CALGARY, AB, March 12, 2021 /CNW/ - New West Energy
Services Inc. (TSX Venture: NWE), an oil and gas and
environmental services company focused on Western Canada, today announced that it
intends to seek shareholder approval for a proposal to complete the
process of taking NWE private.
Background
The common shares (the "Common Shares") of NWE were listed for
trading on the TSX Venture Exchange (the "TSXV") under the symbol
"NWE". As a public company, management of NWE had been unable
to secure needed financing and NWE's directors believed that the
minimal trading activity of the Common Shares no longer justified
the expense and administrative requirements associated with
maintaining the listing. As such, NWE's directors believed
that it was in the best interests of NWE and all stakeholders to
have the Common Shares voluntarily delisted from the TSXV and for
the directors to consider options for taking NWE private and it
ceasing to be a reporting issuer in Canada subsequent to a delisting. At an
annual and special meeting of the shareholders held on December 11, 2020, the shareholders, excluding
votes attached to Common Shares held by promoters, directors,
officers or other insiders of NWE, approved an ordinary resolution
authorizing NWE to delist the Common Shares from the TSXV.
Following this, the Common Shares were voluntarily delisted from
the TSXV effective December 24,
2020.
Proposed Consolidation of Common Shares
NWE plans to complete the process of taking NWE private by way
of a consolidation (the "Consolidation") of the Common Shares on
the basis of one post-Consolidation Common Share for every
27,498,810 Common Shares held immediately prior to the
Consolidation. Subsequent to the completion of the
Consolidation, NWE will apply to cease to be a reporting issuer in
each province in which it is currently a reporting issuer, being
Alberta and British
Columbia.
Effective March 8, 2021, NWE
entered into a consolidation agreement (the "Consolidation
Agreement") with the following shareholders of the company:
William A. Rand (director and
control person of NWE), Gerry E.
Kerkhoff (President and CEO of NWE), Galin A. Kerkhoff (manager of NWE) and Nations
Fund I, LLC (control person of NWE) (collectively, the "Interested
Shareholders"). Pursuant to the Consolidation Agreement,
prior to the effective date (the "Effective Date") of the
Consolidation, a corporation is to be incorporated under the
Business Corporations Act (Alberta) ("Newco") and the Interested
Shareholders have agreed to transfer to Newco those Common Shares
owned by them, being in aggregate 27,498,810 Common Shares, and, in
return, will be issued the same number of common shares of
Newco. Upon completion of the Consolidation, Newco will be
the sole shareholder of NWE.
Shareholders (other than those shareholders who dissent pursuant
to the Canada Business Corporations Act (the "CBCA")) who
hold fractional shares upon completion of the Consolidation
(collectively, "Minority Shareholders") will receive a cash payment
of $0.002 per pre-Consolidation
Common Share (the "Consideration") on account of such
fractional shares, such payment to be made without interest upon
delivery of certificates representing their Common Shares, a duly
completed Letter of Transmittal and such other documents as NWE or
its depositary may reasonably require. Upon the Effective
Date, all fractional Common Shares will be cancelled and the
Minority Shareholders will no longer be entitled to any other
rights as shareholders of NWE other than the right to receive the
Consideration.
Special Meeting and Shareholder Approval
A special meeting (the "Meeting") of NWE's shareholders has been
called for April 7, 2021, at which
time shareholders will be asked to consider and, if deemed
advisable, approve the Consolidation. All shareholders of
record as of March 2, 2021 (the
"Record Date") will be entitled to receive notice of and to vote at
the Meeting. In connection with the Meeting, NWE will
distribute a management information circular, Letter of Transmittal
and other accompanying materials on or around March 12, 2021 to all shareholders of record as
of the Record Date.
In order to be effective, the resolution approving the
Consolidation must be approved by at least two-thirds of the votes
cast in respect thereof by shareholders present in person or
represented by proxy at the Meeting. In addition, because the
Consolidation is a "business combination" within the meaning of
Multilateral Instrument 61-101 Protection of Minority Security
Holders in Special Transactions ("MI 61-101"), the resolution
must be approved by a majority of the votes cast in person or by
proxy at the Meeting by the shareholders, excluding the votes
attaching to the Common Shares held by the Interested
Shareholders.
