Long Run Exploration Ltd. amended the terms of its private placement with Maple Marathon Investments Ltd. and MIE Holdings Corp. and began a formal asset rationalization program, the company said Nov. 9. Long Run’s board and management team began a formal asset disposition process of both core and noncore assets to address the non-revolving syndicated facility which is due May 29, 2016.
Under the agreement, Long Run will issue 125 million common units, priced at 80 cents each, to Maple Marathon for about CA$100 million in gross proceeds.
Each unit will be comprised of one Long Run share and 0.728 of a common share purchase warrant. Each warrant entitles holders to acquire one Long Run share at CA$1.10 exercise price for one year from the closing date. If exercised, Long Run will receive about CA$100 million in additional proceeds .
Maple Marathon will hold about 39% of Long Run’s issued and outstanding common shares.
The private placement’s closing is subject to approval by Long Run and MIE shareholders, among other conditions, Long Run said. Long Run said it will hold a special meeting of shareholders no later than Jan. 22, 2016, where voting on the private placement will take place.
The amended investment agreement allows Long Run to respond to unsolicited acquisition proposals and to pursue asset dispositions. Certain asset dispositions require the prior consent of Maple Marathon, but Long Run has the right to terminate the agreement in order to complete such dispositions if Maple Marathon does not consent.
Scotia Waterous Inc. and National Bank Financial Inc. are Long Run’s financial advisers. Macquarie Capital Markets Canada Ltd., FirstEnergy Capital Corp. and Cormark Securities Inc. are Long Run’s strategic advisers.
Long Run agreed to pay a termination fee of $5 million to Maple Marathon in certain circumstances, including if Long Run terminates the agreement with respect to an alternative corporate acquisition proposal. Maple Marathon agreed to deposit $10 million with an escrow agent in Canada, on or before Nov. 30, in accordance with the agreement.
The size and composition of Long Run’s board of directors will be determined, from time to time, in part by the share ownership of Maple Marathon. On closing of the private placement, Long Run expects the board will be comprised of eight directors including three nominees from Maple Marathon and five incumbent directors, including Mr. William E. Andrew, who will remain the chairman.
Long Run Exploration Inc. is based in Calgary, Alberta.
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