CALGARY, Dec. 9, 2013 /CNW/ - Alston Energy Inc. ("Alston" or the "Company") announces today that, after careful consideration of all available alternatives, the Board of Directors of Alston has determined that it is in the best interests of the Company and all of its stakeholders that it file an application for an initial order under the Companies' Creditors' Arrangement Act (Canada) ("CCAA"). As a result, earlier today, the Company obtained a court order from the Court of Queen's Bench of Alberta protecting it from its creditors for a period of two days, expiring on December 11, 2013, as it attempts to restructure its business. The filing was made with the agreement of the Company's primary secured creditor, Alberta Treasury Branches. The Company will be seeking an order on December 11, 2013 extending the creditor protection for a period until January 8, 2014.
Pursuant to a loan agreement dated February 24, 2011 (the "Loan Agreement") between CanRock Energy Corp. ("CanRock"), a predecessor entity of the Company, and Second Wave Petroleum Inc. ("Second Wave"), the Company pledged its assets as security for a vendor take-back loan in connection with an asset purchase from Second Wave. Pursuant to an amendment to the Loan Agreement entered into contemporaneously with the merger between the Company and CanRock in July 2012, the Company agreed to make quarterly payments of principal and interest on this loan. As previously announced, the Company failed to make the most recent quarterly installment of principal and interest and, as a result, the Company is in default to Second Wave, who has demanded full repayment and indicated its intention to enforce its security.
A combination of negative operating results, depressed natural gas prices and unfavourable differentials in the price of Alberta oil versus the benchmark WTI pricing has resulted in lower than anticipated cash flows for the Company following the amalgamation with CanRock. With access to the capital markets being constrained for junior resource issuers, including Alston, the Company was unable to restructure its affairs in an adequate manner and has made the decision to file for protection from its creditors.
"The Company will remain in possession and control of our current assets, undertaking and properties, and the proceeds thereof." said President and CEO, Don Umbach. "The Company's operations will continue uninterrupted during the CCAA proceeding and obligations to employees and key suppliers of goods and services provided after the filing date will continue to be met thereafter." The Company has also confirmed that to the best of its knowledge, there are no immediately contemplated changes to the management team or the composition of the board of directors and that they are seeking to maintain continuity at both levels throughout the CCAA process.
The Company also announces that, given the CCAA process described above, it has cancelled its annual general and special meeting scheduled for December 11, 2013. Further press releases will provide details of any new date for a shareholders meeting.
The common shares of Alston Energy Inc. trade on the TSX Venture Exchange under the trading symbol "ALO". The common shares will continue to trade on the facilities of the TSX Venture Exchange during the CCAA process described herein. Further press releases will be provided throughout the process.
Neither the 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 press release.
SOURCE: Alston Energy Inc.
For further information:
ALSTON ENERGY INC.
Don K. Umbach, President & CEO
Tel.: (403) 265-2770 Ext. 222
Email: [email protected]
Neil G. Burrows, VP Finance & CFO
Tel.: (403) 265-2770 Ext. 228
Email: [email protected]