Crown Point Advises that Rights Offering Will Not Proceed and Provides Regulatory and Corporate Update
/EINPresswire.com/ -- Crown Point Energy Inc. (TSX VENTURE:CWV) ("Crown Point" or the "Company") announces that the minimum subscription condition with respect to its previously announced rights offering which expired at 5:00 p.m. (EDT) on September 23, 2016 (the "Rights Offering") was not met. The Rights Offering required a minimum of 130,000,000 common shares (the "Minimum Amount") of Crown Point to be subscribed for on exercise of the rights distributed to shareholders in connection with the Rights Offering. As such, in accordance with the terms of the Rights Offering, the Rights Offering will not be completed and all funds delivered to the subscription agent in connection with the Rights Offering will be returned to subscribers.
As disclosed in Crown Point's rights offering circular and related materials, Liminar Energía S.A. ("Liminar"), the Company's largest shareholder, had indicated its intention to participate in the Rights Offering for at least the Minimum Amount. However, the Company has been advised by Liminar that it has determined to defer any decision to make further investments in the Company until ongoing regulatory hearings affecting participants in the oil and gas industry in Argentina are complete and the impact of such hearings on the Company can be evaluated.
In particular, as previously disclosed by the Company, in March, June and July of 2016 the Ministry of Energy and Mines (the "Ministry") issued Resolutions providing for increases in natural gas prices, which were expected to increase prices set in the comparative period by up to 400% for residential users and up to 500% for small and medium-sized companies. The Ministry had also announced proposed increases to electricity prices. However, a recent ruling by the Supreme Court of Argentina suspended the natural gas and electricity price increases pending the outcome of public hearings across Argentina. The public hearings regarding the proposed increase in natural gas prices for residential and small and medium-sized companies were held between September 16 and September 18. During the hearings the Ministry proposed average natural gas price increases of 200%. The public hearings regarding the proposed increase in electricity prices are expected to be held in the next 30 days. It is anticipated that price increases will be finalized in November 2016. The Company cannot predict what if any price increases will ultimately be approved.
Liminar and the Company are engaged in active discussions regarding the Company's go-forward business plan. Among other things, the Company is reviewing alternatives to further reduce its general and administrative and other expenses and is evaluating opportunities to grow the Company's business in Argentina through strategic acquisitions or otherwise. After the Company has advanced these initiatives and the Argentine government has finalized the natural gas and electricity price increases, the Company intends to evaluate its options to obtain the financing required to fund its go-forward business plan. The Company will consider all financing alternatives available to it, including the possibility of conducting another rights offering provided that Liminar provides a contractual commitment to backstop any such offering.
In the interim, the Company, with Liminar's assistance, is reviewing opportunities to obtain short-term financing in order to fund the Company's near term financial obligations, including the possibility of obtaining short-term debt financing in Argentina.
About Crown Point
Crown Point Energy Inc. is an international oil and gas exploration and development company headquartered in Calgary, Canada, incorporated in Canada, trading on the TSX Venture Exchange and operating in South America. Crown Point's exploration and development activities are focused in the Golfo San Jorge, Neuquén and Austral basins in Argentina. Crown Point has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a basis for future growth.
Forward looking information: Certain information set forth in this news release, including: the return of funds by the subscription agent, Liminar's intentions with respect to the Company and the making of further investments in the Company; the expected timing for the finalization of public hearings with respect to Argentine natural gas and electricity rates; the expected interim natural gas and electricity rates; the ongoing initiatives by the Company to reduce expenses and to grow its business and; the potential financing options available to the Company is considered forward-looking information, and necessarily involve risks and uncertainties, certain of which are beyond Crown Point's control. Such risks include but are not limited to: the risk that the public hearings may not be concluded in the timeframes contemplated herein; that the Company may not be able to secure interim funding to funds its current obligations; that changes, which may be material, to the natural gas and electricity rates may be imposed as a result of the ongoing hearings; and that the Company cannot revise its current business plan to achieve the results contemplated herein. Actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that Crown Point will derive therefrom. Additional information on these and other factors that could affect Crown Point are included in reports on file with Canadian securities regulatory authorities, including under the heading "Risk Factors" in the Company's most recent annual information form, and may be accessed through the SEDAR website (www.sedar.com). With respect to forward-looking information contained herein, the Company has made assumptions regarding the timing of the return of the funds from the Rights Offering, the time period that public hearing will be completed with respect to natural gas and electricity rates; the ability of the Company to obtain financing on acceptable terms, including pursuant to a subsequent rights offering, debt or otherwise and the availability of financing to fund the Company's near term obligations. Furthermore, the forward-looking information contained in this news release are made as of the date of this document, and Crown Point does not undertake any obligation to update publicly or to revise any of the included forward looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
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 news release.
President & CEO
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Crown Point Energy Inc.
Vice-President & CFO
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Crown Point Energy Inc.