CALGARY — Connacher Oil and Gas Ltd. says it has abandoned a court-supervised sale of the company to East River Oil and Gas Ltd. after the buyer failed to make a required deposit payment by Feb. 15.
The Calgary-based oilsands producer had negotiated a conditional deal for East River to pay $113.5 million to acquire Connacher, but East River was unable to obtain necessary regulatory approvals in China by the initial deadline.
Connacher says that the deadlines for East River to complete the purchase were extended to Dec. 15 and then to Jan. 31 and would have been extended further if East River provided an additional $2 million deposit by Feb. 15.
The company says it didn't receive the additional $2 million deposit by Friday and, as a result, East River's original deposit of $13.5 million has been forfeited to Connacher and the agreement has been terminated.
Connacher says that under a prior support agreement with its first lien creditors, the parties will now work to implement a credit bid process over the coming months.
Connacher has been operating with court protection under the Companies Creditors Arrangement Act since May 2016. The court's latest stay of proceedings against Connacher runs until March 15, but could be extended further.
The support agreement with creditors covers assumption of Connacher's payments to trade suppliers since it received court protection from creditors, offers of employment to all of its employees, a new secured credit agreement and distribution of Connacher shares to the existing first lien lenders.
The Canadian Press