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True Energy Trust Board of Directors response to unsolicited restructuring alternative presented by Lawrence Asset Management Inc.

View All News Releases March 13, 2007


    CALGARY, March 13 /CNW/ - The Board of Directors of True Energy Trust
("True" or the "Trust") is issuing this press release in response to an
unsolicited reorganization alternative proposal received from Lawrence Asset
Management Inc. ("LAMI") on March 7, 2007 and press released on March 8, 2007.
LAMI is a Toronto based privately owned asset management and hedge fund
company. LAMI has announced that it plans to vote against the proposed
reorganization of True (the "True Reorganization") that is to be considered by
True securityholders at an annual and special meeting of unitholders scheduled
for March 30, 2007 and as fully detailed in the management information
circular of True dated March 2, 2007 (the "Information Circular").
    The Board of Directors (the "Board") of True, after meeting with LAMI,
wish to provide the following analysis for clarification for True unitholders,
and reaffirm the Board's previous recommendation that the True Reorganization
is in the best interest of all unitholders and will maximize value for
unitholders over time.
    The Board of True carefully considered numerous alternatives available to
True including a reorganization concept similar to that which is proposed by
LAMI, prior to making its recommendation to convert into a growth oriented,
dividend paying intermediate exploration and production company. The Board
determined that the proposed True Reorganization represented the most viable
strategic alternative for the Trust respective of whether the Federal
Government's proposed tax policy concerning trusts is legislated in its
current or some other form. The Board carefully considered the LAMI proposal
as compared to, among other things, concepts previously analyzed by the Board
and, with the benefit of financial and legal advice, concluded that the
differences from concepts previously analyzed did not alter the Board's view
that LAMI's proposal is not compelling as compared to the Trust Reorganization
recommended by the Board to True securityholders.
    In order to understand the True Board's decision that the LAMI concept is
not in the best interest of True unitholders, it is important to fully
understand the suggested restructuring put forth by LAMI and discussed with
the Board on March 12, 2007 and the assumptions and conditions that were
omitted from LAMI's news release of last week.

    LAMI's Restructuring Proposal-   True's assets would be split between the Trust operating in a 'blow
        down' mode and a newly formed exploration company ("Exploreco")
        established through the spin-out of 1,000 boe/d of current production
        and 500,000 acres of the Trust's best growth prospects.
    -   The Trust's capital program would be cut dramatically after 2007 with
        only $27 million of capital expenditures in 2008 and $7 million of
        capital expenditures in 2009 resulting in increasingly declining
        monthly production volumes and cash flows.
    -   LAMI presented its view of an expected value range for its
        restructuring plan based on a number of unsubstantiated market
    -   LAMI's plan includes a highly conditional $40 million rights

    Key Shortcomings of LAMI's Restructuring Proposal

    -   LAMI's proposed $40 million rights offering is highly conditional and
        self-serving. Under the rights offering equity would be issued at a
        5% discount to the prevailing market price and a 2% backstop fee
        would be payable 100% to LAMI, in cash, at closing. LAMI would also
        require a minimum of $10 million or 25% of the rights offering issue
        be set aside for LAMI's accounts, which is far in excess of their
        pro-rata ownership of True. LAMI would not allow the rights to trade
        which may not be permitted by Canadian regulatory authorities, and
        therefore would not provide liquidity for existing unitholders of
        True. In addition, as the rights might not be permitted to be
        exercised by unitholders in the US (currently approximately 31%), and
        if so, the percentage of the offering acquired by LAMI under its
        backstop would be further significantly increased.
    -   Under LAMI's proposal, after 2007 the Exploreco would be highly
        dependent on the capital markets and potentially dilutive equity
        issues to fund True's expanded capital expenditure program whereas
        under the True Reorganization, True plans to fund its capital program
        through internally generated cash flows.
    -   LAMI's proposal does not consider the costs and availability of
        highly skilled management, staff, board composition, regulatory
        compliance and administrative costs necessary to operate two public
        entities rather than one.
    -   The spin-out of key growth assets to the Exploreco would result in a
        significant reduction in the Trust's current net asset value which is
        not reflected in LAMI's proposal.
    -   The 'blow down trust' would be left obligated to repay 100% of the
        Trust's debt ($280.9 million at December 31, 2006) on a declining
        cash flow base.
    -   LAMI's proposal would add a new debt instrument, being a Production
        Pre Payment ("PPP"), which would be financed at an undisclosed cost
        and terms to be provided by a lender that LAMI states in its proposal
        it has initiated discussions with. LAMI advised that the proposed
        lenders have done no PPP's in the Canadian energy sector. LAMI
        provides no certainty on the PPP structure.
    -   The hedging strategies, including the PPP structure, LAMI has
        proposed would require significant structuring, are conditional on
        due diligence, have no assurance of being completed and present
        current True unitholders with undue time, completion and pricing
    -   LAMI's expected value range resulting from the restructuring plan is
        not reasonable.
        - A key assumption in LAMI's expected value range is based on the
          declining 'blow down trust' trading at a 12% - 15% yield applying a
          comparison of the 'blow down trust' to business trusts and real
          estate investment trusts, among others, and ignoring the declining
          cash flows and declining net asset value associated with a 'blow
          down trust' model.
        - LAMI's value range implies the 'blow down trust' would trade at a
          significant premium to its net asset value, whereas oil and gas
          trusts (not operating in blow-down mode) are currently trading at
          or around their net asset value.
        - A 'blow down trust' would not be expected to trade at a premium to
          its after-tax net asset value.
    -   LAMI's proposal also involves extensive hedging strategies and
        complex forward sales of future production in order to manage the
        debt in the 'blow down trust', all of which are strategies currently
        available to True and which would be available to True following the
        True Reorganization but are not required in order for True to
        successfully execute its business plan.Board Continues to Recommend the Current True Reorganization

