Zargon Announces Voting Results of Extraordinary Meeting of Debentureholders and Provides Strategic Alternatives Process Update

Source Company Press Release
Company Zargon Oil & Gas Ltd.
Tags Corporate: Overview/Strategy, Country: Canada, Financing Activities: Debt Financing, Equity Financing, Financing News
Date January 10, 2019

Zargon Oil & Gas Ltd. ("Zargon" or the "Company") (TSX:ZAR; ZAR.DB.A) announces that 82.64% of holders ("Debentureholders") of its 8.00% convertible unsecured subordinated debentures due December 31, 2019 (the "Debentures") voting at the extraordinary meeting of the Debentureholders held today (the "Meeting") have voted in favour of an extraordinary resolution pursuant to which all of the Debentures will be settled and all claims of the Debentureholders thereunder will be extinguished in exchange for approximately 428,878,324 common shares ("Common Shares") in the capital of Zargon, including the payment, in the form of Common Shares, of the accrued and unpaid interest owing on the Debentures (the "Exchange Transaction"). The report on voting for the Meeting will be available under Zargon's profile on the SEDAR website at Closing of the Exchange Transaction is scheduled for January 11, 2019 (“Closing”).

Immediately before the Exchange Transaction, approximately 30,932,912 Common Shares will be issued and outstanding. Following the completion of the Exchange Transaction, approximately 459,811,236 Common Shares will be issued and outstanding.

The Exchange Transaction significantly enhances the prospects and flexibility of the Company to pursue strategic, value-enhancing transactions which may include a corporate merger, sale, recapitalization or reorganization. Following Closing, the Company will have reduced its overall debt by $41.94 million and its annual interest burden by $3.36 million, resulting in a simplified capital structure with only US$3.5 million of term debt remaining outstanding (see Nov 2, 2018 press release).

As a result, Zargon’s Board of Directors has renewed its strategic alternatives process to seek outcomes that will maximize value for the Company and its stakeholders. Zargon’s long-life, low-decline oil exploitation assets have significant upside potential in a period of prolonged higher oil prices. In addition, Zargon brings a TSX listing and more than $155 million of non-capital losses that could have significant value in a more favourable Canadian energy investment climate. Zargon also previously commenced marketing its North Dakota assets in December 2018, assisted by Energy Advisors Group (formerly PLS).

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