RIA Resources enters into LOI for proposed acquisition of RIA
Resources by Plan of Arrangement
CALGARY,
Feb. 4, 2013 /CNW/ - RIA Resources
Corp. (TSXV: RIA) ("RIA" or the "Corporation") is pleased to
announced that it has entered into a non-binding letter of intent
("LOI") dated February 1, 2013 with
Qwest Investment Management Corp. ("Qwest") regarding the proposed
acquisition by a fund to be formed by Qwest (the "Qwest Contrarian
Fund") to acquire all of the shares of RIA ("RIA Shares") by way of
a plan of arrangement (the "Arrangement"). Subject to
legal and tax advice, the Qwest Contrarian Fund is to be
established as a "mutual fund trust" under the Income Tax
Act. The Qwest Contrarian Fund's investment objectives will
be to invest in and acquire junior oil and gas companies and other
oil and gas assets. The proposed acquisition of RIA will be
the first acquisition of the Qwest Contrarian Fund.
Subject to tax advice, the Units proposed to be
issued by Qwest Contrarian Fund under the Arrangement will have the
following features:
- Units shall be issued in series with each series redeemable by
the Qwest Contrarian Fund in 5 year terms;
- Each series of Units shall bear 8% annual interest which shall
be paid out in Units on a semi-annual basis in arrears; and
- The Units will not be listed on any market or exchange.
It is proposed that the Qwest Contrarian Fund
will, upon completion of the Arrangement, be initially funded by
way of a private placement (the "Seed Round Private Placement") of
not less than $500,000 at
$10/Unit. All Units issued
under the Arrangement to RIA shareholders shall be of the same
series of the Units held by the Initial Unit holders.
Pursuant to the terms of the LOI, it is proposed
that the Qwest Contrarian Fund will acquire, directly or
indirectly, all of the outstanding RIA Shares, including RIA Shares
which may be issued in connection with currently granted or issued
stock options (the "Stock Options") and other equity based
compensation securities of RIA, if any, on the basis that the RIA
shareholder will receive, subject to the parties reaching a
definitive agreement, 0.014 of a Unit for each RIA Share held (the
"Exchange Ratio"). The final Exchange Ratio shall be
determined on the basis of the NAV of RIA's oil and gas assets set
forth in an independently prepared engineering report, a valuation
of tax pools, and the value of Units set in the Seed Round Private
Placement.
As at the date hereof there are not more than
23,684,045 RIA Shares issued and outstanding; 880,000 Stock
Options; 1,300,000 common share purchase warrants (the "Warrants")
and a debenture convertible into 1,704,348 RIA Shares, all as more
fully detailed within RIA's July 31,
2012 Financial Statements. Stock Options with an
exercise price of less than $0.14
shall be cancelled, as part of the plan of arrangement, in exchange
for 0.004 of a Unit to a maximum of 3,550 Units. In addition
it is proposed that on or before the closing date of the
Arrangement, the Warrants shall be cancelled and the outstanding
debt of $963,000 and accrued interest
thereon owing by RIA to Chinook Financial Ltd. shall, subject to
applicable TSX Venture Exchange approval, be converted into RIA
Shares at $0.10 per share.
Immediately prior to closing of the Arrangement, there will be
35,018,393 RIA Shares issued and outstanding on a fully diluted
basis comprised as follows:
|
RIA Shares |
|
|
Current issued and outstanding RIA Shares: |
23,684,045 |
|
|
RIA Shares issued upon conversion of the
Debenture: |
1,704,348 |
|
|
RIA Shares issued upon conversion of outstanding
debt of $963,000: |
9,630,000 |
|
|
Total: |
35,018,393 |
Upon completion of the Arrangement, RIA shareholders will hold
Units of the Qwest Contrarian Fund which will not trade on the TSX
Venture Exchange or any other stock exchange.
The parties have agreed in the LOI to cooperate
in structuring the proposed transaction in the most efficient and
practicable structure possible for the benefit of RIA and the Qwest
Contrarian Fund, acting reasonably, including in a manner that
would accommodate a reorganization and having regard to the various
tax, corporate, securities law and accounting considerations. In
the event that RIA and Qwest agree that the proposed transaction is
to be carried out other than by way of a plan of arrangement, the
terms and conditions of the LOI shall apply with appropriate
modifications.
The LOI establishes that the parties shall enter into a
definitive agreement for the proposed transaction by February 15, 2013. RIA intends to issue a
press release disclosing the final terms of any definitive
agreement entered into with Qwest with respect to the proposed
Arrangement promptly upon execution of the same.
RIA is a company listed and trading on the TSX Venture Exchange,
symbol: RIA.
Forward Looking Statements
Certain statements contained in this news
release constitute forward-looking statements. These statements
relate to future events contemplated under the LOI. All statements
other than statements of historical fact are forward-looking
statements. The use of any of the words ''anticipate'',
''plan'', ''contemplate'', ''continue'', ''estimate'', ''expect'',
''intend'', ''propose'', ''might'', ''may'', ''will'', ''shall'',
''project'', ''should'', ''could'', ''would'', ''believe'',
''predict'', ''forecast'', ''pursue'', ''potential'' and
''capable'' and similar expressions are intended to identify
forward-looking statements. These statements involve known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking statements. Although RIA
believes these statements to be reasonable, no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not
be unduly relied upon. Such statements include the closing of the
proposed Arrangement on the terms and conditions set out above and
the anticipated timing for stated events. Actual results
could differ materially from those anticipated in these
forward-looking statements as a result of the proposed Arrangement
not closing when planned, closing on the terms and conditions set
out above, or if a closing occurs at all; the failure of RIA to
obtain the necessary regulatory, shareholder and other third party
approvals required in order to proceed with the proposed
Arrangement; the failure of the parties to reach a definitive
agreement for the proposed Arrangement, regulatory decisions,
competitive factors in the industries in which RIA and Qwest
operate, prevailing economic conditions; and other factors, many of
which are beyond the control of RIA and Qwest. The forward-looking
statements contained in this news release represent RIA's
expectations as of the date hereof, and are subject to change after
such date. RIA disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as may be
required by applicable securities regulations.
Neither the 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.
SOURCE RIA Resources Corp.