    LAMI's suggested reorganization alternative is based on flawed
assumptions, unsustainable cash flow forecasts, an incorrect valuation
methodology, a number of conditions which result in ownership dilution for
current True unitholders in prime future growth properties of True, and has
significant risks to completion.
    The Board of True is unanimous in its commitment to enhance unitholder
value by way of the True Reorganization which the Board of Directors believe
will provide a superior value to True unitholders over time.
    Tristone Capital Inc. and National Bank Financial Inc. have been engaged
as financial advisors to the Board in connection with the True Reorganization
and National Bank Financial Inc. has provided to the Board its fairness
opinion, a copy of which is included in the Information Circular, that the
consideration to be received by True securityholders pursuant to the True
Reorganization is fair, from a financial point of view, to True
    The Board of True continues to support and recommend voting in favour of
the current reorganization plan as detailed in the Information Circular. The
annual and special meeting at which the vote is scheduled to take place is
March 30, 2007 at 10 AM (Calgary time). If you have any questions regarding
the reorganization or how to fill out your proxy, please feel free to contact
Kingsdale Shareholder Services Inc. at 1-866-639-8089 or 1-416-867-2272 who
would be pleased to help.
    We encourage you to view our current corporate presentation which is
available on our website at

    Forward Looking Statements: Certain information set forth in this news
release, including management's assessment of True's future plans and
operations, management and the Board's assessment of the LAMI's proposal and
the True Reorganization and the effects thereof, and timing of matters
relating to the approval of the True Reorganization and implementation
thereof, may contain forward-looking statement, and necessarily involves risks
and uncertainties, certain of which are beyond True's control including,
without limitation, risks as to whether securityholders and all required
regulatory and other approvals related to completion of the True
Reorganization will be obtained and the timing thereof, risks associated with
oil and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets and other economic and industry conditions,
volatility of commodity prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other producers, inability to
retain drilling services, incorrect assessment of value of acquisitions and
failure to realize the benefits therefrom, delays resulting from or inability
to obtain required regulatory approvals, the lack of availability of qualified
personnel or management, stock market volatility and ability to access
sufficient capital from internal and external sources, economic or industry
condition changes. Actual results, performance or achievements could differ
materially from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurance can be given that any events
anticipated by the forward-looking statements will transpire or occur, or if
any of them do so, what benefits that True or its securityholders will derive
therefrom. Additional information on these and other factors that could affect
True are included in reports on file with Canadian securities regulatory
authorities and may be accessed through the SEDAR website (, at
True's website ( Furthermore, the forward-looking
statements contained in this news release are made as of the date of this news
release, and True 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 may be expressly
required by applicable securities law.

    Boe Disclosure: Barrels of oil equivalent ("Boe") may be misleading,
particularly if used in isolation. A BOE conversion ratio has been calculated
using a conversion rate of six thousand cubic feet of natural gas to one
barrel and is based on an energy equivalent conversion method application at
the burner tip and does not represent an economic value equivalency at the

    %SEDAR: 00021401E

Bellatrix Exploration Ltd.
1920, 800 5th Avenue SW
Calgary, Alberta T2P 3T6
Main: 403-266-8670
Fax: 403-264-8163
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