RPT Resources Ltd. ("RPT") (TSX VENTURE: RPT) became aware of a
dissident proxy circular (the "Dissident Circular") that was filed
on SEDAR on November 18, 2010 by Mr. Amir Mousavi (the "Dissident
Shareholder"). The Dissident Shareholder subsequently issued a
press release on November 26, 2010 (the "Dissident Release"). RPT
wishes to respond to the incorrect information set forth in the
Dissident Circular and the Dissident Release.
Timing of Announcement of ArPetrol Transaction
On November 22, 2010, RPT announced that it had entered into a
letter of intent on November 19, 2010 for an arm's length business
combination (the "ArPetrol Transaction") with ArPetrol Inc.
("ArPetrol"). Conversations with ArPetrol commenced in mid October
2010 following the efforts of Mr. Sam Charanak to introduce the
parties, and negotiations between the parties continued from that
time up to the date of execution of the letter of intent. In fact,
the letter of intent was in the final stages of negotiation when
the Dissident Circular was first filed on SEDAR. The decision to
enter into the letter of intent with ArPetrol was completely
unrelated to the Dissident Circular and was not "hurried" (as
incorrectly stated in the Dissident Release), but rather involved
negotiation over time and in a manner that was in the best
interests of RPT and its shareholders.
As noted in RPT's press release of November 22, 2010, the
ArPetrol Transaction is anticipated to constitute a change of
business and/or a reverse takeover in accordance with the policies
of the TSX Venture Exchange and, as such, the approval of the
shareholders of RPT will be required. As a result, RPT determined
to defer the holding of its annual and special meeting of
shareholders that was scheduled for December 3, 2010 until such
time as it could present the ArPetrol Transaction to shareholders
for approval. At that time, shareholders will have complete
information in order to make an informed decision on all matters to
be transacted at the meeting.
Merits of the ArPetrol Transaction
Management of RPT has negotiated what it feels to be a fair and
proper valuation of ArPetrol and a transaction that has created
value for, and is in the best interests of, RPT shareholders. RPT
has engaged Raymond James Ltd. to act as financial advisor to RPT
with respect to the ArPetrol Transaction and it is expected that
Raymond James will be asked to provide an opinion on the fairness
of the ArPetrol Transaction, from a financial point of view, to the
RPT shareholders. Further, if required by the TSX Venture Exchange
and subject to the completion of satisfactory due diligence,
Raymond James has also agreed to act as sponsor of the combined
entity in connection with the ArPetrol Transaction. Similarly,
Canaccord Genuity Corp. is acting as financial advisor to ArPetrol
and it is expected that Canaccord Genuity will be asked to provide
an opinion on the fairness of the ArPetrol Transaction, from a
financial point of view, to the ArPetrol shareholders. The ArPetrol
Transaction will also be reviewed by, and is subject to the
approval of, the TSX Venture Exchange. Based on the above, both RPT
and ArPetrol shareholders will have the benefit of independent
third party assessments of the fairness of the ArPetrol Transaction
and will be protected by the application of regulatory requirements
and stock exchange review, in addition to their entitlement to vote
on the ArPetrol Transaction after being provided with full
disclosure.
Commenting on the merits of the ArPetrol Transaction, Tim
Thomas, President and Chief Executive Officer of ArPetrol,
expressed his views on ArPetrol's business:
"ArPetrol owns a 100 percent interest in, and is operator of, a
producing asset with redevelopment opportunities and an 85 million
cubic feet per day gas plant. In addition, we have an inventory of
exploration projects which is expected to create additional value.
Overall, we believe Argentina has significant potential which makes
it a leading South American hydrocarbon province, following the
recent successes realized by other Canadian companies in Colombia
and elsewhere in South America. In our view, Argentina is
positioned for change and growth and we expect to be a major part
of that future success."
Management of RPT and ArPetrol also expect that commitments in
respect of the financing which is anticipated to be completed in
connection with the ArPetrol Transaction will be obtained prior to,
or concurrently with, RPT and ArPetrol entering into the definitive
agreement in respect of the ArPetrol Transaction. The parties
believe this will reduce financing and deal risk, providing comfort
for the parties and the companies' shareholders to move forward to
obtain the required approvals and complete the transaction.
Extension of MetaLeach Consulting Agreement
Since August 2009, RPT's principal focus has been to search for
mineral properties, primarily zinc oxide mineralization, which may
be suitable for application of the proprietary mineral processing
technology developed by MetaLeach Limited, a wholly owned
subsidiary of Alexander Mining PLC. Prior to entering into the
letter of intent for the ArPetrol Transaction, RPT had detailed and
lengthy discussions with a number of companies regarding mineral
properties that were presented through RPT's consulting arrangement
with MetaLeach Limited, some of which were ongoing right up to the
time that negotiations with ArPetrol commenced. In order to keep
these discussions and options available to RPT, management
determined it was in the best interests of its shareholders to
renew the consulting arrangement with MetaLeach Limited. This
consulting arrangement is on a month to month basis and does not
represent a material expense to RPT.
