NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. WIRE SERVICES
Blacksteel Energy Inc. (TSX VENTURE:BEY) ("Blacksteel") is pleased to announce
that it has entered into a letter of intent dated May 16, 2014 (the "Letter
Agreement") to acquire Alcan Fluid Disposal Ltd. ("Alcan"), Peace Drilling and
Research Ltd. ("Peace Drilling") and Integrated Resource Technologies Ltd.
("Integrated") (the "Proposed Transaction"). The Transaction is considered to be
a reverse take-over under the policies of the TSX Venture Exchange Inc.
("TSXV"). Completion of the Transaction will be subject to customary closing
conditions, including regulatory and shareholder approval.
The Proposed Transaction
Blacksteel is acquiring all of the issued and outstanding shares of Alcan, Peace
Drilling and Integrated (collectively referred to herein as the "TargetCos") for
an aggregate purchase price of $8,486,645, subject to working capital
adjustments at closing. The consideration for the Proposed Transaction consists
of the issuance of 23,750,000 common shares of Blacksteel (the "Acquisition
Shares") at a deemed price of $0.20 per share, cash payment of $1,476,645 and
the assumption of approximately $2,260,000 in debt. The purchase price is
allocated among the TargetCos as follows:
Alcan: Purchase price of $3,850,000 satisfied through the issuance of 14,250,000
Acquisition Shares and a cash payment of $1,000,000.
Peace Drilling: Purchase price of $1,176,645 satisfied through the issuance of
3,500,000 Acquisition Shares and a cash payment of $476,645; and
Integrated: Purchase price of $3,460,000 satisfied through the issuance of
6,000,000 Acquisition Shares and the assumption of secured debt of approximately
$2,260,000.
The acquisitions of the TargetCos are arm's length transactions. Alcan and Peace
Drilling are both British Columbia incorporated companies and Integrated is an
Alberta incorporated company. The principal shareholders of Alcan are Altec
Inspection Holdings Ltd. ("AIH"), Karen Baker and Ron Baker, the sole
shareholder of Peace Drilling is AIH and the sole shareholder of Integrated is
Ken Watson. AIH is a British Columbia company owned by Baker Springing Trust,
Karen Baker and Ron Baker. Karen Baker and Ron Baker are trustees of the Baker
Springing Trust.
In addition, upon completion of the Proposed Transaction, Shift Capital Inc., a
company wholly owned by Greg McLean, will receive a financial advisory fee of
300,000 common shares of Blacksteel (the "Blacksteel Shares") at a deemed price
of $0.20 per share.
Trading in the Blacksteel Shares may remain halted pending review of the
Proposed Transaction by the TSXV. There can be no assurance that trading in
Blacksteel Shares will resume prior to completion of the Proposed Transaction.
Private Placement
In conjunction with the Transaction, Blacksteel is proposing to complete a
brokered private placement of subscription receipts (the "Private Placement")
for gross proceeds of up to $15,000,000 at a price to be determined in the
context of the market. The net proceeds of the Private Placement will be used to
fund the cash component of the Proposed Transaction, acquisition of capital
assets and general corporate purposes. Each subscription receipt (a
"Subscription Receipt") will entitle the holder to acquire, for no additional
consideration, one Blacksteel Share. It is expected that the gross proceeds of
the Private Placement will be held in escrow pending delivery by Blacksteel of a
certificate to the effect that all conditions (other than payment of the
purchase price) necessary to complete the Proposed Transaction have been
completed. Further details on the Private Placement will be provided once
Blacksteel has entered into an engagement letter with an investment dealer.
Target Companies and Financial Information
The TargetCos are focused on waste management, environmental services and
geotechnical drilling in northeastern British Columbia and northwestern Alberta.
Alcan Fluid Disposal Ltd. provides waste water processing, disposal facilities
and onsite water treatment. Peace Drilling and Research Ltd. is involved in
geotechnical and coring services along with soil stabilization and Integrated
Resource Technologies Ltd. focuses on remediation and reclamation services.
