Press release from Newsfile Corp
Nova Bancorp Reports Growing Opposition to the Pace Arrangement
Monday, February 11, 2013
Nova Bancorp Reports Growing Opposition to the Pace Arrangement10:08 EST Monday, February 11, 2013Vancouver, British Columbia--(Newsfile Corp. - February 11, 2013) - Nova Bancorp Ltd. (“Nova Bancorp”) is very encouraged by the growing opposition to the Pace deal. On January 29, 2013, Nova Bancorp announced its plan to oppose the business combination involving Pace Oil & Gas Ltd., AvenEx Energy Corp. and Charger Energy Corp. (the “Arrangement”). Pursuant to exemptive relief from the Alberta Securities Commission that we obtained in order to execute our plan, Nova Bancorp is permitted to make non-public solicitations to not more than 15 Pace shareholders. Nova Bancorp has spoken with 8 of Pace’s largest shareholders. 7 of these 8 shareholders have advised us that they intend to vote against the Pace Arrangement. In addition, Nova Bancorp has received unsolicited reports from other Pace shareholders who also intend to vote no. There is clearly growing opposition to the Arrangement. Shareholders are not satisfied with the deal or the management of Pace. THIS DEAL CAN STILL BE STOPPED. Only Three Days Left to Vote Nova Bancorp urges Pace shareholders to vote against the Arrangement. Vote against the Arrangement using the form of proxy or voting instruction provided by Pace. The cutoff for internet or telephone voting is 10:00 am Calgary time Wednesday,February 13 to meet the Pace deadline of Thursday, February 14. Shareholders using internet or telephone voting can change their voting instructions more than once and at any time prior to the cutoff. Do not appoint Nova Bancorp Ltd., Jack Muir or Rick Wlodarczak as your appointee. Leave blank or name another individual. Four Reasons for Opposing the Pace Arrangement 1.The limited sale process was not adequate Pace shareholders were not well served when Pace engaged its financial advisor to “conduct a non-public, confidential, limited party sale process.” It’s unacceptable that the result of this process was a non-arm’s length deal. Since the Arrangement was announced, Pace shares have fallen more than 8% to close at $3.11 on Friday. 2.Pace shareholders would be unfairly diluted The Arrangement is unfair to Pace shareholders on an absolute basis and a relative basis. We estimate Break-up Value at $5.40 per share. In Q3 2012 the consensus target price of the six analysts covering Pace was $5.29. The proposed exchange ratios also undervalue Pace's relative contributions to the combined entity. While Pace represents 64% of combined cash flow, Pace shareholders will only own 47% of Spyglass. 3.The proposed dividend is not sustainable The Spyglass dividend will not be sustainable. This view is shared by other analysts not involved in the transaction. Our modeling indicates that more funds from operations will need to be invested in asset development at the expense of dividends. 4.The Arrangement does not improve the management of Pace assets The Arrangement looks more like a game of musical chairs than a serious attempt to improve management and bolster market confidence. In addition, the top five members of the Pace management team will receive cash payments of $5.3 million. Next Steps Part 2 Our press release of February 1, 2013 outlined some minimum changes that would have to follow a no vote. We can confirm that there is a growing consensus among a number of the largest Pace shareholders that significant changes must be made if shareholder value is going to be maximized. Their focus on change is coupled with an informed optimism that there’s simply a better deal out there. If the Arrangement is voted down by the shareholders including some of the largest shareholders, Nova Bancorp believes that the Pace should be receptive to significant changes. If Pace was not receptive, Nova Bancorp and certain other shareholders would be prepared to organize a second shareholder initiative. Notice This solicitation is being made by Nova Bancorp and not by or on behalf of the management of Pace Oil & Gas Ltd. Except for certain non-public solicitations, any solicitation will be made by broadcast, speech or publication. Nova Bancorp will bear all the costs and expenses associated with such solicitation. Affiliates or associates of Nova Bancorp own an aggregate of 108,200 Pace common shares (“Shares”), representing approximately 0.23% of the total Shares issued and outstanding as of the record date. Nova Bancorp Investments Ltd., an affiliate of Nova Bancorp owns 65,200 Shares. Jack Muir and Rick Wlodarczak own or control an aggregate of 43,000 Shares. Messrs. Muir and Wlodarczak are officers of Nova Bancorp and its affiliates. Vote against the Arrangement using the form of proxy or voting instruction provided by Pace. Shareholders may subsequently revoke such proxy in any manner permitted by law. If you have previously voted on the form of proxy or voting instruction form sent to you by Pace, you may revoke your vote by voting on the internet, by fax, by mail or over the telephone (as available). Only your latest dated form of proxy or voting instruction form will be counted. The address of Pace Oil & Gas Ltd. is 1700, 250-2 Street S.W., Calgary, Alberta T2P 0C1. Nova Bancorp is a member of Nova Bancorp Group (www.novabancorp.com), a private investment company based in Vancouver. Nova Bancorp has considerable experience with oil & gas investments and with shareholder activist situations. For further information: Jack Muir 604-891-8782 email@example.com Rick Wlodarczak 604-891-8791 firstname.lastname@example.org Website www.keeppace.caForward-Looking Statements Certain statements in this press release contain forward-looking information within the meaning of applicable securities laws in Canada (“forward-looking information”). The words “anticipates”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “may”, “might”, “plans”, “projects”, “schedule”, “should”, “will”, “would” and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information in this press release includes, but is not limited to: the timing and holding of the Pace meeting and the future prospects of Pace. In connection with the forward-looking information contained in this news release, Nova Bancorp has made numerous assumptions. While Nova Bancorp considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. All forward-looking information in this press release is qualified in its entirety by this cautionary statement and, except as may be required by law, Nova Bancorp undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.