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Press release from CNW Group

Surge announces closing of $247.5 million equity financing

Wednesday, July 03, 2013

Surge announces closing of $247.5 million equity financing

10:58 EDT Wednesday, July 03, 2013

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./

CALGARY, July 3, 2013 /CNW/ - Surge Energy Inc. ("Surge" or the "Company") (TSX: SGY) is pleased to announce the closing of its previously announced $247.5 million equity financing.

The financing was completed in connection with the previously announced acquisition (the "Acquisition") by the Company of certain assets in Saskatchewan.  The Company issued 15,000,000 units ("Units") of the Company on a "bought deal" basis at a price of $15.00 per Unit, for gross proceeds of $225 million as part of a "bought deal" financing with a syndicate of underwriters led by Macquarie Capital Markets Canada Ltd. and including GMP Securities L.P., National Bank Financial Inc., CIBC World Markets Inc., TD Securities Inc., Scotia Capital Inc., FirstEnergy Capital Corp., Dundee Securities Ltd. and Cormark Securities Inc.  Each Unit was comprised of one common share ("Common Share") of the Company at a price of $5.00 per Common Share and two subscription receipts ("Subscription Receipts") at a price of $5.00 per Subscription Receipt of the Company. The Underwriters have exercised their option to purchase up to an additional 4,500,000 Subscription Receipts, for proceeds of an additional $22.5 million. The gross proceeds from the sale of Subscription Receipts are being held in escrow pending the satisfaction of all conditions to the completion of the Acquisition, provided that the closing date of the Acquisition is on or before September 30, 2013, at which time each Subscription Receipt will entitle the holder to receive a Common Share, without further payment or action on the part of the holder, upon the closing of the Acquisition. If the Acquisition is not completed on or before September 30, 2013 or is terminated at an earlier time, holders of Subscription Receipts will receive, for each Subscription Receipt held, a cash payment equal to the Subscription Receipt offering price and any interest earned thereon during the term of the escrow. It is anticipated that the Subscription Receipts will be listed and posted for trading on the Toronto Stock Exchange under the symbol SGY.R at the open of markets today, until the conversion of the Subscription Receipts into Common Shares is completed. The gross proceeds from the issuance of Common Shares will be used to pay down debt and for general corporate purposes and the gross proceeds from the issuance of Subscription Receipts will be used to partially fund the Acquisition.

The financing was completed by way of a short form prospectus in all of the provinces of Canada and on a private placement basis in the United States pursuant to exemptions from the registration requirements of the U.S securities laws.

FORWARD LOOKING STATEMENTS:

This press release contains forward-looking statements. More particularly, this press release contains statements concerning the anticipated completion of the Acquisition, the conversion of the Subscription Receipts into Common Shares and the timing thereof, the listing of the Subscription Receipts on the TSX and use of the proceeds from the financing.

The forward-looking statements are based on certain key expectations and assumptions made by Surge, including anticipated expenses, cash flow and capital expenditures, expectations and assumptions concerning the performance of existing wells and success obtained in drilling new wells, and the application of regulatory and royalty regimes.

Although Surge believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Surge can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Surge's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and Surge undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Surge Energy Inc.

For further information:

Paul Colborne,
President and CEO 
Surge Energy Inc.
Phone: (403) 930-1507
Fax: (403) 930-1011
Email: pcolborne@surgeenergy.ca

Max Lof, 
CFO
Surge Energy Inc.
Phone: (403) 930-1021
Fax: (403) 930-1011
Email: mlof@surgeenergy.ca

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