Fairness to Minority Shareholders
Evans & Evans, Inc., a leading Canadian boutique investment
banking firm with offices and affiliates in Canada, the United
States and Asia, was
engaged by the board of directors (the "Board") of NWE to provide
an independent opinion as to the fairness of the
Consideration. In their written opinion, a copy of which is
included in the management information circular being mailed to the
shareholders of NWE, Evans & Evans concluded that, as of the
date of their review, the Consideration is fair, from a financial
point of view, to the Minority Shareholders.
The Consolidation is exempt from the formal valuation
requirement under MI 61-101 as NWE's securities are not listed or
quoted on any stock exchange listed at paragraph 4.4(1)(a) of MI
61-101.
Board Approval and Recommendation
At a meeting held on February 25,
2021, the Board considered options for taking NWE private
and it ceasing to be a reporting issuer in Canada. After a
discussion, the Board unanimously, with Messrs. William A. Rand and Gerry E. Kerkhoff abstaining from voting due to
their interest in the Consolidation, determined that the
Consolidation was in the best interests of all shareholders,
including the Minority Shareholders, and stakeholders and approved
the same. The reasons for the Board approval include the
following:
- NWE's ability to continue as a going concern is in doubt given
declining revenues, high unserviceable debt levels and the
inability of management to secure needed financing;
- the conclusion of Evans & Evans that the Consideration is
fair, from a financial point of view, to the Minority
Shareholders;
- the Consolidation represents a liquidity opportunity in absence
of a public market for the Common Shares and will allow the
Minority Shareholders to dispose of their Common Shares for the
Consideration without incurring brokerage fees or commissions;
- the Consolidation will be subject to Minority Shareholder
approval pursuant to MI 61-101; and
- shareholders may dissent in respect of the resolution approving
the Consolidation pursuant to the CBCA and be entitled to be paid
the fair value of their Common Shares.
Funding of Consideration
The Consideration payable to shareholders upon completion of the
Consolidation will be funded by NWE. Pursuant to the
Consolidation Agreement, Mr. William A.
Rand has agreed to lend to NWE such funds equal to the
aggregate amount of the Consideration required to be paid to the
shareholders. The loan will have an interest rate of 9% per
annum, calculated and compounded monthly, on the outstanding
principal amount until paid in full. The principal amount of
the loan and outstanding interest shall be payable by NWE to Mr.
Rand on demand.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this news release may constitute
"forward-looking information" within the meaning of applicable
securities laws that involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements or industry results to be materially different from
any future results, performance or achievements or industry results
expressed or implied by such forward-looking information and
financial outlook. Forward-looking information is identified
by the use of terms and phrases such as "anticipate", "believe",
"could", "estimate", "expect", "intend", "may", "plan", "predict",
"project", "will", "would", and similar terms and phrases,
including references to assumptions. Such information may
involve, but is not limited to, comments with respect to
strategies, expectations, planned operations or future
actions. Forward-looking information in this news release
includes, without limitation, statements with respect to: the
receipt of approval of the NWE shareholders to the Consolidation;
NWE giving effect to the Consolidation; and Mr. Rand lending to NWE
the funds to pay the Consideration. Actual events or results
may differ materially. This forward-looking information is
only a prediction based upon NWE's current expectations, and actual
events or results may differ materially. NWE may not actually
achieve the plans, intentions or expectations disclosed in its
forward-looking information. Forward-looking information is
subject to known and unknown risks and uncertainties and is based
upon uncertain assumptions that could cause NWE's actual results
and the timing of events to differ materially from those
anticipated in such forward-looking information. You are cautioned
not to place undue reliance on this forward-looking information,
which speak only as of the date of this press release. NWE
does not assume any obligation to publicly update or revise such
forward-looking information to reflect new information, subsequent
or otherwise, except as may be required by applicable law.
The forward-looking information contained herein is expressly
qualified in its entirety by this cautionary statement.
SOURCE New West Energy Services Inc.