The most recent unaudited management prepared financial information for the
TargetCos is set out below:
Peace Drilling - March 31, 2014 year end
Current Assets $ 247,674
Fixed Assets $ 115,922
Total Assets $ 363,596
Current Liabilities $ 79,375
Long term Liabilities $ 626,380
Total Liabilities $ 705,755
Revenue $ 625,873
Expenses $ 556,757
Net Income $ 69,116
Integrated - March 31, 2014 year end
Current Assets $ 7,464
Fixed Assets $ 65,725
Total Assets $ 73,189
Current Liabilities $ 7,270
Long term Liabilities $ 3,294,620
Total Liabilities $ 3,301,890
Revenue $ 139,000
Expenses $ 190,186
Net Ordinary Income (Loss) $ (51,186)
Net Other Income $ 100,495
Net Income $ 49,309
Alcan - March 18, 2014 (7 1/2 months)
Current Assets $ 297,743
Fixed Assets $ 340,899
Total Assets $ 638,643
Current Liabilities $ 247,440
Long term Liabilities $ 1,427,416
Total Liabilities $ 1,682,817
Revenue $ Nil
Expenses $ 37,449
Net Income (Loss) $ (37,449)
Resulting Issuer
Blacksteel currently has 26,918,016 Blacksteel Shares outstanding. Upon
completion of the Proposed Transaction, it is expected that the resulting entity
(the "Resulting Issuer") will have 50,968,016 common shares issued and
outstanding, not including any Blacksteel Shares that may be issued upon
completion of the Private Placement. The Resulting Issuer will be considered an
industrial issuer under the policies of the TSXV.
The directors and officers of the Resulting Issuer are expected to be as follows:
Ken Watson, President, Chief Executive Officer and Director
Mr. Watson has 29 years of experience providing environmental services to the
oil and gas and other industries, including, but not limited to: liquid
treatment and processing; remediation of impacted soils including train
derailment clean-up; operation of municipal landfills and rural transfer
stations; negotiations with First Nations, government agencies and energy
producers relevant to permitting hazardous treatment facilities and secure
landfill sites; and environmental and geotechnical drilling.
He is a Co-Founder and President, Chief Executive Officer and Director of
Integrated Resource Technologies Ltd. and President and a Director of Peace
Drilling & Research Ltd. Mr. Watson also co-founded Complete Environmental Inc.
("Complete"), which purchased Babkirk Land Services Inc. in 2009. He was a key
player in Complete obtaining the operational permit for a secure hazardous
landfill and hazardous treatment facility. Complete was sold in 2011 to Tervita
Corporation.
Mr. Watson's previous work experience also includes Field Superintendent for
Oilfield Maintenance for Wesden Oilfield Services from 1989-1992 and Special
Projects Manager with Central Treating and Newalta Corporation from 1992-1997.
Greg McLean, Vice-President Finance and Chief Financial Officer
Mr. McLean is currently an Associate Portfolio Manager with Qwest Investment
Funds and an independent financial consultant. He was most recently Director of
Investments for a family trust encompassing assets of $1.4 billion and Executive
Vice-President, Investments for Cavendish Investing Ltd. Mr. McLean had
previously founded a private investment boutique focused on financings, M&A,
structured buy-outs and private equity transactions and previously spent seven
years in investment banking roles with bank owned and independent IIROC
registered firms.
Mr. McLean holds a Bachelor of Commerce degree from the University of Alberta
and a Masters in Business Administration degree from the Ivey School of
Business.
Eugene Chen, Corporate Secretary and Director
Mr. Chen leads the Capital Markets group in the Calgary office of the national
law firm McMillan LLP. He has over twenty years of experience in advising
emerging and growth oriented companies on corporate finance, mergers and
acquisitions, and securities matters. Mr. Chen has acted for numerous oilfield
service companies and provided advice on corporate and transactional structure,
capital financing and corporate governance. He is a director of numerous private
and public companies.
Mr. Chen holds a Bachelor of Science degree from the University of Alberta and a
Bachelor of Laws degree from the University of British Columbia. He is a member
of the Law Society of Alberta.
Ron Baker, P. Eng., Director
Mr. Baker is a professional engineer with over 45 years of experience in the oil
and gas industry. He has been the President of Altec Inspection Ltd. since 1976,
an engineering consulting company involved in all aspects of pipeline
construction, inspection and management, including but not limited to project
management, structural evaluation and inspection, cost forecasting and
foundation design. He is also a director of Macro Enterprises Inc., a TSXV
listed company involved in pipeline and facilities construction and maintenance
services to entities in the oil and gas industry.
Mr. Baker is a past technical advisor to the Oil and Gas Commission of British
Columbia ("OGC") and a member of committees on the Oil and Gas Standards of the
CSA (Z184 (Pressure Testing) and Z184 (Design Stress Group)). From 2005-2010, he
was the Chair of PAG (Practice Advisory Group), an industry liaison committee to
the OGC.
Mr. Baker has a Bachelor of Science (Chemistry) degree from the University of
Calgary and a Bachelor of Science in Engineering (Metallurgical) from the
University of Alberta. He is a member of the British Columbia Association of
Professional Engineers and Geoscientists.
