Calgary, Canada – May 21, 2014 – High Arctic Energy Services Inc. (TSX:HWO) (“High Arctic” or the “Corporation”) is pleased to announce it has entered into an agreement dated May 21, 2014 with National Bank Financial Inc. (“NBF”) as lead underwriter on its own behalf and on behalf of a syndicate of underwriters including PI Financial Corp., AltaCorp Capital Inc., and Lightyear Capital Inc. (collectively, the “Underwriters”) in connection with the proposed public offering (“Offering”) of subscription receipts of the Corporation (“Subscription Receipts”). Pursuant to the terms of the agreement, the Underwriters will purchase for resale from High Arctic, on a bought deal basis, a treasury offering of 5,051,000 Subscription Receipts at a price of $4.95 per Subscription Receipt for aggregate gross proceeds to the Corporation of $25,002,450.
The proceeds of the Offering will be used by the Corporation to partially fund the previously announced acquisition of two heli-portable drilling rigs and associated ancillary equipment (the “Acquisition”) and will be held in escrow pending the completion of the Acquisition. Details of the Acquisition and the 2-year drilling services contract with InterOil Corporation are available in the news release of the Corporation dated April 9, 2014.
FBC Holdings Sàrl, an insider of the Corporation, which holds approximately 41% of the issued and outstanding Common Shares in the Corporation as of the date of this news release, has agreed, directly or through its investment manager Cyrus Capital Partners, L.P., to purchase a minimum of 1,516,000 Subscription Receipts at a price of $4.95 per Subscription Receipt, for gross proceeds of $7,504,200.
If all outstanding conditions to the completion of the Acquisition (other than payment of the purchase price) are met (the “Escrow Release Conditions”), the net proceeds from the sale of the Subscription Receipts will be released to High Arctic to finance, in part, the purchase price of the Acquisition, and each Subscription Receipt will be exchanged for one common share of the Corporation (“Common Share”).
The Subscription Receipts will be offered for distribution in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario by way of a short form prospectus. The Subscription Receipts may also be placed on a private placement basis in the United States pursuant to applicable exemptions under United States Securities Act of 1933, in the United Kingdom and in certain other jurisdictions as may be agreed to by High Arctic.
The Offering is expected to close on or before June 11, 2014, subject to customary conditions and the receipt of all regulatory approvals including the approval of the Toronto Stock Exchange (“TSX”) and of applicable securities regulatory authorities. There can be no assurance as to whether or when the Offering will be completed, or whether the Escrow Release Conditions will be met and the Common Shares underlying the Subscription Receipts released to the subscribers. If the Escrow Release Conditions are not satisfied in accordance with terms of the Offering on or before August 15, 2014, holders of the Subscription Receipts will be entitled to the return of their subscription amount plus their pro rata share of any interest earned on such subscription amount.
The securities being offered have not, nor will they be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent U.S. registration or an applicable exemption from such registration requirements. This release does not constitute an offer for sale or the solicitation of an offer to buy securities in the United States or in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About High Arctic
The Corporation is a provider of specialized oilfield equipment and services for drilling, completion and work over operations. Based in Alberta, High Arctic has operations throughout Western Canada and in Papua New Guinea. The Corporation’s most recent investor presentation can be found at www.haes.ca.
Chief Financial Officer
(403) 508-7836 ext. 103
Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Corporation’s future performance. The use of any of the words “could”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation’s current belief or assumptions as to the outcome and timing of such future events. In particular, forward-looking statements contained in this press release include, but are not limited to: the expected approvals for, and the closing of, the Offering and the expected closing of the Acquisition. These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, certain of which are beyond the Corporation’s control, including the impact of general economic conditions, the satisfaction of the conditions precedent to the Acquisition, the satisfaction of the escrow release conditions pursuant to the Offering, industry conditions, volatility of commodity prices, competition, stock market volatility and the ability to access sufficient capital. Actual future results may differ materially. The Corporation’s annual information form for the year ended December 31, 2013 and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.