Calgary, AB – November 18, 2014 – Dixie Energy Trust (“Dixie” or the “Trust“) announced today that it has entered into a purchase and sale agreement (“Agreement”) with Gulf Pine Energy Partners, LP, a Delaware limited partnership (the “Purchaser” or the “Partnership”). Under the Agreement, the Purchaser has agreed to purchase all or substantially all of the assets of the Trust, being all of its right, title and interest in oil and gas assets held indirectly by the Trust and other administrative assets of the Trust held by Dixie Energy Ltd. (the “Administrator”) on behalf of the Trust, directly and indirectly for total cash consideration of US$47,500,000, subject to adjustment in certain circumstances (the “Sale Transaction”).
In conjunction with the Sale Transaction, the Administrator is proposing the winding-up of the Trust, including the liquidation of the Trust and the distribution to holders (the “Unitholders”) of Dixie trust units (the “Trust Units”), on a pro-rata basis, of the cash proceeds of the sale of the Trust’s assets after provision for the payment, retirement or discharge of all of the Trust’s obligations and liabilities (the “Winding-Up”).
Unitholders will be asked to approve the Sale Transaction and Winding-Up at the annual and special meeting of Unitholders (“Meeting”) scheduled for December 29, 2014. Provided that Unitholder approval is obtained, the closing of the Sale Transaction would result in the sale of all or substantially all of the Trust’s assets and thereafter the Trust will cease to have an operating business. The Trust will commence the process of Winding-Up as soon as reasonably practicable following the closing of the Sale Transaction. If all conditions to closing are met, the Sale Transaction is expected to close on December 29, 2014. Following completion of the Sale Transaction, certain members of Dixie’s management as well as Britannia Capital Ltd., a lender to Dixie, will make equity investments in the Partnership and certain management of the Administrator will become employees of the Purchaser’s management company.
The board of directors (the “Board“) of the Administrator expects that after completion of the Sale Transaction, pursuant to the Winding-Up, Unitholders will receive an aggregate of between $0.46 and $0.52 in cash per Trust Unit based upon approximately 56,841,000 Trust Units issued and outstanding (after giving effect to the exchange of certain exchangeable securities). The amount and timing of distributions will be determined by the Board having regard to the payment, retirement and discharge of the Trust’s obligations, including tax and other liabilities of the Trust. The Board is not currently aware of any material items that could give rise to unforeseen tax liabilities or other liabilities or costs which would materially reduce the amount of cash available for distribution to Unitholders, however there can be no assurance that unforeseen liabilities will not arise during the Winding-Up. The Trust intends to distribute, in two or more instalments, all of its remaining cash assets to Unitholders (after provision for the Trust’s obligations and liabilities). The Trust intends to make an initial distribution within 90 days following the closing of the Sale Transaction, while maintaining sufficient reserves in order to settle any remaining obligations and liabilities. Depending on the circumstances of the Winding-Up, the Trust is not likely to complete all distributions to Unitholders until approximately 12 months following closing. However, at the present time, no definitive dates can be provided for the initial or subsequent distributions.
The Sale Transaction is the result of an extensive effort, over the last 18 months, by management of the Administrator to raise equity for the Trust. Following receipt of a proposal of the Sale Transaction, an independent committee (the “Special Committee”) of the Board was formed to perform a comprehensive review of the Sale Transaction and to assess the alternatives available to Dixie in the circumstances.
Management of the Administrator engaged Dundee Securities Ltd. (“Dundee”) to provide financial advice and assistance to the Board in evaluating the Sale Transaction. Dundee provided the Board with a verbal opinion that, as of the date thereof and based upon and subject to the assumptions, limitations, qualifications and other matters contained therein, the consideration to be received by Dixie pursuant to the Sale Transaction is fair, from a financial point of view, to Dixie. The Special Committee engaged AltaCorp Capital Inc. (“AltaCorp”) to provide a fairness opinion to the Special Committee in connection with the Sale Transaction. AltaCorp provided the Special Committee with a verbal opinion that, as of the date thereof and based upon and subject to the assumptions, limitations, qualifications and other matters contained therein, the consideration to be received by Dixie pursuant to the Sale Transaction is fair, from a financial point of view, to Dixie.
