With Kerr Energy Limited CALGARY, Sept. 13 /CNW/ - Wrangler West Capital Corp. (TSX: WWP) ("Wrangler" or the "Corporation"), a capital pool corporation, is pleased to announce that it has entered into a letter agreement dated September 12, 2002 with Kerr Energy Limited ("Kerr"), a private Alberta based petroleum and natural gas company, to acquire all of the issued and outstanding shares of Kerr. Pursuant to the proposed transaction, the holders of common shares of Kerr would receive their respective pro rata (based on their holdings of common shares of Kerr) of one common share of Wrangler for each $0.40 of appraised value of Kerr. Management of Kerr's preliminary estimate of the appraised value of Kerr is in the range of $7 to $10 million and as a result, between 18.5 and 25 million common shares would be issuable pursuant to the proposed transaction. Sproule Associates Limited ("Sproule") is in the process of completing a reserve report for Kerr. The transaction will be completed by way of a share-exchange take-over bid by Wrangler for the issued and outstanding shares of Kerr. The transaction is a Related Party Transaction as defined in the TSX Venture Exchange Policy 1.1. The purchase price was based on negotiations between the Corporation and Kerr, approved by an independent committee of the board of directors of the Corporation, and will be based on an assessment of an independent engineering report. The Kerr appraised value will be equal to: (a) the net present value before tax discounted at 15% of the proved oil and gas reserves of Kerr at August 31, 2002 as estimated by Sproule based upon the lesser of product price and cost profiles of Sproule at such date and the constant dollar case at such date; plus (b) one-half of the net present value before tax discounted at 15% of the probable oil and gas reserves of Kerr at August 31, 2002 as estimated by Sproule based upon the lesser of product price and cost profiles of Sproule at such date and the constant dollar case at such date; plus (c) the cost to Kerr, as recorded on its books, of undeveloped land of Kerr at August 31, 2002; plus (d) the working capital of Kerr at August 31, 2002 determined in accordance with generally accepted accounting principles. Kerr was incorporated under the laws of Alberta on September 11, 2000. Kerr is a petroleum and natural gas company operating in southern Alberta. Kerr is active in oil and gas exploration and holds various interests in oil and gas producing properties in southern Alberta, which currently produce 275 barrels of oil per day. The company has no long-term debt, has approximately $1 million in working capital and a credit facility of $1.5 million with the Bank of Montreal available to fund ongoing activities. Upon the completion of the proposed transaction, the business of Kerr will constitute all of the operations of the Corporation such that the Corporation will continue to be involved in the petroleum and natural gas industry. Based on internally prepared unaudited financial statements of Kerr, as at March 31, 2002 and December 31, 2001, Kerr had total assets of $3.8 million and $4.8 million respectively. For the period ended March 31, 2002, Kerr had revenues of $573,268, net income of $176,407 and retained earnings of $1,907. For the year ended December 31, 2001, Kerr had revenues of $318,476, net loss of $155,897 and a deficit of $174,500. Steven F. Johnson, Calgary, Alberta and James B. Howe, Bragg Creek, Alberta are directors of both Wrangler and Kerr and as a result, are considered principal Sellers of Kerr pursuant to TSX Venture Exchange Policy 2.4. In addition, Steven Johnson, William Kerr, James Howe and Tom Wood each beneficially own over 10% of the issued and outstanding common shares of Kerr. Richard Charron, President, Chief Executive Officer and Chief Financial Officer and a Director of the Corporation is expected to resign on closing of the transaction. William Kerr, JoAnne Dorval-Dronyk and Steven Johnson will be the President and Chief Executive Officer, the Chief Financial Officer and the Chairman of the Corporation respectively following completion of the transaction. Christopher Nixon will be added to the board of the Corporation on closing of the transaction. The following is a brief outline of the backgrounds of the officers, directors and insiders of the Corporation following completion of the transaction. William E. Kerr, President and Chief Executive Officer Mr. Kerr is currently the President, Chief Executive Officer and founder of Kerr. From 1996 to 2000, he was Vice-President, Engineering and Operations and a Director of Big Sky Resources, a private oil and gas company. Mr. Kerr has over 24 years experience as a petroleum engineer in the oil and gas industry. Mr. Kerr obtained a Bachelor of Science in Petroleum Engineering from the University of Wyoming in 1978. JoAnne Dorval-Dronyk, Chief Financial Officer Ms. Dorval-Dronyk is currently the Chief Financial Officer of Replay Resources Limited, a private oil and gas company and the Chief Financial Officer of Nu-Sky Energy Inc., a public oil and gas company listed on the Toronto Stock Exchange. From 1998 to 2001, she was the Chief Financial Officer of Player Petroleum Corporation, a public oil and gas company listed on the Toronto Stock Exchange. Prior thereto, she was the controller for Cirque Energy Inc., a former public oil and gas company. Ms. Dorval-Dronyk received her CGA designation in 1990. Steven F. Johnson, Chairman and Director Mr. Johnson is currently the President and Chief Executive Officer of Replay Resources Limited, a private oil and gas company. From 1994 to 2001, he was the President and Chief Executive Officer of Player Petroleum Corporation, a public oil and gas company trading on the Toronto Stock Exchange and from 1983 to 1994, he