CALGARY, ALBERTA--(Marketwire - June 7, 2012) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.
Trafina Energy Ltd. ("Trafina" or the "Company") (TSX VENTURE:TFA.A) announces that the planned sale of its southwest Saskatchewan properties for consideration of $1.35 million net to Trafina will not proceed at this time due to closing conditions for such sale not being satisfied and an acceptable alternative arrangement with the purchaser not being reached.
The Company also announces that the Company's lender under its secured credit facility has made a demand on the Company for repayment of all indebtedness under the facility, which is currently in the amount of approximately $3.34 Million. The demand is due to the Company being in breach of certain of its covenants under the facility as a result of the Company's current debt and liquidity problems associated with, among other things, the continuing depressed commodity price environment.
Management of Trafina is working with its lender to come up with a plan to repay the indebtedness under the facility, which plan may include the sale of assets, Trafina entering into farm-in or other funding arrangements with industry partners, raising equity or debt capital or other corporate or asset restructurings. If the Company is unable to satisfy the repayment requirement or maintain adequate forbearance arrangements with its lender, the lender may appoint a receiver to liquidate the Company's assets or take other realization remedies against the Company, or the Company may be forced to seek creditor protection or voluntary receivership in order to resolve the demand. There is a risk that the Company's assets may not be sufficient to satisfy the demand plus the costs associated with a realization or liquidation in respect thereof.
Lastly, Trafina announces that its Corporate Secretary, Jamie Gagner of Norton Rose Canada LLP, has resigned.
Trafina is a junior oil and gas company based in Calgary, Alberta. The Company's main areas of interest are in the McMullen area of Alberta with other operated and non-operated production in Wetaskiwin. Trafina's shares trade on the TSX Venture Exchange under the stock symbol TFA.A and warrants trade under the stock symbol TFA.WT.A.
Forward Looking Statements: This news release contains forward looking statements and forward looking information based on management's current expectations regarding Trafina's debt and liquidity problems and the demand by its lenders, possible ways to rectify such problems and demand and possible results or effects which may result from such problems and demand.. Such forward looking information is based on management's expectations regarding, among other things, results of operations, production, future commodity prices and foreign exchange rates, future capital and other expenditures and future economic conditions. Readers are cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Forward looking statements involves significant known and unknown risks and uncertainties. Reference is made to Trafina's annual information form for the year ended December 31, 2011 dated April 23, 2012 and management's discussion and analysis for the year ended December 31, 2011 for a description of some of the risks that could affect the Company's financial condition and future results and could cause results to differ materially from those expressed in the Company's forward looking statements. The forward looking statements contained in this news release are made as at the date hereof and, except as required by applicable securities laws, Trafina does not undertake any obligation to update publicly or otherwise any such statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.