MONTREAL, June 3 /CNW Telbec/ - Gale Force Petroleum Inc. (TSX Venture:
GFP, the "Corporation") today announced a status update to shareholders
regarding the progress of its debt restructuring and equity re-financing
The Corporation remains under bankruptcy protection as part of the
Proposal to Creditors filed on February 4, 2009, under the Bankruptcy and
Insolvency Act (Canada). Since the Proposal to Creditors was approved by the
creditors and sanctioned by the Superior Court of Quebec, the Trustee is now
soliciting unsecured creditors to provide their Proof of Claim until June 12,
2009, after which the unsecured creditors will be issued up to 45 million new
common shares of the Corporation as a final dividend to settle their debts.
Barring any unforeseen complications, this can be expected to occur prior to
the end of June, 2009.
The Corporation is currently insolvent, but has sufficient resources to
continue operations for a limited period of time while under the protection of
the Proposal to Creditors. The Corporation is focusing its efforts on
obtaining new equity financing, which is needed for working capital and to
maintain the value of its assets.
Following the completion of the Proposal to Creditors, the Corporation
will still hold a $2 million secured loan. This secured loan remains a major
barrier for the Corporation in its efforts to obtain any new equity or other
alternative financing. Therefore, the Corporation is currently negotiating
with its secured lender, Primatlantis Capital L.P., to restructure the loan
and convert a portion of the loan into equity, which would be subject to
concurrently raising sufficient additional equity financing to provide a
viable future for the Corporation.
The debt conversion and new equity financing transactions would be highly
dilutive to all existing shareholders, including the new shareholders who are
receiving payment in shares as part of the Proposal to Creditors. If the
Corporation is able to convert part of its secured loan and obtain sufficient
new equity financing, it would be expected to issue approximately 400 million
new shares as part of these transactions. However, given the current financial
situation of the Corporation and capital market conditions, such transactions
appear to be the Corporation's sole viable alternative.
If the Corporation is unable to negotiate a conversion of its secured
loan into equity and obtain new equity financing, it will not be able to
continue as a going concern and will possibly be required to file for
bankruptcy in the coming months. Further details will be announced in such
ABOUT GALE FORCE PETROLEUM INC.(TM) - www.GaleForcePetroleum.com
Gale Force Petroleum is a public corporation focused on acquiring and
exploiting unconventional and conventional gas resources in mature basins,
building shareholder value through growth. It owns producing natural gas
properties in Alberta, Canada and in Kentucky, USA.
Forward looking statements:
Statements included herein, including those that express management's
expectations or estimates of our future performance, constitute
"forward-looking statements" within the meaning of applicable securities laws.
Forward-looking statements - especially but not limited to any geological or
reservoir information not supported by a NI 51-101 report - are based on
assumptions and estimates that are subject to various risks and uncertainties
including but not limited to geological risk, engineering risks, market risk
and the risks disclosed under the heading "Business Risks" in the
Corporation's periodic filings with Canadian securities regulators, including
most recently in its Management Discussion and Analysis for the annual
exercise ended June 30, 2008 available on SEDAR. Such information contained
herein represents management's best judgment as of the date hereof based on
information currently available. The Corporation does not assume the
obligation to update any forward-looking statements.
"The TSX Venture Exchange has not reviewed this release and therefore
does not accept responsibility for its adequacy or accuracy."
For further information:
For further information: Michael McLellan, Chairman and CEO, (514)