Caracal Energy and TransGlobe Energy Announce Proposed Business Combination to Create One of the Largest Independent Africa

 Caracal Energy and TransGlobe Energy Announce Proposed Business Combination to  Create One of the Largest Independent Africa Focused Oil Producers  /NOT FOR DISSEMINATION OUTSIDE OF CANADA AND THE UNITED STATES/  -Caracal and TransGlobe joint investor conference call at 7:00 a.m. Calgary  Time, March 17, 2014- CALGARY, March 15, 2014 /CNW/ - Caracal Energy Inc. (LSE:CRCL) ("Caracal") and  TransGlobe Energy Corporation (TSX:TGL)(NASDAQ:TGA) ("TransGlobe") announced  today that they have entered into an agreement (the "Arrangement Agreement")  to merge the two companies by way of an exchange of shares pursuant to a plan  of arrangement under the Business Corporations Act (Alberta) (the  "Arrangement").  Rationale for the Proposed Business Combination  The Arrangement would create one of the largest independent Africa focused oil  producers, poised for strong growth in oil production and reserves from  development and high impact exploration in Chad and Egypt. Based on March 14,  2014 closing prices, the merged company would have a combined market  capitalization of approximately US$1.8 billion(1) and:            --  Material Onshore Oil Production - Pro forma current oil             production of 25,100 bbl/d (company working interest) and 2P             reserve base of 135 MMbbl (company working interest) from             majority operated assets in Chad and Egypt and additional             non-operated interests in Yemen         --  Near Term Production Growth - Average 2014E production target             of 31,000-34,000 bbl/d (company working interest); ongoing             appraisal and development program         --  Catalyst Rich Exploration Program - Campaign of 30-42 high             impact exploration wells in Chad by 2016, targeting 70+ per             cent of a total 833 MMbbl of gross risked mean prospective             resources and low risk step out exploration in the Egyptian             Eastern Desert         --  Strong Regional Position -Enhanced scale provides a platform             for future organic and acquisition growth in Africa, building             on core operated positions in Chad and Egypt, with ready access             to key infrastructure and export markets         --  Improved Financial Position -Combined businessplan remains             fully funded, with a pro forma cash position of US$302 million             and no net debt as at December 31, 2013, and a growing cash             flow profile  "This transaction will clearly benefit both companies and their shareholders,  as the enhanced scale will expedite production growth and increase cash flow,"  said Gary Guidry, Caracal's President & Chief Executive Officer. "At its core,  this transaction is about greater value creation for all shareholders of the  merged company. Through the combination of complementary asset bases, we will  create a solid regional platform for compounding reserves and production  growth."  Added Ross Clarkson, TransGlobe's President & Chief Executive Officer,  "Consistent with our onshore, operated, oil strategy, the combination will  provide shareholders with significant organic production and reserves growth,  while providing increased country diversification.  Specifically, we're  pursuing additional upside of over four billion barrels of gross mean unrisked  prospective resource, aggressively targeted with a fully funded drilling  program. And as one of the largest independent oil producers in Africa, we  will be well positioned for future value-enhancing growth."  The merged company will benefit from an experienced Board of Directors, with  Robert Hodgins as independent non-executive Chairman. Other independent board  members include Carol Bell, John Bentley, Peter Dey, Ronald Royal, and Brooke  Wade. It is proposed that two directors from TransGlobe, Ross Clarkson and  Lloyd Herrick, will join the Caracal Board.  After completion of the transaction the combined assets and employees will  operate under the Caracal name and will be led by Caracal's CEO Gary Guidry  and a combination of Caracal's and TransGlobe's current executive teams.  In connection with the Arrangement, Caracal is required to seek a listing for  the merged company on the Toronto Stock Exchange ("TSX").  