Groundstar Resources Limited (TSXV:GSA)
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6 Months : From Apr 2017 to Oct 2017
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.
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.
Groundstar Resources LimitedSuite 2300, 144 4th Avenue SWCalgary, Alberta T2P 3N4www.groundstarresources.com