Groundstar Resources Limited Signs LOI to Acquire Oil and Gas Assets and Complete Reverse Take-Over
13 July 2017 - 5:52AM
Groundstar Resources Limited (TSX-V:GSA)
(“
Groundstar” or the “
Company”)
is pleased to announce that it has signed a letter of intent (the
“
LOI”) to acquire certain oil and gas assets
located in Rainbow Lake and Farrell, Alberta (the
“
Assets”) from a private Alberta company
(“
PrivateCo”). The proposed transaction is an
arm’s length transaction and constitutes a “reverse take-over” of
Groundstar under Policy 5.2 – Changes of Business and Reverse
Takeovers of the TSX Venture Exchange Inc. (the
“
Exchange”).
PrivateCo is a privately-held junior oil and gas
company with operations in Alberta and Saskatchewan. It focuses on
the acquisition, development and exploitation of existing oil and
gas assets through re-drilling and re-entry opportunities.
The purchase price for the Assets is $3,070,092,
which Groundstar intends to satisfy by issuing to PrivateCo
153,504,596 common shares at a deemed price of $0.02 per common
share. The LOI also contemplates a non-brokered private placement
of up to 25,000,000 common shares of Groundstar at a price of $0.02
per common share for gross proceeds of up to $500,000. Groundstar
currently has 44,626,149 common shares outstanding. Groundstar will
be making an application to the Exchange for an exemption from the
requirement to issue shares at a price of no less than $0.05 in
connection with this financing.
The LOI further contemplates that all of the
directors of Groundstar except for Stephen Hughes would resign upon
the closing of the transaction and be replaced by nominees of
PrivateCo. In addition, the President and Chief Executive Officer
of PrivateCo would become the President and Chief Executive Officer
of Groundstar and Chairman of the Board of Directors. Nominees of
PrivateCo would also become the Chief Operating Officer and Chief
Financial Officer and Stephen Hughes would become Corporate
Secretary. All of the current members of the Groundstar management
team would resign upon the completion of the transaction.
Groundstar and PrivateCo expect to close the
proposed transaction on or about September 29, 2017. Closing is
subject to certain conditions, including but not limited to,
Exchange acceptance and the approval of the shareholders of
Groundstar and PrivateCo.
Stock Exchange Matters
Groundstar will issue, in due course, a
comprehensive press release in accordance with the requirements of
Policy 5.2 – Changes of Business and Reverse Takeovers of the
Exchange.
Completion of the proposed transaction is
subject to a number of conditions, including but not limited to,
Exchange acceptance and if applicable, disinterested shareholder
approval. Where applicable, the transaction cannot close until the
required shareholder approval is obtained. There can be no
assurance that the proposed transaction will be completed as
proposed or at all. Investors are cautioned that, except as
disclosed in the management information circular to be prepared in
connection with the proposed transaction, any information released
or received with respect to the transaction may not be accurate or
complete and should not be relied upon. Trading in the common
shares of Groundstar should be considered highly speculative.
The Exchange has in no way passed upon the
merits of the proposed transaction and has neither approved nor
disapproved the contents of this news release.
Forward-Looking Information
This news release contains “forward-looking
information” within the meaning of Canadian securities legislation.
Forward-looking information generally refers to information about
an issuer’s business, capital, or operations that is prospective in
nature, and includes future-oriented financial information about
the issuer’s prospective financial performance or financial
position. The forward-looking information in this news release
includes disclosure about the terms of the proposed transaction and
its anticipated closing date, as well as the intention of the
Company to make an application for an exemption from the Exchange
pricing requirements for the financing.
Groundstar made certain material assumptions
relating to prevailing market conditions, commodity prices,
Exchange acceptance, shareholder approval and the availability of
capital to develop the forward-looking information in this news
release.
Actual results may vary from the forward-looking
information in this news release due to certain material risk
factors. These risk factors include adverse market conditions, the
inability of Groundstar or PrivateCo to complete the proposed
transaction on the terms disclosed in this news release, or at all,
the inability of Groundstar to obtain Exchange acceptance and/or
the approval of its or PrivateCo’s shareholders and risks
associated with the oil and gas industry in general. More
information about certain of these risks is disclosed in the
documents that Groundstar files from time to time with Canadian
securities regulatory authorities, which are available under
Groundstar’s profile on SEDAR at www.sedar.com.
Groundstar assumes no obligation to update or
revise the forward-looking information in this news release, unless
it is required to do so under Canadian securities legislation.
Contact Information
Groundstar Resources LimitedSuite 2300, 144 4th Avenue
SWCalgary, Alberta T2P 3N4www.groundstarresources.com
Stephen Hughes587-580-9344shughes@groundstarresources.com
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