Twin Butte reminds Securityholders of the importance of a vote for its proposed Arrangement

• Securityholders are reminded to vote FOR the Arrangement prior to August 8, 2016 at 9:00 a.m. (Calgary Time)

CALGARY, Aug. 4, 2016 /CNW/ - (TSX: TBE) - Twin Butte Energy Ltd. ("Twin Butte" or the "Company") wishes to remind the shareholders and debentureholders of Twin Butte (collectively, the "Twin Butte Securityholders") of the importance of a vote FOR the proposed plan of arrangement initially announced on June 24, 2016 (the "Arrangement") in respect of Twin Butte and the Twin Butte Securityholders at the upcoming meeting of Twin Butte Securityholders scheduled for August 10, 2016.

The Company is aware that certain debentureholders have indicated their intention to vote against the Arrangement, based in part on their view that the Arrangement provides value to the Company's other stakeholders at the expense of the debentureholders.  It has also been communicated that an "alternative form of transaction" is possible, and the Company believes this is misleading. In making their voting decision, it is extremely important that Twin Butte Securityholders be aware that no such alternative proposal has emerged, either to us, or publicly to the Twin Butte Securityholders.  Throughout the Company's lengthy process to seek strategic alternatives, which commenced in December 2015, Reignwood Resources Holding Pte. Ltd. is the only party that has put forward a defined and viable proposal.  No other proposal exists, and no other discussions are underway.

The ‎Company ran a comprehensive strategic review process, seeking out both domestic and international counterparties. The review encompassed all reasonable proposals: en bloc sales, recapitalization efforts, potential go-private transactions, and asset sales to reduce debt. A special committee of non-management directors was formed to consider all potential courses of action. Peters & Co. Limited and National Bank Financial Inc. were retained to assist in the process and report to the special committee. After considering all alternatives, the Company's board of directors was advised by the Company's financial advisors, Peters & Co. Limited and National Bank Financial Inc., that the Arrangement represented the sole proposal where value would be realized for debentureholders and ‎ shareholders. All other proposals received contemplated no value to the shareholders or debentureholders.

Significant concessions were provided by all interested parties in executing the definitive agreement for the Arrangement.  

"After an extensive and exhaustive strategic review process, the Board is confident that the Arrangement represents the best option for Twin Butte and the Twin Butte Securityholders. There is a real possibility that Twin Butte will be placed into receivership if the Arrangement is not completed, and in the current commodity price environment, we are advised that it is extremely unlikely that any offers will materialize in a receivership process that will provide any value to the debentureholders or shareholders of Twin Butte." commented Jim Brown, director and chair of the special committee.

Since Twin Butte commenced its strategic alternatives process in December 2015, Twin Butte's corporate production volumes have decreased from approximately 15,300 boe/d to current production of approximately 11,500 boe/d. Bank debt plus working capital is estimated to be 7.5 times annualized cash flow in the second quarter (10.4 times if debenture debt is included), and this rate is expected to increase in the third quarter with lower commodity prices and volumes reducing cash flow from Q2. With the current low commodity price environment, the Company does not anticipate that it will be able to re-pay any amounts toward its credit facilities or fund investments to prevent its production rates from continuing to fall. Furthermore, as long as Twin Butte remains in default under the terms of its senior secured credit facilities, debentureholders will not receive any interest payments under their debentures.

Board Recommends Securityholders Vote in Favour of the Arrangement

Throughout the strategic review process initiated by Twin Butte in December 2015, the board of directors of Twin Butte, with the stewardship of its special committee, has been committed to taking courses of action that are in the best interests of the Company and the Twin Butte Securityholders. After an extensive review of the Company's strategic and financial options, the board of directors of Twin Butte has unanimously: (i) determined that the Arrangement is in the best interests of Twin Butte and the Twin Butte Securityholders; (ii) resolved to recommend that Twin Butte Securityholders vote in favor of the Arrangement; and (iii) determined that the consideration to be received by Twin Butte Securityholders pursuant to the Arrangement is fair to the Twin Butte Securityholders.

The board of directors of Twin Butte UNANIMOUSLY recommends that the Twin Butte Securityholders vote "FOR" the Arrangement.

Reader Advisory

Forward-Looking Statements

Certain information set forth in this press release, including information and statements which may contain words such as "could", "plans", "should", "anticipates", "expects", "believes", "will" and similar expressions and statements relating to matters that are not historical facts, contain forward-looking statements, including but not limited to statements regarding: the Arrangement, the potential consequences for Twin Butte Securityholders if the Arrangement is not completed (including any action by the lenders under the Company's credit facilities), Twin Butte's negative cash flows, the Company's estimated future estimated annualized cash flows and Twin Butt's assessment of its ability to service its debt in the event the Arrangement is not completed. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Twin Butte's control. Completion of the Arrangement is subject to a number of conditions which are typical for transactions of this nature. Failure to satisfy any of these conditions or the failure to obtain approval of the Twin Butte Securityholders may result in the termination of the arrangement agreement.  In addition, the Arrangement may be subject to amendments, if the counterparties thereto agrees to such amendments. The foregoing list is not exhaustive. Additional information on these and other risks that could affect completion of the Arrangement will be set forth in the information circular, which are available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The actual results, performance or achievement of Twin Butte could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Twin Butte will derive therefrom. Twin Butte disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

Boe means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6: 1, using a conversion on a 6: 1 basis may be misleading as an indication of value.

SOURCE Twin Butte Energy Ltd.

For information on voting instructions please contact: Laurel Hill Advisory Group, North American Toll-Free Number: 1-877-452-7184, Collect Calls Outside North America: 416-304-0211, Email: [email protected]; For further information about Twin Butte, please contact: Twin Butte Energy Ltd., Rob Wollmann President and Chief Executive Officer; R. Alan Steele, Vice President Finance, Chief Financial Officer and Corporate Secretary, Tel: [phone], Website: www.twinbutteenergy.com