Terms of the proposed transaction  Exchange Ratio  Pursuant to the Arrangement, each TransGlobe shareholder will receive 1.23 new  common shares of Caracal ("New Caracal Shares") in exchange for each  TransGlobe common share ("TransGlobe Share") held. After completion of the  Arrangement the merged company will have approximately 238,503,645 shares  issued and outstanding prior to adjusting for conversion of Caracal's  outstanding convertible debentures. After taking into consideration the  conversion of the convertible debentures it is expected that current Caracal  shareholders would hold approximately 65.6 per cent and former TransGlobe  shareholders would hold approximately 34.4 per cent of the issued shares of  the merged company( 2)  Treatment of TransGlobe Debentures  Upon completion of the transaction, TransGlobe's 6.0% convertible unsecured  subordinated debentures with an aggregate principal amount of CAD$97,750,000  (the "TransGlobe Debentures") will continue to be obligations of TransGlobe,  as a wholly-owned subsidiary of Caracal. The conversion price of the  TransGlobe Debentures will be adjusted pursuant to the terms of the trust  indenture governing the TransGlobe Debentures based on the exchange ratio  under the Arrangement. After completion of the Arrangement, conversion rights  will be into Caracal shares.  Following closing of the transaction, in accordance with its terms, Caracal  intends to make an offer for the TransGlobe Debentures at Par plus accrued and  unpaid interest (the amount of interest will depend on the time of any  repurchase). The repurchase offer will be made within 30 days of closing of  the proposed transaction. Should a holder of the TransGlobe Debentures elect  not to accept the repurchase offer, the debentures will mature as originally  set out in their respective indentures. Holders who convert their TransGlobe  Debentures following completion of the Arrangement will receive common shares  of Caracal.  Dividends  In light of the significant capital programs for development and exploration  for the combined company, neither Caracal nor TransGlobe will pay dividends in  the interim period prior to closing. However, the Board of the combined  company will consider dividends in the future as a part of normal course  business.  Further details of the transaction  Caracal's CEO Mr. Guidry has recused himself from the process of considering  the Arrangement because he served as a director of TransGlobe from October  2009 until March 11, 2014, when he resigned. Mr. Guidry owns the following  TransGlobe securities: 40,000 TransGlobe shares, CAD$100,000 in TransGlobe  convertible debentures and options to acquire 160,500 TransGlobe shares. Mr.  Guidry's TransGlobe share ownership amounts to approximately 0.05 per cent of  the 74.7 million TransGlobe shares outstanding. Mr. Guidry's ownership of  Caracal shares, including beneficial ownership, amounts to 1,674,173 shares or  approximately 1.14 per cent of the 146.7 million current basic Caracal shares  outstanding.  The Boards of Directors of Caracal (other than Mr. Guidry, who has recused  himself for the reason mentioned above) and TransGlobe have each unanimously  approved the Arrangement Agreement and have concluded that the Arrangement is  in the best interests of Caracal and TransGlobe, respectively. The Board of  Directors of Caracal has received fairness opinions from RBC Capital Markets  and Canaccord Genuity Corp. with respect to the Arrangement. The Board of  Directors of TransGlobe has received a fairness opinion from Scotiabank with  respect to the Arrangement.  The Boards of Directors of each of Caracal (other than Mr. Guidry, who has  recused himself for the reason mentioned above) and TransGlobe intend to  unanimously recommend to their respective shareholders that they vote their  shares in favor of the Arrangement in the information circulars to be prepared  and mailed by Caracal and TransGlobe in connection with the Arrangement.  In addition, each of the Directors and Executive Officers of Caracal and  TransGlobe have agreed to vote their shares in favor of the Arrangement. In  aggregate this represents 3,338,903 Caracal shares, or approximately 2.28 per  cent of the 146.7 million current basic Caracal shares outstanding, and  3,092,054 TransGlobe shares or approximately 4.14 per cent of the 74.7 million  current basic TransGlobe shares outstanding.  The proposed transaction will be implemented by way of a court-approved plan  of arrangement and will require the approval of at least 66(2/3 )per cent of  holders of TransGlobe shares represented in person or by proxy at a special  meeting of TransGlobe shareholders (the "TransGlobe Meeting") to be called to  consider the Arrangement. If required, the approval will consist of a  "majority of the minority" of the holders of TransGlobe shares, being a  majority of the votes cast by shareholders excluding shareholders whose votes  may not be included pursuant to Canadian Multilateral Instrument 61- 101  Protection of Minority Securityholders in Special Transactions. The exclusion,  if required, would apply only to Mr. Guidry, by virtue of his role as a  director of TransGlobe from October 2009 until March 11, 2014.  