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Critical Control Energy Services Corp
Symbol CCZ
Shares Issued 58,459,856
Close 2017-05-11 C$ 0.135
Recent Sedar Documents

Critical Control arranges preferred share financing

2017-05-11 21:45 ET - News Release

Mr. Alykhan Mamdani reports

CRITICAL CONTROL ANNOUNCES PRIVATE PLACEMENT AND PLAN OF ARRANGEMENT

Critical Control Energy Services Corp. intends to complete a non-brokered private placement of units consisting of a newly created class of Series A preferred shares and common share purchase warrants for gross proceeds of a minimum of $3-million to a maximum of $5-million. Contemporaneously with the offering, the corporation intends on issuing $4.65-million of preferred shares to the current common shareholders of the corporation in exchange for some or all of their existing common shares.

"The completion of the offering will immediately improve the corporation's balance sheet, liquidity and cash flow," said Alykhan Mamdani, president and chief executive officer of Critical Control. "In management's opinion, the creation of the preferred share, combined with both the offering and the arrangement, improves the corporation's capital structure by providing greater long-term flexibility to finance growth."

The corporation currently has no shares outstanding other than common shares. The preferred shares underlying the offering and the arrangement will have a $2 deemed value, and a maximum of 4,825,000 preferred shares will be distributed pursuant to the offering and the arrangement. The preferred shares will entitle the holders to an 8-per-cent cumulative dividend paid quarterly, will be redeemable by the corporation after five years from initial issuance, and the cumulative dividend rate shall be reset after the five-year anniversary to be the Canada five-year bond rate plus 5 per cent, with a minimum rate of 8 per cent.

The offering

The offering will be for a minimum of 1.5 million units and a maximum of 2.5 million units at $2 per unit. Each unit shall consist of one preferred share with a $2 deemed value and one warrant to acquire one common share of the corporation for 20 cents per common share. Each warrant shall expire two years from the date on which it is issued.

Any closing of subscriptions for the offering is subject to the subscription of a minimum of 1.5 million units for minimum proceeds of $3.0-million. The closing will also be subject to the completion of the arrangement and the approval of the Toronto Stock Exchange to list the preferred shares on the Toronto Stock Exchange.

Management and directors of the corporation are expected to subscribe for 375,000 units, for total gross proceeds of $750,000. Closing is expected to occur with the arrangement on or about June 30, 2017.

The offering is expected to be non-brokered and shall be completed upon reliance on exemptions from the prospectus requirements of applicable securities regulations. Subscribers to the units shall have statutorily imposed hold periods attributed to the preferred shares acquired thereunder and to the common shares acquired from the issuance of the warrants. The offering may be subject to a finder's fee.

Proceeds of the offering will be used to reduce the corporation's bank debt.

The arrangement

The arrangement will allow existing holders of common shares of the corporation to exchange any portion of their common shares for preferred shares on the basis of one preferred share for every 12.9 common shares they tender for conversion. This exchange ratio is based upon a conversion rate of $2 per preferred share and a price of 15.5 cents per common share, representing a premium of 14.8 per cent over the closing price of the common shares on the Toronto Stock Exchange on May 11, 2017.

Under the arrangement, holders of common shares will not be required to exchange their common shares under the arrangement and may elect to keep some or all of their common shares. A maximum of 29,992,500 common shares will be exchanged for a maximum of 2,325,000 preferred shares under the arrangement. In the event holders of common shares in aggregate elect to receive more than 2,325,000 preferred shares, the maximum number of preferred shares shall be distributed to them on a pari passu basis based upon their election. In the event the holders of common shares in aggregate elect to receive less than 2,325,000 preferred shares, the remaining preferred shares will be distributed pro rata to those holders of common shares who do not make a valid election subject to a maximum of 2,325,000 preferred shares being distributed pursuant to the arrangement and in accordance with the aforementioned exchange ratio.

Details of the arrangement will be distributed to the holders of the common shares in an information circular associated with the corporation's annual and special meeting to be held in Calgary on June 29, 2017. The arrangement is expected to be completed on or about June 30, 2017, through a statutory plan of arrangement under Section 193 of the Business Corporation Act (Alberta), which will be subject to court approval and approval of the shareholders of the corporation at the meeting. In addition, the arrangement will also be contingent upon the corporation reaching the minimum offering.

About Critical Control Energy Services Corp.

Critical Control provides solutions for the collection, control and analysis of measurement and operational data related to oil and gas wells across North America. The company provides services to capture the data, cloud-based software to visualize and manage it, and the business intelligence to make quicker and more informed operational decisions.

We seek Safe Harbor.

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