Cadence Announces Debenture Make Whole Premium Conversion Period



    CALGARY, June 17 /CNW/ - (CDS - TSX) - Cadence Energy Inc. (formerly,
Kereco Energy Ltd.) ("Cadence"), announces that the previously announced
arrangement (the "Arrangement") with Daylight Resources Trust ("Daylight") and
Daylight Energy Ltd. ("DEL") providing for the acquisition of Cadence by
Daylight is currently anticipated to be completed on or about July 18, 2008.
Completion of the Arrangement is subject to various conditions, including the
receipt of all regulatory, shareholder and court approvals.
    The Arrangement will result in the acquisition of Cadence by Daylight
pursuant to which all of the issued and outstanding common shares ("Cadence
Shares") will be exchanged for trust units ("Daylight Units") of Daylight or
cash or a combination of Daylight Units and cash. Pursuant to the Arrangement,
holders ("Cadence Shareholders") of Cadence Shares may elect to receive for
each Cadence Share, either (i) 0.47 of a Daylight Unit; (ii) $5.32 in cash; or
(iii) a combination thereof. The maximum amount of cash that holders of
Cadence Shares will be entitled to receive pursuant to elections by all
holders of Cadence Shares will be $30,000,000, such amount to be pro-rated in
the event that Cadence Shareholders elect to receive cash in an aggregate
amount of more than $30,000,000. If no election is made or an election is
improperly made, Cadence Shareholders will automatically receive Daylight
Units.
    As at June 17, 2008, Cadence had $70 million in aggregate principal
amount of 4.75% convertible unsecured subordinated debentures due on June 30,
2012 (the "Convertible Debentures") outstanding. The Convertible Debentures
were issued on June 25, 2007 pursuant to an indenture dated June 25, 2007 (the
"Debenture Indenture") between Cadence and Computershare Trust Company of
Canada, a copy of which is available on SEDAR at www.sedar.com. Each
Convertible Debenture may be converted into Cadence Shares at the option of
the holder at any time prior to the close of business on the business day
immediately preceding the final maturity date at a conversion price of $10.00
per Cadence Share (the "Conversion Price"), being a ratio of 100 Cadence
Shares per $1,000 principal amount of Convertible Debentures, subject to
adjustment, in certain events, as described in the Debenture Indenture.
    The Debenture Indenture provides that if a Change of Control (as
described below) occurs in which the consideration for the Cadence Shares in
the transaction constituting the Change of Control consists primarily of trust
units or other participating equity securities of a trust, Cadence is required
to pay a Make Whole Premium (as described below) to holders of Convertible
Debentures who provide, during the period beginning twenty trading days before
the anticipated effective date of the Change of Control and ending on a date
specified by Cadence (not to be more than five trading days prior to the
anticipated effective date of the Change of Control) (the "Conversion
Period"), a notice of intent to convert their Convertible Debentures
immediately prior to the effective date of the Change of Control.
    The Make Whole Premium is an adjustment to the conversion rate for the
Convertible Debentures converted during the Conversion Period. The number of
additional Cadence Shares per $1,000 principal amount of Convertible
Debentures constituting the Make Whole Premium is based on the date on which
the Change of Control becomes effective (the "Change of Control Effective
Date") and the price (the "Stock Price") paid per Cadence Share in the
transaction constituting the Change of Control. Where the consideration
payable pursuant to the Change of Control is not solely cash, the Stock Price
will be equal to the Current Market Price (as described in the Debenture
Indenture) of the Cadence Shares immediately preceding the Change of Control
Effective Date of such transaction. If the Stock Price on the Change of
Control Effective Date is less than $7.10 per Cadence Share, the Make Whole
Premium will be nil and the Make Whole Premium will continue to be made
available. If the Stock Price on the Change of Control Effective Date is
greater than $7.10 per Cadence Share, the Make Whole Premium will be as set
forth in the Debenture Indenture.
    Cadence's obligation to pay or make the Make Whole Premium available is
limited to the issuance of Cadence Shares upon conversion.
    A "Change of Control" is defined in the Debenture Indenture as including:

    
    (i)  the acquisition by any person of beneficial ownership, directly or
         indirectly, through a purchase, merger (except a merger by Cadence
         described in the following paragraph) or other acquisition
         transaction or series of transactions, of Cadence Shares entitling
         that person to exercise in aggregate more than 66 2/3% of the total
         voting power of all Cadence Shares entitled to vote generally in
         elections of directors; or

    (ii) Cadence's amalgamation, consolidation or merger with or into any
         other person, any merger of another person into Cadence, or any
         conveyance, transfer, sale, lease or other disposition of all or
         substantially all of Cadence's and Cadence's subsidiaries'
         properties and assets, taken as a whole, to another person, other
         than any transaction pursuant to which holders of Cadence Shares
         immediately prior to the transaction are entitled to exercise,
         directly or indirectly, more than 66 2/3% of the total voting power
         of all shares entitled to vote generally in the election of
         directors of the continuing or surviving person immediately after
         the transaction.
    

