Mr. Murray McCartney reports
CROWN POINT DEEMS DISSIDENT'S LAST-MINUTE PROPOSAL NOT A BONA FIDE OFFER AND CONFIRMS SUPPORT FOR SECOND TRANCHE FINANCING WITH STRATEGIC INVESTORS
Crown Point Energy Inc. today advised shareholders that a special committee of the board has reviewed the purported "binding proposal" for financing (the last-minute proposal) received from dissident shareholder LAIG Oil Investments, and after careful consideration has determined that it is not a bona fide offer of financing. Furthermore, Crown Point advises shareholders that based on the advice of counsel, the last-minute proposal is not binding at all, notwithstanding LAIG's claim that it is.
Crown Point strongly disagrees with LAIG's position that its last-minute proposal should replace the second-tranche financing that Crown Point has arranged with a strategic Argentine investor group.
"Our conclusion is that LAIG's last-minute proposal is a public relations ploy to disrupt the approval of the second tranche by shareholders at the forthcoming special meeting," said Gordon Kettleson, chairman of the board and member of the special committee. "The special committee wishes to confirm for shareholders that it continues to strongly support the company's relationship with the strategic investors and the second-tranche financing."
The special committee encourages shareholders to consider the following factors. These factors, among others, have influenced the committee's conclusions:
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Benefits of strategic investors to shareholders -- The second tranche
cements a relationship with the strategic investors that will be
advantageous to Crown Point over the long term, given their strong
business reputations in Argentina, their vast experience in the energy
and banking industries in Argentina, and their knowledge of, and deep
relationships within, the local business community.
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Crown Point believes the strategic investors will help grow the company
into a significant player in the Argentine oil and gas sector. As
previously disclosed, the strategic investors are positioned to
accelerate Crown Point's growth by leveraging their financial
capabilities and local business networks so that Crown Point can gain
access to new opportunities through, among other things, acquisitions
and farm-ins on strategic assets.
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Pablo Peralta, one of the strategic investors' board nominees, has
more than 30 years of experience in Argentina's financial services,
insurance and real estate sectors, and has extensive experience financing
oil and gas companies, including the largest oil and gas company in
Argentina, YPF. Mr. Peralta is co-founder, vice-president and a major
shareholder of Banco de Servicios y Transacciones SA (where he was
president from 2002 to 2014), and president and controlling shareholder
of each of the companies in the Origenes Insurance Group, which is the
largest private institutional investor in Argentina, with more than $8-billion (U.S.) under management.
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Gabriel Obrador, the other board nominee of the strategic investors,
is a seasoned entrepreneur and manager who has more than 30 years of
experience operating in the oil and gas sector, and other industries in
Argentina. Among other things, Mr. Obrador has co-founded and acts as
president of Petrolera Piedra del Aguila SA, an independent oil and
gas operator in Argentina.
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Unlike the strategic investors, LAIG is not an Argentine company, and its
principals are not Argentineans or Argentine businessmen. Rather, LAIG
is a self-admitted foreign investor operating out of the Cayman Islands, which is run by individuals residing in England and Mexico. As a result,
the special committee does not believe that a relationship with LAIG
would benefit the company's operations in Argentina. On the contrary,
LAIG is currently suing a prominent Argentine oil and gas producer,
which is something that the company does not want to be associated with.
-
Definitive agreement versus a public relations ploy -- The second tranche is
covered by a 51-page SEDAR-filed contract with the strategic investors,
which have a demonstrated financial capability and have already invested
approximately $6.5-million (U.S.) in the company. In contrast, LAIG's two-paragraph proposal includes no third party verification of LAIG's
financial capability and falls far short of the requirements of a
definitive agreement.
-
Questionable timing -- Why now? The timing of the submission of the last-minute proposal to the board appears to be motivated more by public
relations considerations than a sincere desire to finance the company:
- LAIG did not explain why it waited to provide the last-minute
proposal for a full 82 days after LAIG submitted its highly dilutive
and coercive original proposal, which contemplated that Crown Point
would issue LAIG 20-cent shares and 30-cent warrants. LAIG said at the
time that it would "require" these terms.
- LAIG did not explain why it waited to provide the last-minute
proposal for a full 70 days after Crown Point initially announced
its financing agreement with the strategic investors.
- LAIG did not explain why it announced its last-minute proposal
publicly before providing the brief, two-paragraph proposal to the
board.
For these and other reasons, Crown Point confirms that the board continues to recommend that shareholders vote the white proxy for the second tranche and against LAIG's dissident nominees in advance of the forthcoming special meeting.
To learn more about the reasons for Crown Point's voting recommendations, shareholders should read Crown Point's proxy materials, including a letter to shareholders and circular, both dated Jan. 22, 2015. The circular and other materials have been mailed to shareholders, and are available on SEDAR and on Crown Point's website.
We seek Safe Harbor.
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