Northern Frontier Corp. Announces Closing of $18.3 million Offering of Subscription Receipts

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CALGARY, Sept. 12, 2013 /CNW/ - Northern Frontier Corp. (TSX-V: FFF.P) (the "Corporation" or "Northern Frontier") is pleased to announce that it has closed its previously announced offering (the "Offering") of subscription receipts ("Subscription Receipts") for aggregate gross proceeds of $18.3 million. The Corporation issued 5,231,950 Subscription Receipts, including 89,093 Subscription Receipts on the partial exercise of the Over-Allotment Option (as defined below) at a price of $3.50 per Subscription Receipt. Each Subscription Receipt entitles the holder to receive, on closing of the Acquisition (as defined below), without payment of additional consideration, one common share of the Corporation ("Common Share") and one-half of one common share purchase warrant. Each full purchase warrant ("Warrant") will entitle the holder to acquire one Common Share at a price of $4.00 per share for a period of 18 months following the closing date of the Acquisition. The final prospectus, which qualifies the distribution of the Subscription Receipts, is available at www.sedar.com under the Corporation's issuer profile.

The Corporation engaged GMP Securities L.P. and Raymond James Ltd. as co-lead agents, together with Acumen Capital Finance Partners Limited and Cormark Securities Inc. (the "Agents") to act as agents for the Offering and has also granted the Agents an option (the "Over-Allotment Option") to purchase up to such number of additional Subscription Receipts and/or Common Shares and Warrants (as applicable, depending on when exercised) as is equal to 15% of the number of Subscription Receipts sold under the Offering to cover over-allotments, if any, and for market stabilization purposes. The unexercised portion of the Over-Allotment Option is exercisable, in whole or in part, for a period of 30 days after the closing of the Offering.

The net proceeds of the Offering will be used by the Corporation to fund a portion of the purchase price of the Acquisition, through its wholly-owned subsidiary, 1739365 Alberta Ltd., of all of the issued and outstanding shares of 794522 Alberta Ltd. ("Numberco"), which carries on the business of the NEC Group (as defined below), and certain assets held by CRC Open Camp & Catering Ltd. (collectively, the "CRC Carve-out Assets") that are used in the NEC Group business (together, the "Acquisition").

Numberco, along with its wholly-owned subsidiary, NEC Contractors (2012) Inc. ("NEC", and collectively with Numberco, the "NEC Group") provides sustaining capital services to large industrial energy customers in the steam assisted gravity drainage ("SAGD") region of northeastern Alberta.  The NEC Group's head office and shop is located in Lac La Biche, Alberta and its field location is in Conklin, Alberta which is central to the substantial industrial energy production developments in the vicinity.  The business focuses on the ongoing demand for services to support operating facilities, sustaining capital expenditures to maintain production levels of those facilities and the development of new production capacity.

Credit Facilities

In connection with the Acquisition, the Corporation has entered into a term sheet with a Canadian chartered bank with respect to a senior credit facility (the "Credit Facility").  The Corporation expects to establish the Credit Facility on or prior to September 30, 2013 and utilize $21.5 million of the Credit Facility to fund a portion of the purchase price of the Acquisition. The Credit Facility is expected to consist of: (i) a $15.0 million committed revolving extendible credit facility; (ii) a $25.0 million committed revolving reducing extendible term loan; (iii) a $2.0 million committed term loan; (iv) a treasury risk management facility subject to a limit of $1.0 million; and (v) a corporate MasterCard for up to $0.5 million.  The term sheet with respect to the Credit Facility contains customary conditions precedent to the lender entering into the Credit Facility.

In addition, the Corporation has entered into a term sheet with a Canadian financial institution with respect to a $12.0 million 5-year term subordinated credit facility (the "Subordinated Facility", collectively with the Credit Facility, the "Credit Facilities") which is expected to be available in a single draw on or prior to September 30, 2012 and will be used to fund a portion of the purchase price of the Acquisition. The term sheet with respect to the Subordinated Facility contains customary conditions precedent to the lender entering into the Subordinated Facility.

Any net proceeds raised by the Corporation in connection with the Over-Allotment Option above the $18.0 million Offering may be used by the Corporation to fund a larger portion of the purchase price of the Acquisition.  In that event, the Corporation would reduce, at their discretion, the amounts drawn under the Credit Facilities in order to fund a portion of the purchase price.

Regulatory Matters

Trading in the Common Shares will remain halted until such time as the TSX Venture Exchange (the "Exchange") has received the documentation required by Policy 2.4 - Capital Pool Companies.

Completion of the Acquisition is subject to a number of conditions including, but not limited to, final Exchange acceptance and, if applicable pursuant to the requirements of the Exchange, majority of the minority shareholder approval. There can be no assurance that the Acquisition will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the final prospectus of the Corporation, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the Offering or the Acquisition and has neither approved nor disapproved the contents of this news release.

Forward Looking Information

This news release includes certain statements that constitute forward-looking statements under applicable securities legislation. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology. These statements are made as of the date of this news release and the Corporation does not undertake to publicly update these forward-looking statements except in accordance with applicable securities laws. These forward-looking statements include, among other things:

• completion of the Acquisition and the Offering;
  
  
• anticipated use of net proceeds from the Offering; and
  
  
• the terms and availability of the Credit Facilities, and the amounts drawn under the Credit Facilities;

These statements are only predictions and are based on current expectations, estimates, projections and assumptions, which the Corporation believes are reasonable but which may prove to be incorrect and therefore such forward-looking statements should not be unduly relied upon. In making such forward-looking statements, assumptions have been made regarding, the receipt of applicable regulatory and third party approvals, the availability of funds pursuant to the Credit Facilities and the terms applicable thereto. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future outcome and actual developments may differ materially from those in the forward-looking statements.

By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. These risks and uncertainties include: the possibility that the parties will not proceed with the Acquisition and the Offering, that the ultimate terms of the Acquisition and the Offering will differ from those that are currently contemplated, that the Acquisition and Offering will not be successfully completed for any reason (including the failure to obtain the required approvals from regulatory authorities or third parties) and regulatory changes. For more information on the Corporation, investors should review the Corporation's continuous disclosure filings that are available at www.sedar.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Northern Frontier Corp.

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