Skip to main content

JEFF McINTOSH/The Globe and Mail

Security holders of Arcan Resources Ltd. have rejected a contentious rescue plan for the company by privately held Aspenleaf Energy Ltd., tossing Arcan into an uncertain future.

Arcan, which is hobbled by heavy debt, had urged its investors to support the transaction that involved Aspenleaf taking over 87.5 per cent of its light oil assets in the Swan Hills area of north-central Alberta. Arcan was to form a new junior oil company with the remaining Swan Hills interests, with Aspenleaf owning 6.7 per cent of it.

But the plan was scorned by debenture holders, led by Stornoway Portfolio Management, which complained about a 17.5 per cent haircut on its securities.

Now the deal's off.

"Our proposed agreement with Aspenleaf, developed after a comprehensive series of professional and productive negotiations, provided a viable path forward. We completed a very thorough process that provided extensive opportunity for security-holders to evaluate this proposal, and they chose not to support it," Arcan chief executive Terry McCoy said in a statement.

Stornoway has offered to work with Arcan to come up with an alternative way to deal with its debt, which at $325-million, is nine times Arcan's annual cash flow. Stornoway's president, Scott Reid, was not immediately available for comment.

Report an error

Editorial code of conduct

Tickers mentioned in this story