RPT Management
Management of RPT is of the view that the Dissident
Shareholder's statements regarding the capabilities of RPT
management are inaccurate. The following is noted regarding current
management:
Michelle Gahagan - Ms. Gahagan is currently a principal in a
privately-held merchant bank based in Vancouver and London. Prior
to the commencement of her involvement in merchant banking five
years ago, Ms. Gahagan graduated from Queens University Law School
and practiced corporate law for 20 years, acting for financiers
with respect to syndicated tax products in the entertainment
finance sector. Ms. Gahagan has extensive experience advising
companies with respect to international tax-driven structures,
mergers and acquisitions. Ms. Gahagan has successfully completed
the Investment Management Certificate course and is a Qualified
Person under the Financial Services Authority (UK) regime. Ms.
Gahagan has been the President of RPT Resources Ltd. since the fall
of 2009 and is currently the managing director of Northern Rand
Resource Corp. and a director of Bowood Energy Corp. Ms. Gahagan
was instrumental in completing the business combination of Bowood
Energy and Roadrunner Oil & Gas in December 2009, which
transaction has delivered an approximate 400% increase in share
price since that time.
Nelson Baker - Mr. Baker has been the President of Nelson W.
Baker Geological Services Ltd. since 1984. Mr. Baker joined the
board of directors of Rainy River Resources Ltd. and became its
President in 2005 when its stock was trading at approximately $0.25
per share. Upon his resignation from the board, Rainy River's stock
was trading at approximately $6.00 per share.
Marshall Bertram - Mr. Bertram is a director and CFO of several
publicly trading companies. Mr. Bertram is currently the President
and CEO of Mineral Mountain Resources Ltd., a company that recently
completed its initial public offering at a price of $0.25 per share
and is now trading at a price of approximately $0.50 per share. Mr.
Baker also sits on the board of directors of Mineral Mountain
Resources.
The above demonstrates that the current management of RPT has
broad experience and has demonstrated its ability to create
shareholder value. In completing the ArPetrol Transaction,
management of RPT expects to do so again.
In addition to the strength of the current management team, upon
completion of the ArPetrol Transaction, the combined entity will
have an impressive board and management team. The new management
team will be led by Tim Thomas as President and Chief Executive
Officer and Troy Wagner as Vice President, Argentina and a new
board of directors will be comprised of Claudio Ghersinich
(Chairman), Abby Badwi, Jeff Boyce, Michelle Gahagan, Tim Thomas
and Ronald Williams. The qualifications of the new management team
are set forth in detail in RPT's press release of November 22,
2010, however, some of their highlighted qualifications are as
follows:
Tim Thomas - Mr. Thomas is a professional engineer with more
than 32 years of oil and gas experience. Most recently, Tim was
Senior Vice President Canadian Oil and Gas and an officer at Nexen
Inc. (TSX, NYSE), a successful oil & gas company with assets in
Canada, US, UK, Yemen, Nigeria and Colombia.
Troy Wagner - Mr. Wagner is a professional engineer and MBA
graduate with 18 years of engineering and management experience.
Prior to joining ArPetrol in 2007 as the in-country manager in
Argentina, Mr. Wagner was COO and VP Engineering of Elmworth
Energy/Triangle USA Petroleum (OTC - US), a company focused on
developing domestic and international shale gas projects.
Abby Badwi - Abby Badwi is an international energy executive and
professional geologist with more than 35 years experience in the
exploration, development and production of oil and gas fields in
North America, South America, Europe, Asia and the Middle East. Mr.
Badwi has been a director of ArPetrol since its inception. He is
currently President & CEO of Bankers Petroleum Ltd. (TSX,
London-AIM), an oil & gas company with heavy oil operations in
Albania.
Claudio A. Ghersinich - Mr. Ghersinich is an independent
businessman and professional engineer with more than 30 years of
oil and gas experience. He is a co-founder and former Executive VP
and VP Business Development of Vermilion Energy Inc. (TSX). He
serves or has served on the board of directors of various public
companies including Verenex Energy Inc. (formerly TSX), Vermilion
Energy Inc. (TSX), Aventura Energy Inc. (formerly TSX), Bulldog
Energy Inc. (TSX), Bulldog Resources Inc. (formerly TSX), Pegasus
Oil & Gas Inc. (formerly TSXV) and Valeura Energy Inc.
(TSXV).
Jeff Boyce - Mr. Boyce is the Chairman and Chief Executive
Officer of Sure Energy Inc. (TSX). Previously, Mr. Boyce was the
President & CEO of Clear Energy Inc. (formerly TSX) and prior
thereto, President & CEO and co-founder of Vermilion Energy
Inc.
Ronald Williams - Mr. Williams joined the ArPetrol Board in June
2007 and brings over 19 years of domestic and international oil and
gas industry experience. Mr. Williams has an extensive background
in the areas of audit, finance and taxation as well as property and
corporate acquisitions.
In summary, the proposed team brings a wealth of public company
experience, knowledge and repeated success in prior endeavours,
which is expected to be of indeterminate value to RPT
shareholders.
