CANADA GAS CORP. ANNOUNCES INTENT TO ACQUIRE FLYING A PETROLEUM LTD.
Vancouver, British Columbia, Canada - August 05, 2008 - Canada Gas Corp. ("Canada Gas" or the "Company") (formerly Wyn Developments Inc.) announces a proposal to acquire all of the outstanding shares of Flying A Petroleum Ltd. ("Flying A" tsx.v: FAB) on the basis of 6 (six) Flying A shares for 1 (one) Canada Gas share.
This proposal follows on an agreement announced September 2007, whereby Bighorn Petroleum Ltd., Flying A, Canada Gas Corp. (formerly Wyn Developments Inc.) and Tenaka Drilling Consortium Ltd. would amalgamate to consolidate each Company's respective assets into one entity. Notwithstanding the agreement of the parties, negotiations did not result in a formal amalgamation and subsequently, Wyn Developments Inc. spun off its mineral assets, restructured its share capital, and changed its name to Canada Gas Corp. (tsx.v: CJC). It has been the Company's consistent belief that a combination of the companies holding shared interests in two northeastern British Columbia gas plays is the ideal strategic direction for the companies, enabling the attraction of strong technical management and financial assistance to position the projects for success. This offer represents the next step in the Company's plan to bring about these benefits. The elimination of duplicate costs for audits, reserve reports, accounting, office space, management, legal fees and the like would result in significant cost savings that could be re-deployed. The increased scale of Canada Gas after the acquisition of Flying A will enhance financial strength providing improved access for project capital.
For Flying A shareholders, the proposal represents:
- An opportunity through which they may obtain shares which will trade on the TSX Venture Exchange, in exchange for Flying A common shares currently subject to a cease trade order;
- Enhanced liquidity for Flying A's shareholders in the form of Canada Gas shares;
- A better opportunity for the development of the Northeastern B.C natural gas interests owned by the two companies;
- By virtue of the enhanced scale of CJC upon completion of the offer, the greater opportunity to secure financial and technical resources to manage and develop the Company's gas assets;
- Increased financial strength, enhanced cash flow from current production and improved access to capital;
- The opportunity for operational and administrative synergies.
An unsolicited proposal respecting the acquisition of all of the outstanding common shares of Flying A by the Company was presented to management of Flying A late Friday afternoon on August 1st, 2008, with a response requested from management of Flying A by 5 pm, Tuesday August 5th, 2008. The Company was advised that due to a currently imposed cease trade order respecting Flying A's common shares, Flying A and its shareholders are prohibited from negotiating and/or entering into a transaction that would involve the common shares of Flying A, including a takeover bid, without a partial revocation of said cease trade order. To resolve this issue, the Company proposes to make an application to the appropriate regulatory authorities for a partial revocation of the cease trade order for the purpose of executing and completing this proposal.
If the Company is successful in obtaining a revocation of the cease trade order, it intends to commence a formal takeover bid by mailing a formal offer and takeover bid circular to Flying A shareholders in adherence with all regulatory and TSX Venture Exchange requirements. The offer will be subject to certain conditions, including receipt of all necessary regulatory clearances, absence of material adverse changes and acceptance of the offer by Flying A shareholders holding such number of common shares of Flying A as the Company considers sufficient to justify proceeding with the acquisition. No threshold amount has yet been determined by the Company in this regard.
Subject to the receipt of the partial revocation order, the Company will attempt to execute lock-up agreements with Flying A's significant shareholders under which they would agree to tender shares to a take over bid.
Canada Gas reserves the right to perform five days of due diligence on Flying A and reserves the right to amend or retract the proposal should the actual assets under Flying A ownership materially differ than as publicly disclosed by Flying A.
If successful, the Company hopes to complete the transaction on or before October 15th 2008. Canada Gas intends to complete the transaction in conjunction with planning exploration and development activities for winter 2008/2009.
This news release does not constitute an offer to buy or an invitation to sell, or the solicitation of an offer to buy or invitation to sell, any of the securities of the Company or Flying A, nor is it intended to represent the commencement of a formal bid to acquire common shares of Flying A. Such an offer, if and when it is made, will be made pursuant to a formal offer and takeover bid circular filed with the securities regulatory authorities in Canada and mailed to the shareholders of Flying A in accordance with applicable regulatory requirements.
This proposal is subject to all regulatory requirements and approvals.
About Canada Rare Earths
Canada Rare Earths is a growth company focused on the exploration and development of rare earth elements at its 100% owned Goeland Rare Earths Project within the Montviel carbonatite complex, Montviel Township Quebec, immediately adjacent to Geomega's (TSX-V: GMA) recent rare earth discovery. The Goeland property located 215 km north of Val-d'Or, is road accessible and consists of 47 claims totaling approximately 2,600 hectares. Since the acquisition of the Goeland Project, the Company, in a short period of time, has successfully established itself in one of the largest Carbonatite complexes in North America. Worldwide, carbonatite-related deposits are a major host for rare earths elements ("REE"). The world's most advanced and prolific REE deposits in production or development, Bayan Obo (China), Molycorp's Mountain Pass (USA), Lynas's Mount Weld (Aus), and Rare Earth Element Resource's Bear Lodge project, are all hosted by carbonatites.
For more information on Canada Rare Earths, please contact our Head Office.
On Behalf of the Board of Canada Rare Earths Inc.
Chad McMillan
President & CEO
Neither 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. All of the above is subject to TSX.V and regulatory acceptance.
FORWARD LOOKING STATEMENTS
Cautionary Note Regarding Forward-Looking Statements: Certain disclosure in this release, including statements regarding the Company's Pre-Development Agreement and the exploration of the Goeland Project, constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. In making the forward-looking statements in this release, the Company has applied certain factors and assumptions that the Company believes are reasonable, including that the Company is able to obtain any required government or other regulatory approvals and any required financing to complete the Company's obligations pursuant to the Pre-Development Agreement and planned exploration activities, that the Company is able to procure equipment and supplies in sufficient quantities and on a timely basis and that actual results of exploration activities are consistent with management's expectations. However, the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors relating to Canada Rare Earth's operation as a mineral exploration company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such uncertainties and risks may include, among others, actual results of the Company's exploration activities being different than those expected by management, uncertainties involved in the interpretation of drilling results and geological tests, delays in obtaining required government or other regulatory approvals or financing, inability to procure equipment and supplies in sufficient quantities and on a timely basis, equipment breakdowns and bad weather. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on forward-looking statements. Canada Rare Earths does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
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