It is expected that the Arrangement will be exempt from the registration  requirements of the U.S. Securities Act of 1933, as amended, pursuant to the  court approval exemption afforded by section 3(a)(10) under that Act. The  proposed transaction is also subject to obtaining the approval of a majority  of the votes cast by the holders of Caracal shares at a special meeting of  Caracal shareholders (the "Caracal Meeting") to be called to consider the  Arrangement and the issuance of New Caracal Shares in connection with the  proposed transaction.  The Arrangement Agreement provides that each party is subject to  non-solicitation provisions and provides that the board of directors of each  party may, under certain circumstances, terminate the agreement in favour of  an unsolicited superior proposal, subject to payment of a termination fee of  US$9.25 million to the other party and subject to a right in favour of Caracal  to match the superior proposal. In addition, each party has agreed to pay a  termination fee of US$9.25 million to the other party in certain circumstances.  Trading, Listings And Regulatory Approvals  Subsequent to the completion of the Arrangement, the TransGlobe shares will  cease trading and be delisted from the TSX and the NASDAQ. Under the  Arrangement, Caracal is required to apply to the TSX to list Caracal shares,  including the New Caracal Shares, on the TSX. It is a condition to the  completion of the Arrangement that such a listing shall have been approved,  subject only to routine filings.  The Arrangement is classified as a reverse takeover for Caracal under the  Listing Rules of the United Kingdom Listing Authority ("UKLA"). Consequently,  Caracal will be required to re-apply for and, on completion of the  Arrangement, satisfy the relevant requirements for listing on the premium  segment of the Official List of the UKLA.  Advisors  For Caracal, RBC Capital Markets is acting as financial advisor. Each of RBC  Capital Markets and Canaccord Genuity Corp. provided a fairness opinion to  Caracal's Board. FirstEnergy Capital Corp. is acting as a strategic advisor.  Stikeman Elliott LLP is the legal advisor.  For TransGlobe, Scotiabank is acting as financial advisor and has provided a  fairness opinion to TransGlobe's Board. Blake Cassels & Graydon LLP is the  legal advisor.  Information Circulars  Further information regarding the proposed transaction will be contained in  information circulars that Caracal and TransGlobe will prepare, file and mail  in due course to their respective shareholders in connection with the Caracal  Meeting and TransGlobe Meeting. Prior to the closing of the transaction,  Caracal will also publish a prospectus in connection with the issue of the New  Caracal Shares and the required re-application for listing of such shares on  the Official List and to trading on the London Stock Exchange's ("LSE") main  market for premium listed securities ("Prospectus").  It is expected that the TransGlobe Meeting and the Caracal Meeting will take  place in June 2014, with closing expected to occur as soon as possible  thereafter subject to regulatory approval. All Caracal and TransGlobe  shareholders are urged to read the relevant information circular once it  becomes available, as it will contain additional important information  concerning the proposed transaction and the Arrangement.  A copy of the Arrangement Agreement will be filed on Caracal's and  TransGlobe's SEDAR profiles and will be available for viewing at www.sedar.com.  Investor conference call and presentation details  TransGlobe and Caracal will host a joint conference call and webcast to  discuss the Arrangement on March 17, 2014:  Time: 7:00 a.m. Calgary Time (Mountain Time) (9:00 a.m. Eastern Time) Dial-in: 416-340-8530 or toll free at 1- 800-766-6630  http://www.gowebcasting.com/5234  Shortly after the conclusion of the call, a replay will be available by  dialing (905) 694-9451 or toll-free at 1-800-408-3053. The pass code is  5119337#. The replay will expire at 23:59 p.m. (Eastern Time) on March 23,  2014. Thereafter, a copy of the call can be accessed through a link on  TransGlobe's Web site at www.trans-globe.com and at Caracal's website at  www.caracalenergy.com.  A joint presentation has been prepared to accompany the conference call. The  presentation is also available for review on the Caracal and TransGlobe  websites.  Exchange Rates  For reference purposes only, the following exchange rates were prevailing on  March 13, 2014 as per the Bank of England Daily Spot Exchange Rates against  GBP (being the latest practicable date prior to publication of this  announcement):  £1.00 = CAD $1.8445 £1.00 = US$1.6677 US$1.00 = CAD$1.1060  All amounts in this announcement expressed in the above currencies have,  unless otherwise stated, been calculated using the above exchange rates.  