CALGARY, Aug. 15, 2018 /CNW/ - AKITA Drilling Ltd. (TSX:AKT.A; TSX:AKT.B) and Xtreme Drilling Corp. (TSX:XDC) are pleased to announce that yesterday they received the approval of the Court of Queen's Bench of Alberta for the previously announced plan of arrangement (the "Arrangement") under the Business Corporations Act (Alberta) (the "Act") pursuant to which AKITA will acquire all of the issued and outstanding common shares of Xtreme (the "Xtreme Shares").

At the Xtreme special meeting of shareholders held on August 13, 2018, the Arrangement was approved by 99.87% of the votes cast by Xtreme shareholders who voted on the Arrangement. 

Pursuant to the Arrangement, Xtreme shareholders will receive 0.3732394 of a Class A Non-Voting Share of AKITA (the "AKITA Non-Voting Shares") or $2.65 in cash for each Xtreme Share held and were able to elect to receive AKITA Non-Voting Shares, cash or a combination of AKITA Non-Voting Shares and cash, in each case subject to proration such that the aggregate consideration to be paid by AKITA will not exceed $45,000,000 in cash and will not exceed 22,235,458 AKITA Non-Voting Shares (the "Share Maximum").

Pursuant to Section 611(c) of the TSX Company Manual, the number of AKITA Non-Voting Shares issuable under the Arrangement exceeds 25% of the AKITA Non-Voting Shares which are issued and outstanding, and as such, the TSX requires Akita shareholder approval for the issuance. AKITA has obtained that shareholder approval by obtaining written consent from Sentgraf Enterprises Ltd. ("Sentgraf"), who holds 86.3% of the Class B Common Shares of AKITA (the "AKITA Voting Shares").

Following the completion of the Arrangement, Sentgraf will continue to hold the same number and percentage of AKITA Voting Shares.

Today, Sentgraf sent written confirmation to the TSX indicating that they are familiar with the material terms and conditions of the Arrangement and approves of the issuance of up to 22,235,458 AKITA Non-Voting Shares pursuant to the Arrangement.

Following the completion of the Arrangement, on a fully diluted basis and taking into account the elections that have been made by Xtreme Shareholders prior to the election deadline provided for under the Arrangement, holders of AKITA Non-Voting Shares immediately following the completion of the Arrangement will hold approximately 16,291,877 AKITA Non-Voting Shares, representing approximately 43% of the then issued and outstanding AKITA Non-Voting Shares on the date the Arrangement becomes effective under the Act (the "Effective Date"), assuming that no Xtreme options or Xtreme restricted share units are converted into Xtreme Shares prior to the Effective Date). Taking into account the elections that have been made by Xtreme Shareholders prior to the election deadline  provided for under the Arrangement, the issuance of AKITA Non-Voting Shares pursuant to the Arrangement would result in a dilution of approximately 133% of existing AKITA Non-Voting Shares.

No insider of AKITA has any interest, direct or indirect, in the transactions contemplated by the Arrangement Agreement. The transactions contemplated by the Arrangement Agreement will not materially affect control of AKITA. Xtreme is an arm's-length party to AKITA and the Arrangement Agreement was negotiated at arm's length.

Closing of the Arrangement remains subject to closing conditions customary in transactions of this nature, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Arrangement is expected to occur in the third quarter of 2018.  Complete details of the terms of the transaction are set out in the arrangement agreement, which will be filed and available for viewing on SEDAR under each of AKITA and Xtreme's profiles at www.sedar.com.


AKITA is an Alberta corporation engaged in the contract drilling business in Western Canada, the North, and the Permian Basin. The Company was an early adopter of pad rig technology and currently enjoys a dominant market share in heavy oil operations, with pad rigs making up approximately one-half of its deep capacity fleet. AKITA has been a pioneer among drilling companies in forming mutually beneficial joint ventures with the First Nations, Inuit and Metis people living proximate to areas of concentrated oil and gas development. The Company recently celebrated its 25th anniversary as a public company and is listed on the Toronto Stock Exchange under the symbol AKT. More information about AKITA can be found at http://www.akita-drilling.com.


Xtreme Drilling Corp. ("XDC" on the Toronto Stock Exchange) designs, builds, and operates a fleet of high specification AC drilling rigs featuring leading-edge proprietary technology. Currently, Xtreme operates one service line - Drilling Services (XDR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in the United States. For more information about the Company, please visit http://www.xtremedrillingcorp.com.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the shares in any jurisdiction. The shares offered will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States or to a United States person, absent registration, or an applicable exemption therefrom.


All amounts are stated in Canadian dollars unless otherwise noted.


This press release contains certain forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "potential", "intend", "focus", "estimate", "expect", "may", "will", "could", "should", or similar words suggesting future outcomes.

More particularly, this press release contains statements concerning the proposed combination including the impact of the combination on AKITA and AKITA's plans, the timing and anticipated dates related to the satisfaction of all parties to the conditions to closing of the combination, the anticipated closing time of the combination and the effect and benefits of the combination..

The completion and timing of the combination are based on a number of assumptions, including regulatory approvals for the combination and the satisfaction of other closing conditions in accordance with the terms of the Arrangement Agreement. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by AKITA and Xtreme relating to the successful completion of the combination, prevailing commodity prices, the demand for drilling rigs and other oilfield services and the continued availability of capital and skilled personnel. Although AKITA and Xtreme consider these assumptions to be reasonable based on information currently available, undue reliance should not be placed on the forward-looking statements because AKITA and Xtreme can give no assurance that they may prove to be correct.

Completion of the combination could be delayed if parties are unable to obtain the necessary regulatory and stock exchange approvals on the timeline planned. The combination will not be completed if all of these approvals are not obtained or some other condition of closing is not satisfied. Accordingly, there is a risk that the combination will not be completed within the anticipated time or at all.

By their very nature, forward-looking statements are subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and AKITA and Xtreme do not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

SOURCE AKITA Drilling Ltd.