Cobalt Enters into Proposed Corporate Sale

Cobalt has entered into an agreement for the sale of Cobalt through a proposed plan of arrangement ("Plan of Arrangement" or "Plan") with Bonterra Oil & Gas Ltd. ("Bonterra") and Bonterra Energy Corp. to acquire all of the issued and outstanding shares of Cobalt on the following basis, subject to certain adjustments:

  • Class A Cobalt shareholders will receive one Bonterra share (with a deemed value of $16.00 per share) per 71.05 Cobalt Class A shares; and
  • Class B Cobalt shareholders will receive one Bonterra share per 11.84 Cobalt Class B shares.

The total transaction value is approximately $5.5 million, including the assumption of Cobalt's net debt and other obligations. The Board of Directors of Cobalt have unanimously approved the proposed transaction and, subject to receipt of an independent fairness opinion, intend to recommend that the shareholders vote in favour of the proposed transaction. Cobalt has agreed to pay a non-completion fee not to exceed $400,000 to Bonterra under certain circumstances. The parties have targeted late April for completion of mutual due diligence and the execution of definitive transaction documents and confirmation of certain adjustments to the transaction price. A supplementary press release will be issued setting out further details of the terms of the proposed transaction.

Mickey Taylor, President and CEO of Cobalt stated, "This transaction will benefit Cobalt shareholders by being part of a larger corporation with the financial strength to capitalize on Cobalt's position at its Pembina core area and provides asset diversity by adding an extensive inventory of development opportunities and a long reserve life."

Shareholders of Cobalt will be asked to approve the Plan of Arrangement at a special meeting of shareholders expected to be scheduled in June 2009. An information circular detailing the Plan is anticipated to be mailed to Cobalt shareholders by mid-May. The Plan will require the approval of, amongst others, 66 2/3% of the votes cast by the shareholders and the approval of the Court of Queen's Bench of Alberta. The transaction may also be subject to TSX Venture Exchange and other regulatory approvals.