CALGARY, ALBERTA--(Marketwired - May 12, 2017) -


WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or the "Company") announces that it has entered into a definitive agreement (the "Arrangement Agreement") with Crest Energy International LLC ("Crest") and its wholly owned affiliate WZG Acquisition Ltd. ("Crest AcquireCo") to take the Company private. Pursuant to the Arrangement Agreement, Crest AcquireCo will provide the Company with the funds necessary in order for the Corporation to acquire all of the outstanding common shares ("Common Shares") and preferred shares of WesternZagros for CAD$0.28 per share in cash, other than one Common Share held by Crest which will be acquired by Crest AcquireCo for CAD $0.28 and result in Crest AcquireCo owning 100 percent of the Company. The transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").

The transaction offers holders of Common Shares ("Shareholders") full liquidity at a substantial premium to current and recent trading prices. The consideration payable pursuant to the Arrangement represents a 70 percent premium to the most recent closing price of the Common Shares on the TSX Venture Exchange ("TSXV"), a 65 percent premium to the 20 day volume weighted average trading price of the Common Shares on the TSXV and represents an implied value of approximately CAD$225 million for WesternZagros.

In addition, WesternZagros and Crest AcquireCo have entered into a bridge loan agreement (the "Bridge Loan Agreement") pursuant to which Crest AcquireCo has advanced a US$30 million short-term loan to WesternZagros (the "Loan") to address the Company's immediate financing requirements.

"We are pleased to present this transaction to our shareholders," said Simon Hatfield, CEO of WesternZagros. "We have been engaged in an extensive search for financing and strategic alternatives for 18 months, hampered by the challenging capital markets for oil and gas investments given the low commodity price environment. We are delighted to conclude this search with the receipt of a proposal that provides a strong premium to the current share price and a fair valuation given the future risks of developing our assets over the next several years."

WesternZagros Chairman, David Boone commented, "We are grateful to our existing shareholders for their patience through this long process. The board of directors unanimously supports the proposed Arrangement. Our market search for alternatives made it clear that this transaction with Crest is the best alternative available to WesternZagros, as supported by a fairness opinion from TD Securities and we will be encouraging shareholders to vote in favour of it."

The Arrangement

Completion of the Arrangement is subject to approval by at least 66 2/3 percent of the votes cast at an annual and special meeting of the Shareholders that is expected to be held on or about July 5, 2017 (the "Meeting") and, in light of Crest's current ownership of approximately 19.9 percent of the outstanding Common Shares, approval by a majority of the votes cast by Shareholders, after excluding the votes cast by Crest and any other persons whose votes may not be included in determining minority approval of a business combination pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is not required to obtain a formal valuation for the Arrangement under MI 61-101 as it qualifies for the exemption to the formal valuation requirement set out in Section 4.4(1)(a) of MI 61-101, since no securities of the Company are listed on the "specified markets" set forth in MI 61-101. Pursuant to the Arrangement Agreement, the transaction is also subject to the approval of the Court of Queen's Bench of Alberta, applicable regulatory approvals and the satisfaction of certain closing conditions customary in transactions of this nature.

The Arrangement Agreement contains customary deal protection provisions which, among other matters, restrict WesternZagros from soliciting, assisting, initiating, encouraging or in any way knowingly facilitating any proposals or offers concerning alternative acquisition proposals. However, the Arrangement Agreement permits WesternZagros to respond to unsolicited written acquisition proposals under certain circumstances which include where such acquisition proposal constitutes or would reasonably be expected to lead to a "superior proposal" (as defined in the Arrangement Agreement). Crest AcquireCo has the right to match any competing proposal for WesternZagros in the event a proposal is made which the Board has determined to be superior. WesternZagros has agreed to pay a termination fee of $7.5 million in certain circumstances including where the Arrangement Agreement is terminated due to a superior proposal. If the Arrangement Agreement is terminated under certain other circumstances, including breach or non-compliance by Crest or Crest AcquireCo, a reverse break fee of $7.5 million is payable to WesternZagros.

A copy of the Arrangement Agreement will be filed on the Company's SEDAR profile and will be available for viewing at The terms and conditions of the Arrangement will also be summarized in WesternZagros's information circular, which is expected to be filed and mailed to Shareholders in June 2017. The Arrangement is expected to close in early July 2017. Following closing of the Arrangement, the Common Shares will be de-listed from the TSXV.

Recommendation of the WesternZagros Board of Directors

As previously announced, the board of directors of WesternZagros (the "Board") began a review of all financing and strategic alternatives available to the Company in December 2015 and hired TD Securities Inc. to act as its exclusive financial advisor in connection with such review. Subsequently, the Board formed a committee comprised of independent directors (the "Special Committee") to, among other things, review and evaluate the terms of the Arrangement proposal from Crest, review and consider alternatives to the Arrangement, and to negotiate the terms and conditions of the Arrangement and make a recommendation to the Board in respect of the Arrangement and other related matters, including the Loan. TD Securities Inc., provided an opinion (the "Fairness Opinion") that, as of the date of the Fairness Opinion and subject to the assumptions and limitations stated therein, the consideration to be received by Shareholders (other than Crest) pursuant to the Arrangement is fair, from a financial point of view, to such Shareholders. Following an extensive review and analysis of the Arrangement and related transactions and the consideration of other available alternatives, the Fairness Opinion and the recommendation of the Special Committee, the Board, after consulting with its financial and legal advisors, has unanimously determined that the Arrangement is fair to the Shareholders (other than Crest) and that the Arrangement and entry into the Arrangement Agreement are in the best interests of WesternZagros and recommends that Shareholders vote in favour of the Arrangement at the Meeting. All of the senior officers and directors of WesternZagros, holding 2.6 percent of the outstanding Common Shares outstanding have entered into customary support agreements, pursuant to which, among other things, they have agreed to vote in favour of the Arrangement.

