MERGERS - ACQUISITIONS / Basinview Energy Announces $70,000,000 Offer to Acquire
Avalanche Energy Limited and $15,000,000 Special Warrant Financing
CALGARY, Dec. 30 /CNW/ - Basinview Energy Limited, a junior capital pool
corporation (ASE:BXV) (''Basinview''), announced that it has signed a letter
of intent to offer to acquire all of the issued and outstanding securities of
Avalanche Energy Limited (''Avalanche''). The acquisition of not less than 66
2/3% of the issued and outstanding common shares of Avalanche (on a fully
diluted basis) would, if approved by The Alberta Stock Exchange and the
requisite majority of Basinview shareholders, qualify as Basinview's major
transaction pursuant to Alberta Securities Commission Rule 46-501 (the ''Major
Transaction''). Basinview also announced that is has signed a letter of
intent with Peters & Co. Limited to sell up to 107,142,857 special warrants at
an issue price of $0.14 per special warrant for aggregate gross proceeds of up
to $15,000,000.
Basinview has agreed to offer 25 common shares at a deemed value of $0.14
per share for each outstanding common share of Avalanche and one option to
acquire 25 common shares of Basinview for each outstanding option to acquire
one common share of Avalanche. Basinview currently has outstanding 6,000,000
common shares and options to acquire 500,000 common shares while Avalanche
currently has outstanding 17,345,290 common shares and options to acquire
1,660,000 common shares. If the offer is successful, Basinview expects to
issue 433,632,250 common shares and to grant 41,500,000 options to acquire
common shares pursuant to the offer (unless such options are exercised to
acquire common shares prior to the completion of the offer). Avalanche also
has debt and working capital deficiency of approximately $10,000,000.
Avalanche is a distributing non-listed oil and gas company that commenced
operations in January 1998. Avalanche's principal property is located at
Entice, Alberta. Avalanche acquired its rights at Entice pursuant to a multi-
well gas development agreement with PanCanadian Petroleum Limited pursuant to
which Avalanche acquired the opportunity to earn rights in up to 138 sections
of contiguous acreage by completing numerous existing wells and drilling a
significant number of development wells. To date, Avalanche has completed all
45 existing wells and has drilled 47 wells. A total of 21 wells are currently
on production and in total average approximately 10.5 mmcf/day. The remaining
wells are awaiting tie-in and compression and are expected to be phased into
production over the next nine months. Avalanche currently intends to drill in
excess of 40 wells at Entice in 1999. Avalanche also has an oil producing
property located at Redwater, Alberta where 11 wells are currently on
production and in total average approximately 200 bbls/day.
Avalanche's board of directors consists of Larry G. Evans, Larry A. Shaw
and Peter A. Williams. Avalanche's management team consists of Larry G. Evans
(President & CEO), Mitchell L. Putnam, (Vice President, Exploration), D. David
Ambedian (Vice President, Finance & CFO), Barry A. Johnson (Vice President,
Engineering), Robert F. Mercier (Vice President, Operations), William C.
MacDonald (Vice President, Land), David S. Cassidy (Chief Geologist) and Jody
W. Forsyth (Corporate Secretary). Mr. Evans is also a director of Basinview
and Mr. Forsyth is also a director and the President and CEO of Basinview. It
is anticipated that Basinview's board of directors and management team will be
replaced by Avalanche's board of directors and management team subsequent to
the completion of the acquisition.
The sale by Basinview of up to 107,142,857 special warrants at an issue
price of $0.14 per special warrant for aggregate gross proceeds of up to
$15,000,000 is expected to close in early January 1999. Each special warrant
will entitle its holder to acquire, at no additional cost, one common share of
Basinview. Proceeds of the special warrant financing will be held in trust
pending completion of the Major Transaction, at which time such proceeds
together with interest accrued thereon will be released to Basinview.
Basinview intends to use the proceeds of the special warrant financing
primarily in relation to the continued development of Avalanche's principal
property located at Entice, Alberta. In the event that the Major Transaction
does not close within 120 days of the closing date of the special warrant
financing, Basinview will repurchase all special warrants and all proceeds
together with interest accrued thereon will be returned to the holders of the
special warrants.
Basinview intends to file a prospectus to qualify the issuance of the
common shares issuable upon the exercise of the special warrants. In the
event that Basinview fails to receive final receipts for the prospectus within
90 days following the completion of the Major Transaction, each special
warrant will entitle its holder to acquire, at no additional cost, 1.1 common
shares of Basinview.
The offer to acquire all of the issued and outstanding securities of
Avalanche and the special warrant financing transaction are subject to
numerous conditions, including due diligence by Basinview and the approval of
The Alberta Stock Exchange, the Alberta Securities Commission and the
shareholders of Basinview.
Basinview will be sending an information circular to all of its
shareholders in respect of a meeting at which such shareholders will be asked
to approve the Major Transaction on the basis of a majority of the minority of
those shareholders. If the Major Transaction is approved and the offer is
successful, Basinview currently intends that it would amalgamate with
Avalanche under the name ''Avalanche Energy Limited'' and would consolidate
its shares on a 25 for 1 basis, or such lesser basis as may be required to
meet The Alberta Stock Exchange's minimum board lot requirements.
The Alberta Stock Exchange has requested that trading in Basinview common
shares be halted until an engineering report on Avalanche's properties and
draft documents respecting the Major Transaction have been presented to the
Exchange's filing committee. It is anticipated that this will occur in mid to
late January.
Basinview Energy Limited is a Calgary based junior capital pool
corporation listed on the ASE under the symbol ''BXV''. Avalanche Energy
Limited is a Calgary based distributing non-listed oil and gas company.
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