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Velvet Energy strikes deal to buy remainder of Iron Bridge

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Velvet Energy strikes deal to buy remainder of Iron Bridge

Oil and gas producer Iron Bridge Resources Inc. agreed to combine with a subsidiary of fellow Calgary, Alberta-based developer Velvet Energy Ltd., subject to Iron Bridge shareholder approval

The amalgamation agreement is part of Velvet Energy's plans to acquire the rest of the Iron Bridge shares that were not bought under a previous Velvet Energy offer to purchase all of Iron Bridge's shares. That offer expired Oct. 5.

The amalgamation agreement still needs to be approved by two-thirds of the votes cast by "minority" Iron Bridge shareholders. Velvet Energy currently holds about 87.7% of issued and outstanding Iron Bridge shares, which are classified as minority shares for voting purposes. Velvet Energy has said it plans to cast its votes in favor of combining the companies.

Iron Bridge scheduled a special shareholder meeting for Nov. 6, and the amalgamation is expected to be approved and take effect that day, according to an Oct. 11 news release from the companies.

Under the agreement, the combined Velvet Acquisition Co. Ltd. and Iron Bridge Resources would be a subsidiary of Velvet Energy. Velvet Energy has offered 84.5 Canadian cents per share for the issued and outstanding common shares of Iron Bridge. That is the same value that Velvet Energy proposed under the expired offer, which was raised from a previous offer of 75 Canadian cents per share after Iron Bridge recommended its shareholders reject the offer.

Velvet Energy on May 22 first announced the offer to buy all of the outstanding common shares of Iron Bridge through a C$120 million all-cash deal, a move that Iron Bridge responded to by saying that the offer "significantly undervalues" the company.