About Caracal  Caracal Energy Inc. is an international exploration and development company  focused on oil and gas exploration, development and production activities in  the Republic of Chad, Africa. In 2011, Caracal entered into three production  sharing contracts ("PSCs") with the government of the Republic of Chad. These  PSCs provide exclusive rights to explore and develop reserves and resources  over a combined area of 26,103 km(2) in southern Chad. The PSCs cover two  world-class oil basins with oil discoveries, and numerous exploration  prospects. The Caracal common shares trade on the LSE under the symbol CRCL.  About TransGlobe  TransGlobe is a Calgary-based, growth-oriented oil and gas exploration and  development company focused on the Middle East and North Africa region with  production operations in the Arab Republic of Egypt and the Republic of Yemen.  TransGlobe's common shares trade on the TSX under the symbol TGL and on the  NASDAQ Exchange under the symbol TGA. TransGlobe's Convertible Debentures  trade on the TSX under the symbol TGL.DB. In TransGlobe's audited financial  statements for the financial year ended December 31, 2013, TransGlobe reported  gross assets of US$675.8 million and profits before tax of US$143.9 million.  Cautionary Statements  This announcement contains forward-looking statements and forward-looking  information within the meaning of applicable securities laws and are based on  the expectations, estimates and projections of management of the parties as of  the date of this news release unless otherwise stated. The use of any of the  words "expect", "anticipate", "continue", "estimate", "objective", "ongoing",  "may", "will", "project", "should", "believe", "plans", "intends" and similar  expressions are intended to identify forward-looking statements or  information. More particularly and without limitation, this announcement  contains forward-looking statements and information concerning: the  anticipated benefits of the Arrangement to TransGlobe and its securityholders  and to Caracal and its securityholders, including anticipated synergies; the  timing and anticipated receipt of required regulatory, court and  securityholder approvals for the transaction; the ability of TransGlobe and  Caracal to satisfy the other conditions to, and to complete, the Arrangement;  the anticipated timing of the mailing of the information circulars regarding  the Arrangement, the holding of the TransGlobe Meeting and the Caracal Meeting  and the closing of the Arrangement and the listing of Caracal's shares on the  TSX or the Official List.  In respect of the forward-looking statements and information concerning the  anticipated benefits and completion of the proposed Arrangement, the  anticipated timing for completion of the Arrangement and the listing of  Caracal's shares on the TSX or the Official List, Caracal and TransGlobe have  provided such in reliance on certain assumptions that they believe are  reasonable at this time, including assumptions as to the time required to  prepare and mail securityholder meeting materials, including the required  information circulars and Prospectus; the ability of the parties to receive,  in a timely manner, the necessary regulatory, court, securityholder, stock  exchange and other third party approvals, including but not limited to the  receipt of applicable regulatory approvals; the ability of the parties to  satisfy, in a timely manner, the other conditions to the closing of the  Arrangement; and expectations and assumptions concerning, among other things:  customer demand for the merged company's services; commodity prices and  interest and foreign exchange rates; planned synergies, capital efficiencies  and cost-savings; applicable tax laws; future production rates; the  sufficiency of budgeted capital expenditures in carrying out planned  activities; and the availability and cost of labour and services. The  anticipated dates provided may change for a number of reasons, including  unforeseen delays in preparing meeting materials, inability to secure  necessary securityholder, regulatory, court or other third party approvals in  the time assumed or the need for additional time to satisfy the other  conditions to the completion of the Arrangement. Information relating to  reserves and resources is deemed to be forward-looking information, as it  involves the implied assessment, based on certain estimates and assumptions,  that the reserves and resources described exist in the quantities predicted or  estimated, and can be profitably produced in the future.  