Bonnett's Energy Corp. to be acquired by investor group led by Mill City Capital, L.P.

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CALGARY, Sept. 24, 2013 /CNW/ - Bonnett's Energy Corp. ("Bonnett's") (TSX - BT) announced today that it has entered into an arrangement agreement (the "Arrangement Agreement") with BEC Acquisition Ltd. ("BEC Acquisitionco"), a wholly-owned subsidiary of Mill City Capital, L.P. ("Mill City"), the lead sponsor of a syndicate of funds comprising an investor group, with participation by certain members of Bonnett's management (the "On-Going Shareholders").

Pursuant to the Arrangement Agreement, BEC Acquisitionco will acquire all of the issued and outstanding common shares (the "Common Shares") of Bonnett's by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement") in a transaction representing an enterprise value of approximately CDN$117 million, inclusive of the value of approximately 10% of the outstanding shares of Bonnett's currently held by the On-Going Shareholders.

Under the terms of the Arrangement Agreement, each Bonnett's shareholder, other than On-Going Shareholders in respect of certain shares not being acquired for cash (the "Public Shareholders"), will receive CDN$7.08 in exchange for each Common Share, and each On-Going Shareholder will receive common shares of BEC Acquisitionco for each Common Share not acquired for cash.  The cash consideration represents a 15% premium to the weighted average trading price of the Common Shares for the 30 trading days ended September 23, 2013.  The parties began discussing the terms of the Arrangement on July 9, 2013.  On this basis, the cash consideration represents a 38% premium to the weighted average trading price of the Common Shares for the 30 trading days prior to July 9, 2013 and a 57% premium to the weighted average trading price of the Common Shares for the 90 trading days prior to July 9, 2013.

The Bonnett's Board (with an interested director abstaining) has unanimously determined that the Arrangement is fair to the Bonnett's Public Shareholders and that the Arrangement is in the best interests of Bonnett's and has unanimously approved the Arrangement and resolved to recommend that Bonnett's shareholders vote in favour of the Arrangement.  Sequeira Partners Inc. has provided the Bonnett's Board with its verbal opinion that, as of the date hereof and subject to its review of the final form of the documentation effecting the Arrangement, the consideration to be received by the Public Shareholders (other than the On-Going Shareholders and any other "related parties", "interested parties" and "joint actors") pursuant to the Arrangement is fair, from a financial point of view, to such Public Shareholders.

All of the members of the Bonnett's Board and Bonnett's executive officers and the On-Going Shareholders, who collectively own approximately 39% of the outstanding Common Shares, have entered into voting support agreements with BEC Acquisitionco to vote their Common Shares in favour of the Arrangement.

In addition, Quinpool Holdings Partnership, an affiliate of Clarke Inc. (the "Independent Shareholder"), who owns approximately 25% of the outstanding Common Shares, has also entered into a voting support agreement and confirmed its intention to vote its Common Shares in favour of the Arrangement.  The Independent Shareholder was involved in the negotiation of the consideration offered to Bonnett's Public Shareholders and as such, Bonnett's is entitled to rely on the "previous arm's length negotiations" exemption from the formal valuation requirements of Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions.

The Arrangement is subject to customary regulatory, Court and shareholder approvals, including, but not limited to, the approval of at least 66 2/3% of the votes cast in person or by proxy at a special meeting of Bonnett's shareholders and the approval of a simple majority of votes cast by shareholders, other than the On-Going Shareholders and any other "related parties", "interested parties", and "joint actors".

A special meeting of Bonnett's shareholders is expected to be held in late October, 2013.  An information circular in connection with the Arrangement is expected to be mailed to Bonnett's shareholders in early October.

Under the Arrangement Agreement, Bonnett's has agreed that it will not solicit or initiate any discussions concerning the pursuit of any other acquisition proposals.  Bonnett's has also agreed to pay a termination fee to BEC Acquisitionco in certain circumstances, including if Bonnett's enters into an agreement with respect to a superior proposal or if the Board of Directors of Bonnett's withdraws or modifies its recommendation with respect to the proposed transaction.  In addition, BEC Acquisitionco has the right to match any competing superior proposal for Bonnett's in the event such a proposal is made. A termination fee will be payable by BEC Acquisitionco if the Arrangement is not completed due to the failure of BEC Acquisitionco to complete the equity financings required to effect the Arrangement.

Following the Arrangement, an application will be made to de-list the Common Shares from the TSX, and Bonnett's will continue to be run by its current management team led by Mr. Murray Toews.

A copy of the Arrangement Agreement will be filed on Bonnett's SEDAR profile and will be available for viewing at www.sedar.com.

FORWARD-LOOKING STATEMENTS

Certain disclosures set forth in this press release constitute forward-looking statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believes", "continue", "could", "estimate", "forecast", "intends", "may", "plan", "predicts", "projects", "should", "will" and other similar expressions. More particularly and without limitation, this press release contains forward-looking statements concerning: the timing and anticipated receipt of regulatory, court, shareholder and other approvals for the Arrangement; the ability of Bonnett's and BEC Acquisitionco to satisfy the other conditions to, and to complete, the Arrangement; and the anticipated timing of mailing of the information circular regarding the Arrangement, the Bonnett's shareholder meeting and the closing of the Arrangement.

In respect of the forward-looking statements and information concerning the anticipated completion of the proposed Arrangement and the anticipated timing for completion of the Arrangement, Bonnett's has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail Bonnett's shareholder meeting materials, including the required information circular; the ability of the parties to receive, in a timely manner, the necessary regulatory, court, shareholder and other third party approvals; and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary shareholder, 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. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times.

Risks and uncertainties inherent in the nature of the Arrangement include the failure of Bonnett's or BEC Acquisitionco to obtain necessary shareholder, 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 Bonnett's or BEC Acquisitionco 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 Bonnett's to comply with the terms of the Arrangement Agreement may result in Bonnett's being required to pay a non-completion or other fee to BEC Acquisitionco, the result of which could have a material adverse effect on Bonnett's' financial position and results of operations and its ability to fund growth prospects and current operations.

Forward-looking statements relate to future events and/or performance and although considered reasonable by Bonnett's at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated in the statements made. Bonnett's does not undertake any obligation to publicly update forward-looking information except as required by applicable securities law.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Bonnett's' operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Bonnett's undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

SOURCE: Bonnett's Energy Corp.

Additional information can be obtained by contacting Bonnett's Energy Corp., 65007 43 Hwy., County of Grande Prairie No. 1, Alberta, T8V 5E7.  Information is also available on the Corporation's website at  www.bonnettsenergy.com or by contacting Murray Toews, Chief Executive Officer at [phone] or David Ross, Chief Financial Officer at [phone], Fax: [phone], E-mail: [email protected].