The Board has reviewed the fairness opinions of Dundee and AltaCorp relating to the Sale Transaction, as well as other relevant matters relating to the Sale Transaction and the Winding-Up, including the recommendation of the Special Committee, and has unanimously concluded (with Ian Atkinson abstaining) that, in its opinion, the Sale Transaction is fair and the Sale Transaction and the Winding-Up are in the best interests of the Trust and should be placed before the Unitholders for their approval. With the exception of Ian Atkinson who declared his interest in certain matters relating to the Sale Transaction and the Winding-Up and abstained from voting thereon, the Board has unanimously approved the purchase and sale agreement providing for the Sale Transaction, and the Winding-Up and has resolved to recommend that Unitholders approve the Sale Transaction and the Winding-Up at the Meeting.
For the Sale Transaction and the Winding-Up to proceed, the Sale Transaction and the Winding-Up must be approved by way of a special resolution by at least 662/3% of the votes cast in person or represented by proxy at the Meeting. In addition, such matters must be approved by a majority of the votes cast by the Unitholders, excluding those votes cast by persons who are to be excluded pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. Unitholders will receive additional details on the Sale Transaction and Winding-Up contemplated by the Agreement in the management information circular to be sent to Unitholders as part of the Meeting materials.
About Dixie Energy Trust
Dixie is an energy trust created to provide investors with an oil and gas exploration focused investment. The strategy of Dixie is to acquire, exploit and develop, indirectly through its subsidiaries, long-life crude oil and gas prospects and reserves in the United States gulf coast states, primarily in Mississippi and Alabama. Additional information is available on Dixie’s website at DixieEnergyTrust.com.
For further information please contact:
Ian Atkinson, President & CEO
T: 403 232 1010
Forward Looking Statement Disclaimer
Certain statements included in this news release constitute forward looking statements or forward looking information under applicable securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Forward looking statements or information typically contain statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, “project” or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this news release include, but are not limited to the proposed Sale Transaction and Winding-Up; the anticipated closing date of the Sale Transaction; the process of Winding-Up of the Trust (including timing of commencement and completion thereof); and the anticipated distribution of cash proceeds (after provision for the Trust’s obligations and liabilities) including the anticipated amount thereof (on an aggregate and per Trust Unit basis), material items that could affect the amount of cash available for distribution and the anticipated timing and number of distributions (including the initial distribution).
Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although Dixie believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because Dixie can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this news release, assumptions have been made regarding, among other things, that the terms of the Purchase and Sale Agreement will remain the same and will not be subject to amendment or termination, the closing of the Sale Transaction will close at the time, and in the manner, described herein, Unitholders will receive the anticipated proceeds from the remaining cash assets, and Dixie’s analysis of the Trust’s obligations including tax and other liabilities of the Trust is accurate. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Dixie and described in the forward looking statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward looking statements or information include, among other things, changes to the terms of the Purchase and Sale Agreement, failure to complete the Sale Transaction in a timely manner (or at all), and the ability to subsequently proceed with the Winding-Up on a timely basis (or at all) including the distribution of its remaining assets to its Unitholders and the amount of any such distribution. The actual results, performance or achievement could differ materially from those expressed in or implied by these forward looking statements, and, accordingly, no assurance can be given that any of the events anticipated to occur or transpire as described in the forward looking statements will provide any benefits to the Trust or the Unitholders. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties. Additional information on these and other factors that could affect Dixie’s operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).
The forward looking statements or information contained in this news release are made as of the date hereof and Dixie 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 required by applicable securities laws. The forward looking statements or information contained in this news release are expressly qualified by this cautionary statement.
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