Accordingly, readers should not place undue reliance on forward-looking  information which by its nature is based on current expectations regarding  future events that involve a number of assumptions, inherent risks and  uncertainties, which could cause actual results to differ materially from  those anticipated. Forward-looking information is not based on historical  facts but rather on current expectations and assumptions regarding, among  other things, the timing and scope of certain of Caracal and TransGlobe's  operations and the timing and level of production from their properties, plans  for and results of drilling activity and testing programmes, future capital  and other expenditures (including the amount, nature and sources of funding  thereof), continued political stability, and timely receipt of any necessary  government or regulatory approvals. Although the expectations and assumptions  reflected in such forward-looking information are believed to be reasonable,  they may prove to be incorrect. Forward-looking information involves  significant known and unknown risks and uncertainties. A number of factors  could cause actual results to differ materially from those anticipated by  Caracal or TransGlobe including, but not limited to, the merged company's  ability to integrate efficiently new businesses following the successful  completion of the transaction; the merged company's ability to achieve the  anticipated financial and other benefits resulting from the successful  completion of the transaction, risks associated with the oil and gas industry  (e.g. operational risks in exploration and production; inherent uncertainties  in interpreting geological data; changes in plans with respect to exploration  or capital expenditures; interruptions in operations together with any  associated insurance proceedings; reductions in production capacity, the  uncertainty of estimates and projections in relation to costs and expenses and  health, safety and environmental risks), the risk of commodity price and  foreign exchange rate fluctuations, the uncertainty associated with  negotiating with foreign governments, risk associated with international  activity, including the risk of political instability, the risk of adverse  economic market conditions, the actual results of marketing activities and the  risk of regulatory changes. Forward-looking information cannot be relied upon  as a guide to future performance. Well-test results are not necessarily  indicative of long-term performance or ultimate recovery.  Risks and uncertainties inherent in the nature of the Arrangement include the  failure of TransGlobe or Caracal to obtain necessary security holder,  regulatory, court and other third party approvals, or to otherwise satisfy the  conditions to the Arrangement, in a timely manner, or at all. Failure to so  obtain such approvals, or the failure of TransGlobe or Caracal to otherwise  satisfy the conditions to the Arrangement, may result in the Arrangement not  being completed on the proposed terms, or at all. In addition, the failure of  one party to comply with the terms of the Arrangement Agreement may result in  that party being required to pay a non-completion or other fee to the other  party, the result of which could have a material adverse effect on the paying  party's financial position and results of operations and its ability to fund  growth prospects and current operations.  Readers are cautioned that the foregoing list of factors is not exhaustive.  Additional information on other factors that could affect the operations or  financial results of the parties, and the combined company, are included in  reports on file with applicable securities regulatory authorities, including  but not limited to; TransGlobe's Annual Information Form for the year ended  December 31, 2013 which may be accessed on TransGlobe's SEDAR profile, and  Caracal's Final Short Form Prospectus dated October 24, 2013 on Caracal's  SEDAR profile at www.sedar.com.  The forward-looking statements and information contained in this announcement  are made as of the date hereof and the parties undertake no obligation to  update, review or revise such forward-looking information contained in this  announcement to reflect any change in its expectations or any change in  events, conditions or circumstances on which such information is based unless  required to do so by applicable law.  Reserves Disclosure  Terms related to reserves and resources classifications referred to in this  announcement are based on definitions and guidelines in the Canadian Oil and  Gas Evaluation Handbook ("COGE") which are as follows.  "Proved reserves" are those reserves that can be estimated with a high degree  of certainty to be recoverable. It is likely that the actual remaining  quantities recovered will exceed the estimated proved reserves.  "Probable reserves" are those additional reserves that are less certain to be  recovered than proved reserves. It is equally likely that the actual remaining  quantities recovered will be greater or less than the sum of the estimated  proved plus probable reserves.  The qualitative certainty levels referred to in the definitions above are  applicable to individual reserves entities (which refers to the lowest level  at which reserves calculations are performed) and to reported reserves (which  refers to the highest-level sum of individual entity estimates for which  reserves estimates are presented). Reported reserves should target the  following levels of certainty under a specific set of economic conditions:         --  at least a 90 percent probability that the quantities actually             recovered will equal or exceed the estimated proved reserves.             