Dissident Shareholder's Proposed Management Team
In contrast to the wealth of experience demonstrated by the
proposed management team of ArPetrol, the Dissident Circular
discloses that the slate of directors (the "Dissident Slate")
proposed by the Dissident Shareholder has limited public company
experience. The Dissident Shareholder also failed to mention that
the Dissident Slate only holds, in the aggregate, 43,500 (0.037%)
of the 116,988,073 common shares of RPT that are issued and
outstanding. In addition, while management of RPT has brought
forward what it believes to be a real opportunity that is in the
best interests of RPT and its shareholders, the Dissident
Shareholder has not provided details of his intended business plan
or strategy for RPT.
Opportunity to be Heard
All shareholders of RPT should recognize that, once the TSX
Venture Exchange conditional approval has been obtained, RPT will
call a shareholder meeting to approve, among other things, the
ArPetrol Transaction with the proposed slate of directors discussed
above. At that meeting, all shareholders of RPT will have an
opportunity to be heard and to vote on all matters brought forth at
the meeting. It is management's view that this proposed plan to
delay the previously scheduled annual general meeting is in the
best interests of RPT and its shareholders in that it will enable
RPT to provide them with full disclosure respecting the ArPetrol
Transaction. The parties are working toward a definitive agreement
and are optimistic that they will be able to do so on an expedited
timeline; however, should RPT and ArPetrol terminate their
discussions or if they are not able to enter into a definitive
agreement within a reasonable period, RPT will call an annual and
general meeting providing for, among other things, the election of
directors by RPT's shareholders.
Reader Advisory
Investors are cautioned that, except as disclosed in the
Management Information Circular to be prepared in connection with
the ArPetrol Transaction, any information released or received with
respect to the ArPetrol Transaction may not be accurate or complete
and should not be relied upon. Trading in the securities of RPT
should be considered highly speculative.
Trading of the common shares of RPT will remain halted pending
receipt and review by the TSX Venture Exchange of acceptable
documentation regarding the combined entity following completion of
the ArPetrol Transaction. The proposed ArPetrol Transaction has not
been approved by the TSX Venture Exchange and remains subject to
TSX Venture Exchange approval.
Completion of the ArPetrol Transaction is subject to a number of
conditions, including but not limited to, TSX Venture Exchange
acceptance. The ArPetrol Transaction cannot close until the
required approvals are obtained. There can be no assurance that
this ArPetrol Transaction will be completed as proposed or at
all.
An agreement to sponsor should not be construed as any assurance
with respect to the merits of the ArPetrol Transaction or the
likelihood of completion.
Except for statements of historical fact, this news release
contains certain "forward-looking information" within the meaning
of applicable securities law. Forward-looking information is
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. In particular, forward-looking information
in this press release includes, but is not limited to, statements
with respect to timing and completion of the ArPetrol Transaction,
the merits of the ArPetrol Transaction, the creation of value in
the combined entity, the completion of a planned financing, the
satisfaction of the conditions precedent to the ArPetrol
Transaction (including receipt of TSX Venture Exchange approval)
and the timing of calling and holding of a shareholders meeting of
RPT. Although we believe that the expectations reflected in the
forward-looking information are reasonable, there can be no
assurance that such expectations will prove to be correct. We
cannot guarantee future results, performance or achievements.
Consequently, there is no representation that the actual results
achieved will be the same, in whole or in part, as those set out in
the forward-looking information.
Forward-looking information is based on the opinions and
estimates of management at the date the statements are made, and
are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ
materially from those anticipated in the forward-looking
information. Some of the risks and other factors that could cause
the results to differ materially from those expressed in the
forward-looking information include, but are not limited to:
general economic conditions in Canada, the United States and
globally; industry conditions, including fluctuations in the prices
of oil and natural gas; governmental regulation of the oil and gas
industry, including environmental regulation; unanticipated
operating events or performance which can reduce production or
cause production to be shut in or delayed; failure to obtain
industry partner and other third party consents and approvals, if
and when required; competition for and/or inability to retain
drilling rigs and other services; the availability of capital on
acceptable terms; the need to obtain required approvals from
regulatory authorities; stock market volatility; volatility in
market prices for oil and natural gas; liabilities inherent in oil
and natural gas operations; competition for, among other things,
capital, acquisitions of reserves, undeveloped lands, skilled
personnel and supplies; incorrect assessments of the value of
acquisitions; geological, technical, drilling, processing and
transportation problems; changes in tax laws and incentive programs
relating to the oil and gas industry; failure to realize the
anticipated benefits of acquisitions and dispositions; and the
other factors. Readers are cautioned that this list of risk factors
should not be construed as exhaustive.
The forward-looking information contained in this news release
is expressly qualified by this cautionary statement. We undertake
no duty to update any of the forward-looking information to conform
such information to actual results or to changes in our
expectations except as otherwise required by applicable securities
legislation. Readers are cautioned not to place undue reliance on
forward-looking information.
The TSX Venture Exchange has in no way passed upon the merits of
the proposed ArPetrol Transaction and has neither approved nor
disapproved the contents of this press release. Neither the 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 release.
Contacts: RPT Resources Ltd. Michelle Gahagan President (604)
639-4459 www.rptresources.com