was the President and Chief Operating Officer of Joss Energy Ltd., a public oil and gas company trading on the Toronto Stock Exchange. Randolph M. Charron, Director Mr. Charron is primarily engaged as the President of his own consulting company, Characo Corp., a private company engaged in oil and gas investment. From 1988-1997, Mr. Charron was the Vice President and a Founding Director of Artisan Corporation, a public oil and gas services company which traded on the Toronto Stock Exchange. Mr. Charron is currently a director of Drillers Technology Corp. (TSX), and Nevis Energy Services Ltd. (TSX Venture), which are engaged in petroleum exploration and development services. Mr. Charron obtained a Bachelor of Arts degree from McMaster University in Hamilton, Ontario in 1978. James B. Howe, Director Mr. Howe is currently a major shareholder and the President of Bragg Creek Financial Consultants Ltd., a private consulting company. Mr. Howe has extensive public company experience, currently acting as a Director of Ensign Resource Service Group (TSX), an oil and natural gas well servicing company and Pason Systems Inc., a company which provides instrumentation services to the oil and gas drilling industry. Mr. Howe obtained a Bachelor of Arts degree in Business Administration (Honours) in 1973 from the University of Western Ontario and holds a Chartered Accountant designation from the Institute of Chartered Accountants of Alberta. Christopher W. Nixon, Director Mr. Nixon is a partner with the law firm of Stikeman Elliott. From 1995 to 2000, he was a partner with Osler, Hoskin and Harcourt LLP. From 1988 to 1995, Mr. Nixon practised law with Burnet, Duckworth and Palmer LLP. Mr. Nixon has served on the board of directors of several public companies and currently serves on a number of private oil and gas and service company's boards. Mr. Nixon obtained an LL.B from the University of Alberta in 1979. James D. Peplinski, Director Mr. Peplinski is currently the President and owner of Jim Peplinski's Leasemaster National (1990 to present), an all-makes automotive leasing company. From 1980 to 1989, he was a professional hockey player with the Calgary Flames in the National Hockey League. Mr. Peplinski currently serves as a director of two corporations which are currently listed on the Toronto Stock Exchange: Northside Group Inc., a manufacturer of truck parts, assemblies and truck mounted equipment and Zargon Oil and Gas Ltd., an oil and gas exploration company. Thomas D. Wood, Director Mr. Wood is an independent businessman. He currently serves as Chairman of the Board of Savanna Energy Services Corp., a private oil and gas service company. Mr. Wood was the President of the Drilling/Wellbore Service for Plains Energy Services Ltd. (formerly TSX-listed), a public oilfield services company, from 1997 to July 2000 when it was acquired by Precision Drilling Corporation (TSX) a public oilfield drilling and energy service company. From 1988 to 1992, Mr. Wood served as a director of Santa Fe Energy Ltd., a public oil and gas company which was trading on the Alberta Stock Exchange at that time. Mr. Wood obtained a Bachelor of Arts degree in Economics from the University of Calgary in 1978. A consolidation of the common shares of Wrangler is being contemplated, subject to the ability of the Corporation to meet the minimum listing requirements of the TSX Venture Exchange, to occur immediately prior to the closing of the proposed transaction on a basis of up to seven to one. The proposed transaction is intended to be the qualifying transaction of the Corporation, subject to regulatory and shareholder approval, pursuant to Policy 2.5 of the TSX Venture Exchange. Completion of the transaction is subject to a number of conditions, including, but not limited to, approval of the TSX Venture Exchange and majority of the minority shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or completed and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. Peters & Co. Limited, subject to satisfactory due diligence, has agreed to act as sponsor to the Corporation in connection with the proposed qualifying transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of its completion. Completion of the qualifying transaction is subject to a number of conditions precedent, including, but not limited to further due diligence, TSX Venture Exchange acceptance and "majority of the minority" shareholder approval, as that term is defined in the Policies and Rules of the Exchange. The qualifying transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the qualifying transaction will be completed as is proposed in this announcement, or at all. Trading on the TSX Venture Exchange of the common shares of Wrangler is expected to remain halted until Wrangler has satisfied all conditions of Section 2.3(b) of Policy 2.4 of the TSX Venture Exchange, including the preparation and filing of a sponsorship acknowledgement form from Peters & Co. Limited and personal information forms for each person who will be an officer, director, promoter or other insider of the resulting issuer following completion of the proposed transaction. The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this press release. This press release may contain forward-looking information. Actual future results may differ materially from those contemplated. /For further information: Richard Charron, President, CEO & CFO, Wrangler West Capital Corp., Telephone: (403) 651-0354, Facsimile: (403) 686-7587, William Kerr, President & CEO, Kerr Energy Limited, Telephone: (403) 267-6748, Facsimile: (403) 503-0654/ (WWP.) CO: Wrangler West Capital Corp.; Kerr Energy Limited ST: Alberta IN: SU: TNM -30-
Wrangler West Capital Corp. (TSX-WWP) - Letter Agreement Signed
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