Tickers: XTSX:PAV.H, XTSE:PAV.H
Tags: #Mining
Vancouver, BC - TheNewswire - November 5, 2019, - PACIFIC ARC RESOURCES LTD. (the "Company" or "Pacific Arc") (TSXV:PAV.H) (NEX:PAV.H) announces that it has entered into a non-binding letter of intent ("LOI"), dated October 28, 2019, with Port Energy, Ltd. ("Port Energy"), a British Virgin Islands-based company involved in the oil and gas exploration and production business pursuing the identification and acquisition of oil and gas resources within prolific basins across sub-Saharan Africa. The LOI outlines the proposed terms and conditions pursuant to which the Company and Port Energy will effect a business combination that will result in a reverse takeover of the Company by the securityholders of Port Energy (the "Proposed Transaction") and the listing for trading of the securities of the resulting issuer (the "Resulting Issuer") on the TSX Venture Exchange (the "TSXV"). Each share of Port Energy shall be exchanged for common shares of the Company based on an exchange ratio which reflects a value for the Company of CDN$3,850,000 plus cash on hand and a value of CDN$33,000,000 for Port Energy on a pre-money basis (i.e. prior to completion of the Concurrent Financing (as defined below)).
The Proposed Transaction is an arm's length transaction subject to requisite regulatory approval, including the approval of the TSXV. The parties will prepare a filing statement in accordance with the rules of the TSXV, outlining the terms of the Proposed Transaction.
Port Energy holds 90% of the participating interests in a production sharing contract (PSC) for the Ultra Profound- 1 Deepwater Block (UP-1), a 5,295 km2 area located in ultra deep water in the joint offshore development zone between the Republics of Senegal and Guinea-Bissau and administered by the "Management and Cooperation Agency Between Senegal and Guinea-Bissau" (AGC). Further details concerning Port Energy, its operations, management and financial status will be provided following completion of due diligence investigations and the negotiation of a definitive agreement in respect of the Proposed Transaction (the "Definitive Agreement"). Until then, confidentiality provisions preclude the disclosure of certain information concerning Port Energy.
The Proposed Transaction
The Proposed Transaction will be structured as an amalgamation, arrangement, takeover bid, share purchase or other similar form of transaction or a series of transactions determined by the legal and tax advisors to each of Pacific Arc and Port Energy. The final structure for the Proposed Transaction will be determined after Pacific Arc and Port Energy have considered all applicable tax, securities law and accounting considerations.
Completion of the Proposed Transaction is subject to a number of conditions, including the negotiation and signing of a Definitive Agreement, receipt of all necessary securityholder and regulatory approvals, including the approval of the TSXV, and completion of the Concurrent Financing (as defined below).
In connection with the Proposed Transaction, the Company and Port Energy will be required to, among other things:
a.complete an equity financing of a minimum of CDN$4 million and a maximum of CDN$7 million concurrently with the completion of the Proposed Transaction (the "Concurrent Financing"); and
b.replace the directors and officers of the Company on closing of the Proposed Transaction with nominees of Port Energy and two board nominees of the Company.
Upon successful completion of the Proposed Transaction, the Resulting Issuer will carry on the business currently carried on by Port Energy. There can be no guarantees that the Proposed Transaction will be completed as proposed or at all.
The shares of the Company will remain halted until all necessary filings have been accepted by applicable regulatory authorities. Unless the Proposed Transaction fails to close, the Company does not expect the shares of the Company to resume trading again until the listing has been accepted by the TSXV.
Further comprehensive information regarding the Proposed Transaction will be provided in a future press release at such time the parties execute a Definitive Agreement.
Trading Halt
Trading in the Pacific Arc common shares has been voluntarily halted and may remain halted pending the review of the Proposed Transaction by the TSXV. There can be no assurance that trading in the Pacific Arc common shares will resume prior to the completion of the Proposed Transaction.
Sponsorship
Sponsorship of the Proposed Transaction is required unless an exemption is available or a waiver from this requirement can be obtained in accordance with the policies of the TSXV. Pacific Arc intends to apply for a waiver to the sponsorship requirement. There is no assurance that a waiver from this requirement will be granted.
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) closing conditions customary to transactions of the nature of the Proposed Transaction; (b) approvals of all regulatory bodies having jurisdiction in connection with the Proposed Transaction; (c) TSXV regulatory approval; and (d) the completion of the Concurrent Financing for a minimum amount of CDN$4,000,000. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.
About Port Energy Ltd
Port Energy, Ltd. is an oil and gas exploration and production business pursuing the identification and acquisition of oil and gas resources within prolific basins across sub-Saharan Africa. Port Energy holds 90% of the participating interests in a production sharing contract (PSC) for the Ultra Profound- 1 Deepwater Block (UP-1), a 5,295 km2 area located in ultra deep water in the joint offshore development zone between the Republics of Senegal and Guinea-Bissau and administered by the "Management and Cooperation Agency Between Senegal and Guinea-Bissau" (AGC).
The UP-1 Block (and AGC) is situated within the larger Mauritania Senegal Gambia Guinea Bissau & Guinea Conakry Basin (MSGBC), an emerging major hydrocarbon province featuring many recent successful discoveries, such as SNE, Fan, Guembeul, Tortue, Chinguetti, Marsouin, Teranga, and Yakaar. The UP-1 block is located immediately adjacent to several blocks where major oil companies, such as CNOOC Group, are commencing exploratory deep-water drilling.
Bridge Financing
Pacific Arc announces that, subject to TSX Venture Exchange approval, it is proceeding with a non-brokered private placement of up to 2,023,809 common shares at a price, as per regulatory guidelines, of $0.21 per share for gross proceeds of up to $425,000.
The shares issued under the private placement will be subject to a four-month hold period from the date of closing. Since the pricing of the Concurrent Financing has not been determined, the TSXV may apply additional escrow conditions to the shares issued under the private placement.
Net proceeds from the private placement will be used to finance costs, such as legal, audit, technical consultants' fees and other due diligence costs, associated with proceeding to completion of the reverse takeover.
An insider of the Company may acquire shares under the private placement. Any such participation would be considered to be a "related party transaction" as defined under Multilateral Instrument 61-101 ("MI 61-101"). The transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of any shares issued to or the consideration paid by such person will exceed 25% of the Company's market capitalization.
ON BEHALF OF THE BOARD OF DIRECTORS
PACIFIC ARC RESOURCES LTD.
s/ "John MacPhail"
John MacPhail, President, CEO and Director
For further information, please contact:
John MacPhail, President, CEO & Director
Phone: (778) 688-7411
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Proposed 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 Filing Statement or 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 Pacific Arc should be considered highly speculative.
The TSXV has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this news release.
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.
Caution Concerning Forward-Looking Information
Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements, including: the receipt of all necessary regulatory approvals, the ability to conclude the Proposed Transaction, capital expenditures and other costs, and financing and additional capital requirements. These statements generally can be identified by the use of forward-looking words such as "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe'' or "continue", or the negative thereof or similar variations. Forward-looking statements in this news release include statements regarding the completion of the Proposed Transaction, the listing of the shares of the Resulting Issuer on the TSXV and the anticipated business plan of the Company subsequent to completion of the Proposed Transaction. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company assumed no obligation to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws.
2019 number 5
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