Torquay Oil Corp (C-TOC) - News Release


Torquay to sell itself to private firm for $21-million

2012-11-20 08:46 ET - News Release
Shares issued 48,659,448
TOC.A Close 2012-11-19 C$ 0.09

Mr. Terry McCallum reports


Torquay Oil Corp. has entered into an arrangement agreement with a private oil and gas company. Under the terms of the Arrangement Agreement, the Purchaser will acquire all of the issued and outstanding Class A Shares and Class B Shares of Torquay for cash consideration of $0.16 per Class A Share and $1.60 per Class B Share, respectively, pursuant to a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").

The aggregate value of the transaction is approximately $21 million which includes the assumption by the Purchaser of Torquay's anticipated net debt of approximately $11.0 million made up of bank debt, working capital obligations and transaction costs.

Based upon, among other things, the verbal fairness opinion of its financial advisor, the Board of Directors of Torquay (the "Torquay Board") has unanimously determined that the Arrangement is fair to the Torquay shareholders and in the best interests of the Company. The Torquay Board has unanimously approved the Arrangement, the transactions contemplated thereby and the entering into of the Arrangement Agreement and resolved to recommend that the shareholders vote in favour of the Arrangement. All of the members of the Torquay Board and Torquay's executive officers, who collectively own approximately 14.3% of the outstanding Class A Shares and 2.2% of the Class B Shares, have entered into lock-up agreements with the Purchaser in respect of the Arrangement and have confirmed their intention to vote their Class A Shares and Class B Shares in favour of the Arrangement.

GMP Securities LP, acted as financial advisor to Torquay and has provided the Torquay Board with its verbal opinion that, as of the date hereof, and subject to review of final documentation, the consideration to be received by Torquay's shareholders pursuant to the proposed Arrangement is fair, from a financial point of view.

The Arrangement is subject to a number of conditions including, but not limited to, the approval of at least 66 2/3% of the votes cast in person or by proxy at a special meeting of Torquay's shareholders and a majority of the votes cast by disinterested shareholders pursuant to the requirements of applicable securities laws, as well as customary court and regulatory approvals and other customary conditions. An information circular regarding the Arrangement is expected to be mailed to Torquay shareholders in late November for a meeting expected to be held on December 21, 2012, with completion of the Arrangement scheduled to occur shortly thereafter.

Under the Arrangement Agreement, Torquay has agreed that it will not solicit or initiate any discussions in respect of any other acquisition proposals. Torquay has also agreed to pay a termination fee in an amount equal to approximately $0.6 million to the Purchaser in certain circumstances. In addition, the Purchaser has the right to match any competing proposal for Torquay in the event such a proposal is made. The Purchaser has agreed to pay Torquay's out-of-pocket expenses incurred in connection with the Arrangement Agreement and the transactions contemplated thereby, if the Arrangement Agreement is terminated by the Company under certain circumstances.

We seek Safe Harbor.