Chris Scase, CGA, Director
Mr. Scase is an accounting professional with almost twenty years of industry and
public accounting experience. He is currently Vice-President, Finance and Chief
Financial Officer at Camber Resource Services Ltd., a company which provides
production chemicals to the oil and gas industry. Mr. Scase was previously
Vice-President and Chief Financial Officer of Ceiba Energy Services Inc., a TSXV
listed oilfield services company. Prior to that, he was the Calgary Managing
Partner of Scase and Partners Professional Accountants. Mr. Scase has acted as a
director, officer and controller for a number of private companies, including
being the Chief Financial Officer for a group of private companies engaged in
oil and gas exploration in the Western Canada sedimentary basin.
Mr. Scase has a Bachelor of Commerce degree from the University of Calgary and
is a Certified General Accountant.
It is anticipated that the parties will nominate additional directors to the
board of the Resulting Issuer.
Upon completion of the Proposed Transaction, it is expected that the Resulting
Issuer will grant stock options to directors and officers to acquire up to
3,739,301 Blacksteel Shares. Each grant of options will be for a ten year term
and exercisable at a price of $0.20 per share. Furthermore, additional stock
options may be granted to directors, officers, employees and consultants subject
to the number of Blacksteel Shares issued upon exercise of the Subscription
Receipts under the Private Placement.
Sponsorship of the Proposed Transaction
It is contemplated that pursuant to the policies of the TSXV, unless Blacksteel
is able to obtain an exemption or waiver, it will be required to engage a TSXV
member or participatory organization to act as sponsor in connection with the
Proposed Transaction.
Significant Conditions to Completion of the Proposed Transaction
Completion of the Proposed Transaction is subject to a number of conditions,
including but not limited to: (a) entering into a formal agreement; (b)
completion of due diligence; (c) TSXV acceptance; (d) Blacksteel Shareholder
approval; and (e) completion of the Private Placement for gross proceeds of not
less than $2,500,000.
The Proposed Transaction cannot close until the required shareholder approvals
are 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 Proposed Transaction may
not be accurate or complete and should not be relied upon. Trading in the
securities of Blacksteel Energy Inc. should be considered highly speculative.
Blacksteel Energy Inc.
Blacksteel is a junior oil and gas company involved in the exploration,
exploitation, development and production of petroleum and natural gas resources.
The Corporation has a 100% working interest in a four section petroleum and
natural gas lease in the Del Bonita Area of Southern Alberta, which it believes
may have Bakken potential. It also has a 25% working interest in one section of
land in the Crossfield area, which the Corporation believes is oil prospective
in the Elkton formation.
This news release contains forward-looking statements relating to the Proposed
Transaction, including statements regarding the anticipated acquisition of the
TargetCos, the anticipated election of directors for the Resulting Issuer, the
completion of the Private Placement, the receipt of all necessary regulatory
approvals and satisfaction of all other closing conditions in connection with
the Proposed Transaction and other statements that are not historical facts.
Readers are cautioned not to place undue reliance on forward-looking statements,
as there can be no assurance that the plans, intentions or expectations upon
which they are based will occur. By their nature, forward-looking statements
involve 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,
which may cause actual performance and results in future periods to differ
materially from any estimates or projections of future performance or results
expressed or implied by such forward-looking statements. These assumptions,
risks and uncertainties include, among other things: the risk that the Proposed
Transaction will not be completed if a formal agreement is not reached or that
the necessary approvals and/or exemptions are not obtained or some other
condition to the closing of the Proposed Transaction is not satisfied; the risk
that closing of the Proposed Transaction could be delayed if the TargetCos are
not able to obtain the necessary approvals on the timelines planned; the risk
that the Private Placement is not completed for minimum gross proceeds of
$2,500,000; the assumptions relating to the parties entering into the formal
agreement in respect of the Proposed Transaction, its structure, and the timing
thereof, the timing of obtaining required approvals and satisfying closing
conditions for the Proposed Transaction, state of the economy in general and
capital markets in particular, investor interest in the business and future
prospects of Blacksteel and the TargetCos.
The forward-looking statements contained in this press release are made as of
the date of this press release. Except as required by law, Blacksteel, Alcan,
Peace Drilling and Integrated disclaim any intention and assume no obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by applicable
securities law. Additionally, Blacksteel, Alcan, Peace Drilling and Integrated
undertake no obligation to comment on the expectations of, or statements made,
by third parties in respect of the matters discussed above.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
Not for distribution to U.S. Newswire Services or for dissemination in the
United States of America. Any failure to comply with this restriction may
constitute a violation of U.S. Securities Laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Blacksteel Energy Inc.
Chris Scase
Director
(403) 629-6156
cds@camberltd.com
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