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CALGARY, Aug. 18, 2014 /CNW/ - Veresen Inc. ("Veresen" or "the Company") (TSX: VSN) announced today that it has been named as a respondent in an application commenced by Energy Fundamentals Group Inc. ("EFG") in the Ontario Superior Court of Justice in Toronto on August 14, 2014. In the application, EFG seeks a declaration that, pursuant to a letter agreement dated July 27, 2005 between EFG and Fort Chicago Energy Partners L.P., the predecessor to Veresen, EFG has the option to acquire up to 20% of Veresen's equity interest in the Jordan Cove liquefied natural gas ("LNG") terminal and related assets in Coos Bay, Oregon.
Veresen believes that the option held by EFG applied only to the prior proposal to build an LNG import terminal and is not valid with respect to the current proposed liquefaction and LNG export terminal. Veresen further believes that even if the courts determine that the option is valid, the existence of the option and whether or not it is exercised are not expected to have a material impact on the Company.
In 2005 when Veresen first considered the development of Jordan Cove LNG as an import terminal project, it entered into a previously disclosed agreement with EFG to provide financial advisory services, which included an option to invest up to 20% of the development and construction capital contributed, or to be contributed, to the project by Veresen. If the option was exercised prior to construction, EFG would pay Veresen an amount equal to all development equity contributed prior to that time, together with a premium after-tax rate of return of 30% (compounded annually) on development equity from the time such costs were incurred. Given the considerable development costs incurred by Veresen since 2005, and the premium return to be paid on such amounts, if valid, the exercise of the option by EFG would require a substantial payment to Veresen.
The LNG import terminal project was designed to accommodate the import of foreign natural gas into North America. With the dramatic and long-term change in North American supply of gas, the LNG import terminal project became commercially unviable. As a result, the import project was terminated and the licenses associated with it were vacated. Veresen commenced a new process to construct a liquefaction and LNG export terminal at the Jordan Cove site.
About Veresen Inc.
Veresen is a publicly-traded, dividend paying corporation based in Calgary, Alberta that owns and operates energy infrastructure assets across North America. Veresen is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; a midstream business which includes ownership interests in a world-class natural gas liquids extraction facility near Chicago, the Hythe/Steeprock gas gathering and processing complex, and other natural gas and NGL processing energy infrastructure; and a power business focused on gas-fired, renewable and district energy facilities. Veresen is also actively developing a number of greenfield projects and regularly evaluates and pursues acquisition and development opportunities.
Veresen's common shares, Series A preferred shares, Series C preferred shares, and 5.75% convertible unsecured subordinated debentures, Series C due July 31, 2017 are listed on the Toronto Stock Exchange under the symbols "VSN", "VSN.PR.A", "VSN.PR.C" and VSN.DB.C", respectively. For further information, please visit www.vereseninc.com.
Forward Looking Information
Certain information contained herein relating to, but not limited to, Veresen and its businesses constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that Veresen expects or anticipates may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this news release include, but are not limited to, statements with respect to the validity of the EFG option agreement, the calculation and amount of the cost to exercise the EFG option, and the impact on the Company of the existence of the EFG option and whether the option is exercised or not. Additional information on risks, uncertainties and factors that could affect Veresen's operations or financial results is included in its filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time. Readers are also cautioned that such additional information is not exhaustive. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time. Although Veresen believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the information contained herein, as actual results achieved will vary from the information provided herein and the variations may be material. Veresen makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof, and Veresen does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable laws. Any forward-looking information contained herein is expressly qualified by this cautionary statement.
SOURCE: Veresen Inc.
For further information: Dorreen Miller, Director, Investor Relations, Phone: (403) 213-3633, Email: [email protected]