels of probable reserves, 3.9 billion barrels of contingent resources (best estimate) and 0.2 billion barrels of prospective resources (best estimate) as determined by Laricina’s independent reservoir engineers as at December 31, 2014 for Germain Grand Rapids, Germain Winterburn, Saleski Grosmont, Burnt Lakes, Conn Creek, Poplar Creek and Portage properties, and as at December 31, 2013 for Thornbury, Thornbury West, House River, Germain Wabiskaw and Boiler Rapids properties. These assets include oil sands resources in the familiar McMurray Formation, and the developing Grand Rapids, and Grosmont and Winterburn carbonate plays, all of which offer significant production potential.

This information release contains certain “forward-looking statements” within the meaning of such statements under applicable securities law including but not limited to potential results of a restructuring process and enhancement of shareholder value, disclosure intentions with respect to the strategic alternatives process, capital repayment process or Settlement Transaction, and timing of final regulatory approval from the Alberta Energy Regulator and Alberta Environment. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “estimate”, “intend”, “believe”, “anticipate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on Laricina’s experience and current beliefs as well as assumptions made by, and information currently available to, Laricina, and are subject to a variety of risks and uncertainties including, but not limited to, those associated with resource definition, unanticipated costs and expenses, regulatory approvals, fluctuating oil and gas prices, and the ability to access sufficient capital to finance future acquisitions and development. Laricina’s resources at Saleski and Burnt Lakes are contained in the Grosmont Formation, and a portion of Germain’s resources are contained in the Winterburn Formation, each a carbonate reservoir. Some of the Company’s contingent resources in the carbonates that are analogous to the Saleski pilot are based on established technologies that have been demonstrated to be commercially viable specifically for the subject reservoirs, and some are based on technology under development that require further development and piloting to confirm the commercial viability of applying these technologies to carbonate reservoirs. Resource volumes based on technology under development have a higher risk than volumes based on established technology. Although the Company believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this information release are not exhaustive and readers are not to place undue reliance on forward-looking statements. Laricina disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this message, except as required under applicable securities legislation. The forward-looking statements are expressly qualified by these cautionary statements.

For further information please visit www.laricinaenergy.com or contact:

Marla Van Gelder
Vice President Corporate Development
403.750.0810
Laricina Energy Ltd.
East Tower, 5th Ave Place
800, 425 1st Street SW
Calgary, AB. T2P 3L8

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