CALGARY, Aug. 26, 2016 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV: RPT) provides an update on the wind-up of the affairs of the Company, including the distribution of the net proceeds from the sale of substantially all of its assets (the "Transaction") to a subsidiary of Empresa Nacional Del Petróleo, which closed on May 19, 2016. The Company also announces its financial and operating results for the interim period ended June 30, 2016. The Company's interim condensed consolidated financial statements and management's discussion and analysis ("MD&A") for the reporting period have been filed on SEDAR at www.sedar.com and posted on the Company's website at www.arpetrol.com.
Update on Wind-up and Distribution
As previously announced, ArPetrol successfully closed the Transaction on May 19, 2016. The purchase price paid to the Company at closing of the Transaction was US$11.1 million including the net working capital at closing of the subsidiaries being sold of US$2.1 million. Included in the purchase price is US$2.25 million which was placed in escrow and will be released to ArPetrol in November 2016 following the six-month indemnity period. To date the Company has received notification of a proposed adjustment to the escrow of US$55,000 for Argentina stamp-taxes. The Company remains exposed to other claims against the escrow account until mid November, 2016.
Some of the US dollar proceeds from the Transaction have been converted into Canadian dollars since the closing date. Based on current exchange rates, and the actual rates received on conversions since close, the total estimated purchase proceeds are expected to be Cdn$14.4 million.
In line with the Company's prior announced plans, the Company announces that its Board of Directors has declared an initial distribution to the holders of common shares ("Shareholders") of the Company ("Common Shares") in the aggregate amount of Cdn$8,996,187, or Cdn$0.40 per Common Share (the "Distribution Payment"), in connection with the liquidation and ultimate dissolution of ArPetrol Ltd.
The Distribution Payment will be paid on September 20, 2016 (the "Distribution Date"), to Shareholders of record at the close of business on September 12, 2016 (the "Record Date"), subject to the "due bills" trading process described herein, and will be made as a return of capital, with the stated capital of the Common Shares being reduced accordingly.
Further details regarding the amount of funds available for future distribution to Shareholders will be provided in due course. Currently the Company expects that the total distributions to the Shareholders will be approximately $0.59 per Common Share. The ultimate distributions may be lower in the event of a negative change to the foreign exchange rate, reductions in the estimated net working capital subject to post closing adjustments, any significant liabilities or costs arising during the winding up and dissolution process which are not currently foreseen by the Company or its advisors, and any other claims against escrowed funds.
Also in line with the Company's prior announced plans, the Company announces that its Board of Directors has approved the application for delisting of the Common Shares from the TSX Venture Exchange ("TSXV") with an effective date of September 20, 2016, which is concurrent with the Distribution Date for the initial distribution.
The Distribution Payment will be made to Shareholders pursuant to the TSXV's due bill trading policy. Pursuant to the policy:
- the Record Date to determine shareholders of ArPetrol entitled to the Distribution Payment is September 12, 2016;
- the due bill trading period will be September 8, 2016 (two trading days prior to the Record Date) to September 20, 2016;
- the payment or Distribution Date will be September 20, 2016; and
- the due bill redemption date will be September 23, 2016.
For clarification, "due bills" will represent the return of capital that Shareholders will be entitled to receive. The due bills will be deemed to be attached to the Common Shares two trading days prior to the Record Date, and will continue to be attached to the Common Shares until the end of the Distribution Date. Accordingly, the Common Shares will trade on a "due bill" basis from September 8, 2016 until close of trading on September 20, 2016 (the "Due Bill Period"). This means that persons who sell their Common Shares during the Due Bill Period shall also sell their entitlement to the Distribution Payment to the purchasers of such shares. The due bills will be redeemed on September 23, 2016 once all trades with attached due bills entered during the Due Bill Period have settled. As the Corporation intends for the Common Shares to be delisted as of the Distribution Date, the Common Shares will not trade ex-distribution following the Distribution Date.
Summary of the Second Quarter 2016 and Outlook
As a result of the closed Transaction and the Company's plan to liquidate and dissolve the Company, the Company has adopted the liquidation basis of accounting effective April 1, 2016.