The Bridge Loan Agreement

The Loan bears interest at a rate of 14 percent per annum, with interest paid in kind to the outstanding principal and accrued quarterly in arrears. The maturity date of the Loan is June 30, 2018, subject to certain prepayment terms, including but not limited to a repayment obligation where the Arrangement Agreement is terminated due to a superior proposal. The Loan is secured by 35 percent of the outstanding shares of WesternZagros's operating subsidiary. In certain circumstances where the reverse break fee is payable to WesternZagros, the principal amount available under the Loan may be increased by US$10 million with additional security to be provided in outstanding shares of WesternZagros's operating subsidiary.

The Loan is a "related party transaction" for the purposes of MI 61-101 since Crest is a "related party" of the Company. However, the Company was not required to obtain minority approval of the Loan under MI 61-101 as it qualifies for the exemption to the minority approval requirement set out in Section 5.7(1)(f) of MI 61-101. Specifically, the Loan is being made available to the Company by Crest AcquireCo on reasonable commercial terms that are not less advantageous to the Company than if the Loan were obtained from a person dealing at arm's length with the Company, and the Loan is not (A) convertible, directly or indirectly, into equity or voting securities of the Company or a subsidiary entity of the Company, or otherwise participating in nature, or (B) repayable as to principal or interest, directly or indirectly, in equity or voting securities of the Company or a subsidiary entity of the Company.

In connection with the entering into of the Arrangement Agreement and the Bridge Loan Agreement, WesternZagros and Crest have entered into an agreement terminating the prior loan agreement between the parties dated August 14, 2014.

Advisors and Legal Counsel

TD Securities Inc. is acting as exclusive financial advisor and Torys LLP is acting as legal counsel to WesternZagros. Norton Rose Fulbright Canada LLP is acting as legal counsel to the Special Committee.

Dentons Canada LLP is acting as legal counsel to Crest.

About Crest Energy International LLC

Crest is an affiliate of Crest Investment Company, a Houston, Texas-based principal investment company. Crest has a long history of investing in oil and gas and midstream assets, including assets in the Middle East. The company has additional expertize and investments in technology/ social media, real estate, and the manufacturing sectors.

About WesternZagros Resources Ltd.

WesternZagros is an international natural resources company focused on acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. WesternZagros, through its wholly-owned subsidiaries, holds a 40 percent working interest in two Production Sharing Contracts with the Kurdistan Regional Government in the Kurdistan Region of Iraq. WesternZagros's shares trade in Canada on the TSX Venture Exchange under the symbol "WZR".


Reader Advisory

Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Canadian securities laws. These forward-looking statements contain statements of intent, belief or current expectations of WesternZagros. Forward-looking information is often, but not always identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook.

The forward-looking statements included in this press release, including statements regarding the Arrangement, the receipt of necessary approvals, the shareholder vote and the anticipated timing for mailing the information circular, holding the Meeting and completing the Arrangement, are not guarantees of future results and involve risks and uncertainties that may cause actual results to differ materially from the potential results discussed in the forward-looking statements.

In respect of the forward-looking statements and information concerning the completion of the Arrangement and the anticipated timing for completion of the Arrangement, WesternZagros has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail meeting materials, the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, shareholder, TSX Venture Exchange and other third party approvals and the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials; inability to secure necessary shareholder, regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release concerning these times.

Risks and uncertainties that may cause such differences include but are not limited to: the risk that the Arrangement may not be completed on a timely basis, if at all; the conditions to the consummation of the Arrangement may not be satisfied; the risk that the Arrangement may involve unexpected costs, liabilities or delays; the possibility that legal proceedings may be instituted against WesternZagros and/or others relating to the Arrangement and the outcome of such proceedings; the possible occurrence of an event, change or other circumstance that could result in termination of the Arrangement; risks relating to the failure to obtain necessary shareholder and court approval; other risks inherent in the oil and gas industry. Failure to obtain the requisite approvals, or the failure of the parties to otherwise satisfy the conditions to or complete the Arrangement, may result in the Arrangement not being completed on the proposed terms, or at all. In addition, if the Arrangement is not completed, the announcement of the Arrangement and the dedication of substantial resources of WesternZagros to the completion of the Arrangement could have a material adverse impact on WesternZagros's share price, its current business relationships and on the current and future operations, financial condition and prospects of WesternZagros. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect WesternZagros's operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (

The forward-looking statements in this press release are made as of the date it was issued and WesternZagros does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that outcomes implied by forward-looking statements will not be achieved. WesternZagros cautions readers not to place undue reliance on these statements.

Contact Information:

WesternZagros Resources Ltd.
Tony Kraljic
Senior VP Finance
(403) 693-7011

WesternZagros Resources Ltd.
Lisa Harriman
Manager of Corporate Communications and Administration
(403) 693-7017