Commerce Energy Signs Letter Agreement with Universal Energy Group For Significant Sale of Assets and Equity Investment
Commerce Energy Group, Inc. (AMEX:EGR) announced today that it has
signed a letter agreement with Universal Energy Group Ltd. (TSX:UEG)
(UEG) related to a potential sale of certain Commerce Energy assets to
UEG and a potential equity investment by UEG in Commerce Energy.
Commerce Energy has agreed to a period of exclusive negotiations with
UEG, extending through November 26, 2008, in order to conduct due
diligence and reach a definitive agreement.
The basic terms of the proposed transaction involve a purchase by UEG of
all of Commerce Energy’s customer contracts
relating to the natural gas retailing business currently being conducted
in Ohio and electricity retailing business currently being conducted in
Pennsylvania, New Jersey, Maryland and Michigan. In addition, UEG would
acquire newly issued shares of Commerce Energy’s
common stock amounting to 49% of the issued and outstanding shares of
Commerce Energy’s common stock (after giving
effect to the issuance of such shares) and a warrant to acquire an
additional number of newly issued shares of Commerce Energy’s
common stock, which when taken together with the other shares to be
purchased by UEG, would amount to 66 2/3% of the issued and outstanding
shares of Commerce Energy’s common stock
(after giving effect to the issuance of the shares to be purchased and
the shares underlying the warrant). Commerce Energy would receive an
aggregate of $16 million in cash for the customer contracts, the shares
of common stock and the warrant.
The terms of the proposed transaction provide that, within 10 days of
signing a definitive agreement relating to the proposed transaction, UEG
would replace or arrange for the replacement of Commerce Energy’s
credit facility with Wachovia Capital Finance (Western).
"We are pleased to have entered into this
agreement with Universal Energy for a potential asset sale and equity
investment against the backdrop of an unprecedented global credit and
financial crisis,” said Commerce Energy Chief
Executive Officer, Gregory L. Craig. "We
believe that this proposed transaction would be in the best interests of
Commerce Energy’s shareholders, particularly
in view of the current economic and banking climate.”
If the proposed transaction is consummated, Commerce Energy would retain
its business providing retail electric power and natural gas in other
markets in which it currently operates.
Any proposed transaction will be subject to, among other things,
obtaining any necessary third-party consents or waivers; applicable
regulatory approvals; the negotiation, execution, and delivery of
definitive agreements; and, approval of the proposed transaction by
Commerce Energy’s full Board of Directors and
shareholders.
Any proposed transaction may only be completed in accordance with
applicable state and federal laws. This press release shall not
constitute an offer or a solicitation of an offer to buy any securities
nor shall it constitute a solicitation of a proxy to vote with respect
to any transaction. There can be no assurances that any definitive
agreement will be approved or consummated between the parties.
If the parties sign a definitive agreement, Commerce Energy will be
filing a proxy statement and other relevant documents concerning the
transaction with the Securities and Exchange Commission (SEC).
SHAREHOLDERS OF COMMERCE ENERGY ARE URGED TO READ THE PROXY STATEMENT
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE FORM
8-K FILED IN CONNECTION WITH THIS NEWS RELEASE, WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders can obtain free copies of the proxy statement and other
documents when they become available by contacting the Corporate
Secretary of Commerce Energy Group, Inc., 600 Anton Boulevard, Suite
2000, Costa Mesa, California 92626, telephone (714) 259-2500. In
addition, documents filed with the SEC by Commerce Energy will be
available free of charge at the SEC’s web
site at http://www.sec.gov.
If the parties sign a definitive agreement, Commerce Energy and its
executive officers and directors may be deemed to be participants in the
solicitation of proxies from the shareholders of Commerce Energy in
favor of the transaction. Information about the executive officers and
directors of Commerce Energy and their ownership of Commerce Energy
common stock will be set forth in Commerce Energy’s
proxy statement which will be filed with the SEC. Certain directors and
executive officers of Commerce Energy may have direct or indirect
interests in the transaction due to securities holdings, pre-existing or
future indemnification arrangements, vesting of options, or rights to
severance or retention payments in connection with the transaction.
Additional information regarding Commerce’s
interest and the interests of its executive officers and directors in
the transaction, will be contained in the proxy statement regarding the
transaction that will be filed by Commerce with the SEC.
About Commerce Energy Group
Commerce Energy Group is a leading independent U.S. electricity and
natural gas marketing company. Its principal operating subsidiary,
Commerce Energy, Inc., is licensed by the Federal Energy Regulatory
Commission and by state regulatory agencies as an unregulated retail
marketer of natural gas and electricity and serves homeowners,
commercial and industrial consumers and institutional customers. For
more information, visit www.CommerceEnergy.com.
Forward-Looking Statements
This press release contains forward-looking statements that are made
pursuant to the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995, particularly those statements regarding
the effects of the proposed transaction and those preceded by, followed
by or that otherwise include the words "believes,”
"expects,”
"anticipates,”
"intends,”
"estimates,”
or similar expressions. Forward-looking statements relating to
expectations about future results or events are based upon information
available to Commerce as of today’s date, and
Commerce does not assume any obligations to update any of these
statements. The forward-looking statements are not guarantees of the
future performance of Commerce and actual results may vary materially
from the results and expectations discussed. For instance, although
Universal Energy Group Ltd. has proposed the purchase of certain assets
and securities from Commerce, no definitive agreements have been
executed and any such transaction would be subject to various conditions.
