BUENOS AIRES, Argentina, Nov. 18, 2014 /CNW/ - LAIG Oil Investments, a subsidiary of LAIG, (collectively, "LAIG") which is the holder of approximately 6.7% of Crown Point Energy Inc.'s ("Crown Point" or the "Company") common shares, today announced that it has serious concerns with respect to the transaction announced by Crown Point on November 17, 2014, involving the private placement of 51,724,138 common shares (the "Private Placement Transaction") at an announced price of US$0.29 (C$0.33) per share.
The Company's description of the issue price under the Private Placement Transaction, and the resulting premium to the market price of the Company's common shares, is materially misleading. Specifically, the new investors would be taking advantage of the differential between the official US dollar exchange rate in Argentina ($8.51/US$1), which has been used to price the Private Placement Transaction, and the implicit exchange rate (resulting from the negotiation of certain publicly traded securities) that actually prevails in the market ($11.89/US$1). Using the 30-day average of the market implicit exchange rate, which is the rate at which it is possible to have access to US Dollars with Argentine pesos and the price at which the Company would need to repurchase US dollars, the price at which the common shares will be issued under the Private Placement Transaction is actually C$0.226, being a discount of 9.6% to the closing price of C$0.25 per common share on the TSX Venture Exchange ("TSXV") on November 14 and a discount of 23% and 19% to the 90 and 60-day trading average of the common shares on the TSXV.
Moreover, LAIG believes that the Private Placement Transaction has been egregiously structured in two tranches to circumvent the regulatory requirement for disinterested shareholder approval for the entire Private Placement Transaction and timed to entrench management and the board of directors of Crown Point in the face of a requisition for a shareholder meeting to change the composition of the board. As previously announced, LAIG has formally requisitioned a shareholder meeting to reconstitute the board. The issuance of the first tranche of common shares without disinterested shareholder approval is, at its core, intended to ensure that 19.9% of the outstanding common shares are voted in support of the board and management in connection with that meeting. The issuance of a substantial block of voting shares into "friendly" hands, which undoubtedly carries with it voting commitments and "standstill" limitations, would have a material impact upon the ability of shareholders to effect change in the board of directors (and therefore management) and a significant impact on control of the Company. In this regard, LAIG has noted that it has recently proposed an equity financing transaction (which the Company rejected out-of-hand, without any attempt at negotiation), which was expressly subject to shareholder approval.
For the reasons outlined above, LAIG is asking the Crown Point board to consider the views of all shareholders by seeking disinterested shareholder approval for the entire Private Placement Transaction at the upcoming requisitioned shareholders meeting. LAIG intends to share its views on the Private Placement Transaction and the self-serving conduct of the Crown Point board with the appropriate regulators and will be taking such further steps in those and other forums as are appropriate to protect the interests of LAIG, as a substantial shareholder, and all other public shareholders of Crown Point.
In the last ten years, LAIG has been one of the most active investors in the Latin America energy sector. In all of its investments, LAIG seeks effective corporate governance, transparency and an alignment of interest between management and shareholders.
This press release is for information only. LAIG previously announced that it has requisitioned a meeting of the shareholders of Crown Point to remove five of the existing members of the board of directors, reduce the size of the board to five directors and elect three new directors to the board (the "Requisition"). Detailed information on the nominees of LAIG and the purpose and history leading up to the Requisition will be provided in the information circular of LAIG and/or other public disclosure, which will be filed on SEDAR prior to the requisitioned shareholders' meeting.
SOURCE: LAIG Oil Investments