This category of reserves can also be denoted as 1P;         --  at least a 50 percent probability that the quantities actually             recovered will equal or exceed the sum of the estimated proved             plus probable reserves. This category of reserves can also be             denoted as 2P; and         --  at least a 10 percent probability that the quantities actually             recovered will equal or exceed the sum of the estimated proved             plus probable plus possible reserves. This category of reserves             can also be denoted as 3P.  Additional clarification of certainty levels associated with reserves  estimates and the effect of aggregation is provided in the COGE Handbook. The  estimates of reserves and future net revenue for individual properties may not  reflect the same confidence level as estimates of reserves and future net  revenue for all properties, due to the effects of aggregation.  "Prospective resources" are those quantities of petroleum estimated, as of a  given date, to be potentially recoverable from undiscovered accumulations by  application of future development projects. Prospective resources have both an  associated chance of discovery (geological chance of success) and a chance of  development (economic, regulatory, market, facility, corporate commitment or  political risks). The chance of commerciality is the product of these two risk  components. The prospective resource estimates referred to herein have not  been risked for either the chance of discovery or the chance of development.  There is no certainty that any portion of the prospective resources will be  discovered. If a discovery is made, there is no certainty that it will be  developed or, if it is developed, there is no certainty as to the timing of  such development or that it will be commercially viable to produce any portion  of the prospective resources.  Figures related to Caracal's reserves and resources are derived from a report  prepared by McDaniel & Associates Consultants Ltd. ("McDaniel"), an  independent qualified reserves evaluator, evaluating the prospective resources  of Caracal effective as of June 30, 2013 (the "McDaniel Resource Report") and  a report prepared by McDaniel evaluating the reserves of Caracal effective as  of December 31, 2013 (the "McDaniel Reserve Report"). A description of the  uncertainties and significant positive and negative factors associated with  the estimates of resources in respect of the June 30, 2013 McDaniel Report is  contained in Caracal's July 25, 2013 material change report. Copies of these  documents are available on the internet under Caracal's profile at  www.sedar.com.  Figures related to TransGlobe's reserves and resources are derived from a  report prepared by DeGolyer & MacNaughton Canada Limited ("DeGolyer"), an  independent qualified reserves evaluator, evaluating the prospective reserves  and resources of TransGlobe effective as of December 31, 2013 (the "DeGolyer  Report") with a report date of January 15, 2014. A description of the  uncertainties and significant positive and negative factors associated with  the estimates of resources in respect of the DeGolyer Report is contained in  TransGlobe's Annual Information Form dated March 13, 2014 for the year ended  December 31, 2013. Copies of these documents are available on the internet  under TransGlobe's profile at www.sedar.com.  _______________________ (1) Calculated on basic shares outstanding as of March 14, 2014 including  shares assuming full conversion of Caracal outstanding convertible debentures  into 28.6mm shares. Exchange rates based on posted Bank of England Daily Spot  Exchange Rates against GBP as at March 13, 2014. (2) Calculated on basic shares outstanding as of March 14, 2014 including  shares assuming full conversion of Caracal outstanding convertible debentures  into 28.6 million shares. Exchange rates based on posted Bank of England Daily  Spot Exchange Rates against GBP as at March 13, 2014.    SOURCE  Caracal Energy Inc.  For further information about Caracal:  Caracal Energy Inc. Gary Guidry, President and Chief Executive Officer Trevor  Peters, Chief Financial Officer +1 403-724-7200  For North American Media  Inquiries Longview Communications Alan Bayless Joel Shaffer +1 604-694-6035 +1  416-649-8006  For further information about TransGlobe:  Steve Langmaid Investor Relations (403) 444-4787  investor.relations@trans-globe.com www.trans-globe.com  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/March2014/15/c5384.html  CO: Caracal Energy Inc. ST: Alberta NI: OIL MNA CONF  
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