CGX Provides Update on Private Placement Financing




TORONTO, March 25, 2013 /CNW/ - CGX Energy Inc. (TSX-V - OYL) ("CGX" or the "Company") announces that it has agreed to reprice the brokered private placement (the "Offering") from Cdn$0.14 per unit of CGX ("Unit") as previously announced on February 27, 2013 to Cdn$0.10 per Unit, subject to the approval of the TSX Venture Exchange ("TSXV"). The minimum of Cdn$35,000,000 (the "Minimum Offering") and maximum of Cdn$40,000,000 remain unchanged. Each Unit will consist of one common share and one common share purchase warrant of the Company (a "Warrant"), each Warrant being exercisable to acquire one common share at the revised exercise price of Cdn$0.17 per common share for a period of five years following the date of issuance of the Units. The private placement is subject to approval of the TSXV and other customary closing conditions. All securities issued in connection with the Offering will be subject to a statutory hold period of four months plus one day from the date of issuance in accordance with applicable securities legislation.

The Company also announces that it has entered into a subscription agreement with Pacific Rubiales Energy Corp. ("Pacific Rubiales"), a current shareholder of the Company, dated March 25, 2013 (the "Pacific Rubiales Subscription Agreement") pursuant to which Pacific Rubiales has agreed to purchase all of the Units to be issued in the Minimum Offering that are not subscribed for by other investors. Pursuant to the Pacific Rubiales Subscription Agreement, it is a condition of closing of the placement of the Minimum Offering to Pacific Rubiales that the Company obtain shareholder approval for a redemption of the rights under the Company's shareholder rights plan (the "Rights Plan") and that it re-negotiate certain of its agreements with the directors, officers, employees and consultants of the Company such that the aggregate obligations payable by the Company or any of its subsidiaries under such agreements on a change of control of the Company do not exceed approximately Cdn$4,000,000.

Pacific Rubiales currently owns 144,434,285 common shares representing 35.06% of the Company's issued and outstanding common shares and is an insider of the Company. The acquisition of any additional shares by Pacific Rubiales is considered an event that gives rise to the rights described in the Company's Rights Plan adopted on June 23, 2011.

As announced on February 27, 2013, a special committee (the "Special Committee") of four "independent directors" of the Company, as defined in MI 61-101, was constituted to consider the proposed private placement and Pacific Rubiales investment. The Special Committee (other than John Cullen and Dennis Pieters who each refrained from voting on the transaction after being designated as a continuing director by Pacific Rubiales and thereby having a personal interest in the transaction) determined unanimously that the Company is in serious financial difficulty. The board of directors of the Company made the same determination.

CGX had intended to rely on the financial hardship exemption from the minority approval requirement of MI 61-101 for the Offering to Pacific Rubiales, however it is only entitled to rely on this exemption if there is no other requirement, corporate or otherwise, to hold a meeting to obtain any approval of the holders of any class of affected securities. As the Company is required to seek minority shareholder approval for a redemption of the rights granted under the Rights Plan, it will also be seeking shareholder approval of the Offering to Pacific Rubiales. The Company has set a date of April 25, 2013 for a meeting of shareholders seeking such minority shareholder approval.

The net proceeds from the private placement, after payment of commissions and expenses related to the Offering, shall be used by CGX as follows:

  • as to approximately US$15,000,000, to meet the Company's current default payment obligations owing to Repsol Exploración S.A. ("Repsol"), Tullow Guyana B.V. and YPF S.A. (collectively the "Partners") pursuant to the Joint Operating Agreement among the Partners to the Georgetown Petroleum Agreement ("Georgetown PA"),

  • as to a maximum of approximately Cdn$4,000,000, for change of control payments to officers, directors, employees and consultants of the Company who will no longer be with the Company following closing,

  • in satisfaction of a transaction fee payable to the Company's financial advisor, and

  • as to the balance of the net proceeds of the private placement, to fund expenditures related to the Company's oil and gas exploration activities and for general corporate purposes.

The Company has agreed to pay GMP Securities L.P. an advisory fee of (i) 4% of the gross proceeds of the private placement in respect of the subscription for Units by Pacific Rubiales, and (ii) 6% of the gross proceeds derived from the sale of Units pursuant to the private placement to any investor(s) other than Pacific Rubiales. The TSXV has advised the Company that it has no objection to the payment of the advisory fee at this time.

In its Management's Discussion and Analysis for the nine months ended September 30, 2012, the Company disclosed that as of November 26, 2012, the Company had received a default notice in respect of its participating share of joint account expenses for the Georgetown PA in the amount of US$11,500,000. On January 24, 2013, the Company was advised by Repsol as operator of the Georgetown PA that the total default amount had increased to US$14,939,626. The Company announced on February 27, 2013 that the current default amount is significantly in excess of its cash on hand and, accordingly, the Company had insufficient funds to satisfy this obligation and other near term obligations. The Company also announces that it has requested a further stay of any enforcement proceedings from the previously negotiated date of March 22, 2013 to April 26, 2013.

About CGX Energy

CGX is a Canadian-based oil and gas exploration company focused on the exploration of oil in the Guyana-Suriname Basin, an area in which the United States Geological Survey estimated a Pmean oil resource potential of 13.6 billion barrels in their Assessment of Undiscovered  Conventional Oil and Gas Resources of South America and the Caribbean, 2012. CGX is managed by a team of experienced oil and gas and finance professionals from Guyana, Canada, the United States and the United Kingdom.


Forward-Looking Statements:

This press release contains forward-looking statements. More particularly, this press release contains statements that include, but are not limited to, the closing of the private placement and the calling and holding of a special meeting of shareholders. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe",  anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. The forward-looking statements are based on certain key expectations and assumptions made by CGX. Although CGX believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because CGX can give no assurance that they will prove to be correct. Since forward-looking statements 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. In addition to other risks that may affect the forward-looking statements in this press release and those set out in CGX's management discussion and analysis of the financial condition and results of operations for the three and nine month periods ended September 30, 2012, the private placement could be delayed or not occur if the Company is unable to obtain the requisite shareholder approval on the timelines it has planned, if the Company is unable to continue as a going concern until the closing of the private placement, or if some other condition to the closing is not satisfied.  The forward-looking statements contained in this press release are made as of the date hereof and CGX 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.


SOURCE: CGX Energy Inc.

For further information:

Kerry Sully, President and CEO
(604) 733-9647 or

Charlotte May, Communications Manager
(416) 364-3353 or 


Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .


Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.


Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.