    Pursuant to the Debenture Indenture, if a "Change of Control" occurs,
Cadence may be required to make an offer to purchase all of the outstanding
Convertible Debentures (a "Change of Control Purchase Offer") at a purchase
price equal to 100% of the principal amount of the Convertible Debentures,
plus accrued and unpaid interest, if any, to, but not including, the purchase
date. However, in circumstances where the consideration for the Cadence Shares
in the transaction constituting the Change of Control consists primarily of
trust units or other participating equity securities of a trust and Cadence
makes available a Make Whole Premium to holders of Convertible Debentures,
Cadence is not required to make a Change of Control Purchase Offer.
    Cadence announces that Cadence will make available the Make Whole Premium
(as described herein) to holders of Convertible Debentures during the period
beginning on June 19, 2008 and ending on July 17, 2008. In addition, to
receive Daylight Units and/or cash under the Arrangement holders of
Convertible Debentures must exercise their right to convert their Convertible
Debentures into Cadence Shares and be entered in the register of Cadence
Shareholders prior to the effective date of the Arrangement, which is
currently expected to be on or about to be July 18, 2008 (the "Effective
Date"). Holders of Convertible Debentures who convert their Convertible
Debentures prior to the Effective Date will receive the same consideration as
Cadence Shareholders based upon the number of Cadence Shares issued upon such
conversion. Holders of Convertible Debentures who do not convert their
Convertible Debentures to Cadence Shares prior to the Effective Date and
subsequently wish to convert their Convertible Debentures will be entitled to
receive Daylight Units instead of Cadence Shares, on the basis of 0.47 of a
Daylight Unit in lieu of each Cadence Share which it was previously entitled
to receive on conversion, provided the Arrangement is completed.

    It is essential that beneficial holders of Convertible Debentures
    instruct their investment dealers to tender conversion instructions to
    CDS & Co. (the registered holder of the Convertible Debentures) in order
    to receive their entitlements as described above.

    The Arrangement will be more fully discussed in the Information Circular
and Proxy Statement of Cadence to be prepared in connection with the special
meeting of Cadence Shareholders to be held to consider the Arrangement which
is expected to be mailed on or about June 20, 2008, a copy of which will be
filed on SEDAR at www.sedar.com.

    Advisory Regarding Forward-Looking Statements and Forward-Looking
    Information

    This material change report contains forward-looking statements and
forward-looking information within the meaning of applicable securities laws.
The use of any of the words "expect", "anticipate", "continue", "estimate",
"objective", "ongoing", "may", "will", "project", "should", "believe",
"plans", "intends" and similar expressions are intended to identify
forward-looking information or statements. More particularly and without
limitation, this material change report contains forward-looking statements
and information concerning the proposed form and effective date of the
Arrangement.
    The forward-looking statements and information are based on certain key
expectations and assumptions made by Cadence and Daylight, including
expectations and assumptions concerning the timing of receipt of court,
regulatory, securityholder and other third party approvals. Although Cadence
believes that the expectations and assumptions on which such forward-looking
statements and information are based are reasonable, undue reliance should not
be placed on the forward-looking statements and information because Cadence
can give no assurance that they will prove to be correct.
    Since forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those currently
anticipated due to a number of factors and risks. These include, but are not
limited to: failure to obtain required court, regulatory, securityholder and
other third party approvals. This material change report also contains
forward-looking statements and information concerning the anticipated
completion of the Arrangement and the anticipated timing for completion of the
Arrangement. Cadence has provided these anticipated times in reliance on
certain assumptions that it believes are reasonable at this time, including
assumptions as to the time required to prepare meeting materials for mailing,
the timing of receipt of the necessary regulatory and court approvals and the
time necessary to satisfy the conditions to the closing of the Arrangement.
These dates may change for a number of reasons, including unforeseen delays in
preparing meeting materials, inability to secure necessary regulatory or court
approvals in the time assumed or the need for additional time to satisfy the
conditions to the completion of the Arrangement. Accordingly, readers should
not place undue reliance on the forward-looking statements and information
contained in this material change report concerning these times.
    Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that could
affect Cadence's operations or financial results are included in reports on
file with applicable securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com).
    The forward-looking statements and information contained in this material
change report are made as of the date hereof and Cadence undertakes no
obligation to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.

    %SEDAR: 00021661E




For further information:

For further information: Cadence Energy Inc., Grant Fagerheim, President
and Chief Executive Officer, Phone (403) 290-3401

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