The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from CNW Group

PETROWEST ENERGY SERVICES TRUST ANNOUNCES INTENTION TO CONVERT TO A CORPORATION AND PROVIDES AN UPDATE ON REFINANCING

Tuesday, May 24, 2011

PETROWEST ENERGY SERVICES TRUST ANNOUNCES INTENTION TO CONVERT TO A CORPORATION AND PROVIDES AN UPDATE ON REFINANCING23:56 EDT Tuesday, May 24, 2011This new release contains "forward-looking and statements" within the meaning of applicable securities laws.  For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see "Forward-Looking Information" later in this news release.CALGARY, May 24, 2011 /CNW/ - Petrowest Energy Services Trust ("Petrowest" or the "Trust") is pleased to announce that its board of directors has unanimously approved the conversion of the Trust from an income trust to a new publicly listed corporation, Petrowest Corporation ("New Petrowest"), pursuant to a plan of arrangement under section 193 of the Business Corporations Act (Alberta) (the "Arrangement").Petrowest will seek the approval of the Arrangement from the holders (the "Unitholders") of trust units (the "Trust Units") and subordinated units (the "Subordinated Units", and together with the Trust Units, the "Units") of Petrowest at its 2011 annual and special meeting of Unitholders (the "Meeting").  Petrowest has scheduled the Meeting to be held at 9:00 a.m. (Calgary time) on June 29, 2011 in the Bennett Boardroom at the offices of Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W., Calgary, Alberta.The Arrangement requires the approval of Unitholders, as well as customary court and regulatory approvals.  To be approved, the special resolution approving the Arrangement must be passed by a majority of not less than 66 2/3% of the votes cast by Unitholders in person or represented by proxy at the Meeting, voting as a single class, as well as: (i) not less than 66 2/3% of votes cast by holders of Trust Units, in person or represented by proxy at the Meeting; and (ii) not less than 66 2/3% of votes cast by holders of Subordinated Units, in person or represented by proxy at the Meeting, in each case voting as a separate class.  The Arrangement will also be subject to the minority approval requirements of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions.Under the Arrangement: (i) holders of Trust Units will receive one common share in the capital of New Petrowest (each, a "Common Share") for each Trust Unit held; and (ii) holders of Subordinated Units will receive one Common Share for each Subordinated Unit held that was issued in 2010 and the remaining holders of Subordinated Units will receive one-tenth of one Common Share for each Subordinated Unit held.  Also under the Arrangement, Petrowest's issued and outstanding 10% convertible secured debentures and deferred trust units will be assumed by New Petrowest.Immediately following the completion of the Arrangement, it is expected that the corporate structure of Petrowest will be simplified through the dissolution of the Trust and Petrowest Energy Services Business Trust, as well as through the amalgamation of Petrowest's corporate subsidiaries.The proposed Arrangement will be completed in compliance with the exchange method provided for under the Income Tax Act (Canada) and is intended to be tax deferred for Canadian residents.It is a condition of the Arrangement that the Common Shares issued by New Petrowest pursuant to the Arrangement be listed for trading on the Toronto Stock Exchange following the completion of the Arrangement. It is anticipated that the Trust Units will be delisted following completion of the Arrangement.Petrowest's senior management team and directors are expected to continue to serve in their current roles with New Petrowest. A management information circular outlining the details of the matters to be dealt with at the Meeting, including the Arrangement, is expected to be mailed to Unitholders on or about May 31, 2011 and will be available on SEDAR (www.sedar.com).  Subject to the receipt of all necessary approvals, the Trust anticipates the Arrangement will be completed on or about July 1, 2011.UPDATE ON REFINANCING Since the maturity of Petrowest's existing credit facility on April 30, 2011, the Trust has been in discussions with its existing lending syndicate regarding an extension of time to provide the necessary time to close and fund a new credit facility. The Trust is in advanced negotiations with three institutions to provide a new credit facility which will be utilized, in part, to pay out the existing credit facility. However, neither an extension to the existing credit facility nor a new credit facility has been obtained at this time and there is no assurance that Petrowest will be able to obtain an extension to the existing credit facility or enter into a new credit facility on acceptable terms and conditions.ABOUT PETROWESTPetrowest is a leading provider of pre-drilling and post-completion energy and civil infrastructure services to the northern region of the western Canadian sedimentary basin.  Petrowest is an unincorporated, open-ended, limited purpose, mutual fund trust established under the laws of Alberta.FORWARD LOOKING INFORMATIONThis news release contains forward-looking statements that involve substantial known and unknown risks and uncertainties.  These forward-looking statements are identified by their use of terms and phrases such as "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "expect", or similar words suggesting future outcomes or language suggesting an outlook. This news release contains forward-looking information pertaining to, among other things, the conversion of Petrowest from an income trust structure to a corporate structure; the timing of the completion of the Arrangement; the exchange of Units for Common Shares; the assumption of the debentures and deferred trust units by New Petrowest; the effective date of the Arrangement; the satisfaction of conditions for listing on the TSX; the composition of the Board of Directors and management of New Petrowest upon completion of the Arrangement; the ability to obtain required consents, permits or approvals, including, but not limited to, Unitholder, Court and regulatory approvals of the Arrangement; the extension of the necessary existing credit facility; and the entering into of a new credit facility. Forward-looking statements and information are based on Petrowest's current beliefs as well as assumptions made by, and information currently available, to Petrowest concerning anticipated business performance.  Although management of Petrowest considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.  Factors that could cause actual results to vary from forward-looking information include, among other things, the failure to obtain the regulatory and Court approvals required to complete the Arrangement or the failure to obtain such approvals on terms acceptable to Petrowest; the failure of Unitholders to approve the Arrangement; the failure of the Trust or New Petrowest to obtain all third party consents, approvals and authorizations; and changes in tax laws and incentive programs relating to the oil and gas industry and income trusts, including the impact of legislation relating to the taxation of "specified investment flow-through" entities and the conversion of income trusts into corporations.  If any of these, or other uncertainties, materialize the actual results of Petrowest may vary materially from those expected.Forward-looking statements are subject to many external variables that are beyond Petrowest's control, such as fluctuating prices for crude oil and natural gas, changes in drilling activity, and general local and global economic, political, business and weather conditions. If any of these, or other uncertainties, materialize the actual results of Petrowest may vary materially from those expected.For further information: please contact Richard Quigley, President and CEO, or Lloyd A. Wiggins, Chief Financial Officer, at (780) 830-0881 or info@petro-west.com.