CORP / Energy North and Electra Energy Unable to Reach Agreement
With Landhawk
ASE SYMBOL: ENI
AND ELECTRA ENERGY CORPORATION
ASE SYMBOL: EEN
JULY 22, 1998
CALGARY, ALBERTA--ENERGY NORTH INC. ("ENERGY NORTH") and ELECTRA
ENERGY CORPORATION ("ELECTRA") announce that after protracted
discussion's with Landhawk Petroleum Corporation and its major
shareholders Landhawk was unable to meet the conditions of the
previously announced Standstill Agreement of April 8, 1998. As a
result ENERGY NORTH and ELECTRA have terminated merger
negotiations with Landhawk.
ENERGY NORTH and ELECTRA further announce that they have finalized
the principal terms of a new letter of intent outlining the terms
of the proposed merger between them.
The letter of intent provides for an amalgamation through a plan
of arrangement involving Energy North and Electra. The approximate
exchange ratios for the respective shares will be based upon the
following ratios:
/T/
Number of Shares to be Exchanged for One Share of the
Amalgamated Corporation
Energy North 5.32
Electra Energy 4.12
/T/
As a result of the amalgamation, the amalgamated corporation will
have 10,000,000 Common shares issued and outstanding and purchase
warrants to purchase 783,208 shares. The holders of the common
shares of ENERGY NORTH will acquire approximately 55 percent of
the amalgamated corporation's shares and the holders of the common
shares of ELECTRA will acquire approximately 45 percent of the
amalgamated corporation's shares.
The amalgamated corporation will have a production rate estimated
at 920 barrels of oil equivalent per day (644 barrels of oil and
2.76 million cubic feet of gas). Assuming oil and oil equivalent
pricing of US $17 per barrel, the amalgamated corporation is
expected to have an estimated cash flow for the twelve month
period following amalgamation of approximately $1,900,000 and long
term debt of two times cash flow or $3,800,000. The capital
expenditure forecast for the twelve month period following
amalgamation is estimated at $1,900,000.
Management will consist of: President and CEO - Richard N. Edgar,
Executive Vice-President - Gary Kirkpatrick, Vice-President
Exploration - Bruce Edgar, Treasurer and CFO - to be determined
The Board of Directors will consist of: Mr. Richard N. Edgar, Mr.
Francis E. Lefaivre, Mr. Morton H. Wyne, Mr. R. Greg Powers Q.C.,
Mr. J. D. Gary Kirkpatrick, Mr. Robert T. Malcolm Q.C. and Mr.
Thomas Goodenough
The transaction is subject to finalization of a definitive
agreement, and approvals of the respective boards of directors and
shareholders of each Corporation and the Alberta Stock Exchange.
The parties anticipate mailing a Joint Information Circular
presenting the arrangement to their shareholders by early October.
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