As at June 20, 2016 the Company had net assets in liquidation of Cdn$13.3 million. This represents the Company's current estimate of the total assets to be distributed to Shareholders upon completion of the liquidation and dissolution of the Company. The Company plans to apply for a Canadian Revenue Agency ("CRA") clearance certificate in connection with the dissolution of the Company and before the final distribution is made to Shareholders, and the timing for receipt of the CRA clearance certificate is unknown.
To minimize the costs arising from the wind-up and dissolution, at the end of September the Company plans to reduce its Board of Directors from the current five members down to three. At that time management will change to payment on a time and expense basis, with no fixed retainers being paid.
About ArPetrol Ltd.
ArPetrol is a Calgary-based publicly traded company whose Common Shares are listed on the TSXV under the symbol "RPT". The Company has completed a sale of substantially all of its assets and no longer has active business operations. The Company intends to apply for delisting of the Common Shares from the TSXV effective September 20, 2016.
Certain information provided in this press release constitutes forward-looking statements and information within the meaning of applicable securities laws. Specifically, and without limitation, this press release contains forward-looking statements and information relating to the anticipated timing for delisting of the Common Shares, the CRA clearance certificate process, and the expected timing and amount of distributions to Shareholders. Forward‐looking information typically contains statements with words such as "anticipate", "believe", "forecast", expect", "plan", "intend", "estimate", "propose", "project", or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company's securities not to place undue reliance on forward‐looking information as, by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company. In particular, liabilities, costs or obligations (including potential tax obligations) may arise, currency exchange rates may change or other events may transpire in the future not currently foreseen by the Company that may result in distributions to Shareholders that are lower than those discussed herein or occur at different times than those discussed herein. Shareholders and potential investors are heavily cautioned against relying on the anticipated timelines or estimated amounts of distributions provided in this press release.
In respect of the forward-looking statements and information set out in this press release, the Company has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the stability of currency exchange rates, the accuracy of estimated net working capital calculations at closing of the Transaction, the number of Common Shares outstanding at the time of the distributions to Shareholders, the estimated amount of the transaction and dissolution costs and the liabilities and obligations of the Company, the estimated timing of the first distribution, the estimated amount of net proceeds remaining for distribution to Shareholders, the delisting process of the TSXV and the process for obtaining the CRA clearance certificate.
There are a number of risk factors associated with the completion of the liquidation and dissolution of the Company, the delisting of the Common Shares and the amount and timing of distributions to be made to Shareholders that could cause actual results to differ materially from those anticipated by the Company, including but not limited to, risks of negative working capital adjustments and/or indemnity claims against the Company in connection with the Transaction, uncertainties regarding the actual transaction and dissolution costs and obligations and liabilities (including potential tax obligations) of the Company, changes in currency exchange rates, uncertainty regarding the ability to recover costs related to the ASSUPA lawsuit and the risk of the TSXV delisting the Common Shares earlier than expected. Readers should also refer to "Forward Looking Statements" and "Meeting Matters – Approval of the Asset Sale Transaction - Risk Factors Associated with the Asset Sale Transaction and – Approval of Voluntary Delisting of the Common Shares from the TSXV – Risk Factors for Delisting" in the Company's Information Circular dated April 4, 2016 filed on SEDAR at www.sedar.com for a further discussion of the risks associated with the distributions to be made to Shareholders and the delisting of the Common Shares.
The forward‐looking information included herein is expressly qualified in its entirety by this cautionary statement. The forward‐looking information included herein is made as of the date hereof and the Company assumes no obligation to update or revise any forward‐looking information to reflect new events or circumstances, except as required by law.
Additional information relating to the Company is also available on SEDAR at www.sedar.com.
Neither the TSXV nor its Regulation Services Provider (as defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SOURCE ArPetrol Ltd.
For further information: Ian Habke, President and Chief Financial Officer, [email protected], ArPetrol Ltd., Main Phone: 403-263-6738