Paramount has entered into an agreement with Redcliffe to acquire all 82% of the issued and outstanding Class A Shares of Redcliffe (the "Class A Shares") not already owned, after conversion of all outstanding Class B Shares as described below, for cash consideration of $0.42 per Redcliffe Class A Share (the "Transaction"). Paramount and its associates currently own approximately 18% of the Class A Shares, after conversion of outstanding Class B Shares. Redcliffe has agreed to convert its outstanding Class B Shares to Class A Shares on a 10-for-1 basis in accordance with their terms prior to the record date for the Redcliffe shareholders' meeting being called to approve the Transaction.
The purchase price represents a 31% premium to the closing price of the Class A Shares on May 7, 2010 and a 34% premium over the 10-day weighted average trading price. The Transaction will be completed through an amalgamation pursuant to the Business Corporations Act (Alberta) and is expected to close on or about June 25, 2010. The purchase price values Redcliffe at approximately $68.5 million, including assumption of Redcliffe's estimated net debt of approximately $12.5 million at closing.
The Board of Directors of Redcliffe has unanimously recommended that Redcliffe shareholders vote their shares in favor of the Transaction. All of the directors and officers of Redcliffe and certain other shareholders of Redcliffe, collectively holding approximately 25% of the Class A Shares of Redcliffe, after conversion of outstanding Class B Shares, have entered into agreements with Paramount to vote their Class A Shares in favor of the Transaction.
The Transaction will solidify Paramount's significant Peace River Arch lands targeting the Montney and Nikanassin formations at Karr-Gold Creek and will add to Paramount's inventory of high quality liquids-rich gas prospects.
The acquired assets include:
Paramount has now consolidated 99,000 (74,000 net) acres of land at Karr-Gold Creek, providing an inventory of more than 200 drilling locations in both sour and sweet, liquids- rich tight gas reservoirs.
The Transaction is subject to acceptance by the remaining Redcliffe shareholders and regulatory approval. An Information Circular with respect to the Transaction is expected to be mailed to all Redcliffe shareholders on or about May 26, 2010 and a special meeting of Redcliffe shareholders is anticipated to be held on or about June 25, 2010.
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