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CALGARY, Sept. 12, 2013 /CNW/ - Northern Frontier Corp.
(TSX-V: FFF.P) (the "Corporation" or "Northern
Frontier") is pleased to announce that it has closed its
previously announced offering (the "Offering") of
subscription receipts ("Subscription Receipts") for
aggregate gross proceeds of $18.3
million. The Corporation issued 5,231,950 Subscription
Receipts, including 89,093 Subscription Receipts on the partial
exercise of the Over-Allotment Option (as defined below) at a price
of $3.50 per Subscription Receipt.
Each Subscription Receipt entitles the holder to receive, on
closing of the Acquisition (as defined below), without payment of
additional consideration, one common share of the Corporation
("Common Share") and one-half of one common share purchase
warrant. Each full purchase warrant ("Warrant") will entitle
the holder to acquire one Common Share at a price of $4.00 per share for a period of 18 months
following the closing date of the Acquisition. The final
prospectus, which qualifies the distribution of the Subscription
Receipts, is available at www.sedar.com under the Corporation's
issuer profile.
The Corporation engaged GMP Securities L.P. and
Raymond James Ltd. as co-lead agents, together with Acumen Capital
Finance Partners Limited and Cormark Securities Inc. (the
"Agents") to act as agents for the Offering and has also
granted the Agents an option (the "Over-Allotment Option")
to purchase up to such number of additional Subscription Receipts
and/or Common Shares and Warrants (as applicable, depending on when
exercised) as is equal to 15% of the number of Subscription
Receipts sold under the Offering to cover over-allotments, if any,
and for market stabilization purposes. The unexercised portion of
the Over-Allotment Option is exercisable, in whole or in part, for
a period of 30 days after the closing of the Offering.
The net proceeds of the Offering will be used by
the Corporation to fund a portion of the purchase price of the
Acquisition, through its wholly-owned subsidiary, 1739365 Alberta
Ltd., of all of the issued and outstanding shares of 794522 Alberta
Ltd. ("Numberco"), which carries on the business of the NEC
Group (as defined below), and certain assets held by CRC Open Camp
& Catering Ltd. (collectively, the "CRC Carve-out
Assets") that are used in the NEC Group business (together, the
"Acquisition").
Numberco, along with its wholly-owned
subsidiary, NEC Contractors (2012) Inc. ("NEC", and
collectively with Numberco, the "NEC Group") provides
sustaining capital services to large industrial energy customers in
the steam assisted gravity drainage ("SAGD") region of
northeastern Alberta. The
NEC Group's head office and shop is located in Lac La Biche, Alberta and its field location
is in Conklin, Alberta which is
central to the substantial industrial energy production
developments in the vicinity. The business focuses on the
ongoing demand for services to support operating facilities,
sustaining capital expenditures to maintain production levels of
those facilities and the development of new production
capacity.
Credit Facilities
In connection with the Acquisition, the
Corporation has entered into a term sheet with a Canadian chartered
bank with respect to a senior credit facility (the "Credit
Facility"). The Corporation expects to establish the
Credit Facility on or prior to September 30,
2013 and utilize $21.5 million
of the Credit Facility to fund a portion of the purchase price of
the Acquisition. The Credit Facility is expected to consist of: (i)
a $15.0 million committed revolving
extendible credit facility; (ii) a $25.0
million committed revolving reducing extendible term loan;
(iii) a $2.0 million committed term
loan; (iv) a treasury risk management facility subject to a limit
of $1.0 million; and (v) a corporate
MasterCard for up to $0.5
million. The term sheet with respect to the Credit
Facility contains customary conditions precedent to the lender
entering into the Credit Facility.
In addition, the Corporation has entered into a
term sheet with a Canadian financial institution with respect to a
$12.0 million 5-year term
subordinated credit facility (the "Subordinated Facility",
collectively with the Credit Facility, the "Credit
Facilities") which is expected to be available in a single
draw on or prior to September 30,
2012 and will be used to fund a portion of the purchase
price of the Acquisition. The term sheet with respect to the
Subordinated Facility contains customary conditions precedent to
the lender entering into the Subordinated Facility.
Any net proceeds raised by the Corporation in
connection with the Over-Allotment Option above the $18.0 million Offering may be used by the
Corporation to fund a larger portion of the purchase price of the
Acquisition. In that event, the Corporation would reduce, at
their discretion, the amounts drawn under the Credit Facilities in
order to fund a portion of the purchase price.
Regulatory Matters
Trading in the Common Shares will remain halted
until such time as the TSX Venture Exchange (the "Exchange")
has received the documentation required by Policy 2.4 - Capital
Pool Companies.
Completion of the Acquisition is subject to a
number of conditions including, but not limited to, final Exchange
acceptance and, if applicable pursuant to the requirements of the
Exchange, majority of the minority shareholder approval. There can
be no assurance that the Acquisition will be completed as proposed
or at all.
Investors are cautioned that, except as
disclosed in the final prospectus of the Corporation, any
information released or received with respect to the Acquisition
may not be accurate or complete and should not be relied upon.
Trading in the securities of a capital pool company should be
considered highly speculative.
The Exchange has in no way passed upon the
merits of the Offering or the Acquisition and has neither approved
nor disapproved the contents of this news release.
Forward Looking Information
This news release includes certain statements
that constitute forward-looking statements under applicable
securities legislation. All statements other than statements of
historical fact are forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
"may", "will", "should", "expect", "plan", "anticipate", "believe",
"estimate", "predict", "potential", "continue", or the negative of
these terms or other comparable terminology. These statements are
made as of the date of this news release and the Corporation does
not undertake to publicly update these forward-looking statements
except in accordance with applicable securities laws. These
forward-looking statements include, among other things:
- completion of the Acquisition and the Offering;
- anticipated use of net proceeds from the Offering;
and
- the terms and availability of the Credit Facilities, and the
amounts drawn under the Credit Facilities;
These statements are only predictions and are
based on current expectations, estimates, projections and
assumptions, which the Corporation believes are reasonable but
which may prove to be incorrect and therefore such forward-looking
statements should not be unduly relied upon. In making such
forward-looking statements, assumptions have been made regarding,
the receipt of applicable regulatory and third party approvals, the
availability of funds pursuant to the Credit Facilities and the
terms applicable thereto. Although the Corporation believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future outcome and actual developments may differ materially from
those in the forward-looking statements.
By its nature, forward-looking information
involves numerous assumptions, known and unknown risks and
uncertainties, both general and specific, that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur. These risks and
uncertainties include: the possibility that the parties will not
proceed with the Acquisition and the Offering, that the ultimate
terms of the Acquisition and the Offering will differ from those
that are currently contemplated, that the Acquisition and Offering
will not be successfully completed for any reason (including the
failure to obtain the required approvals from regulatory
authorities or third parties) and regulatory changes. For more
information on the Corporation, investors should review the
Corporation's continuous disclosure filings that are available at
www.sedar.com.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE Northern Frontier Corp.