Primewest Announces Qualifying Transaction
CALGARY, ALBERTA--(Marketwire - Nov. 20, 2012) -
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Primewest Exploration Inc. (the "Corporation") (TSX VENTURE:PWI.H), a capital pool company listed on the NEX, announces it has entered into a Letter of Intent made November 8, 2012 regarding a proposed transaction (the "Transaction") with Hansar Energy Corp. ("Hansar"), a privately held company incorporated under the Business Corporations Act (Alberta), with various working interests in strategic properties in Manitoba and Alberta. The Corporation intends that the Transaction will constitute its "Qualifying Transaction" for the purposes of Policy 2.4 of the TSX Venture Exchange Inc. ("Exchange"). Subject to any regulatory, shareholder, director or other approvals that may be required, the completion of satisfactory due diligence by the Corporation and other conditions contained in the Letter of Intent, it is intended that the Corporation will acquire Hansar in a reverse takeover transaction which will be effected by way of a three cornered amalgamation or other similar form of transaction. Following completion of the Transaction, it is anticipated the resulting issuer will be classified as a Tier 2 oil and gas issuer.
Immediately prior to closing the Transaction, the Corporation will complete a share consolidation of its common shares (the "Primewest Shares") on a one for five basis (the "Consolidation") and a corporate name change to "Hansar Energy Corp'" or such other name as Hansar may determine (the "Name Change"). The Corporation will incorporate a wholly-owned subsidiary ("Subco") to facilitate the Transaction, pursuant to which Subco and Hansar will complete a three-cornered amalgamation in accordance with the Business Corporations Act (Alberta) to create a new company and the former holders of common shares of Hansar ("Hansar Shares") will receive new (post-Consolidation) common shares of the Corporation ("Resulting Issuer Shares"). Without giving effect to the Offering (as defined below), the Transaction will have a deemed value of $8,195,884.
Pursuant to the terms of the Transaction: (i) all of the Hansar Shares, including any Hansar Shares issued pursuant to the Offering, will be exchanged on a one-for-one basis for Resulting Issuer Shares; (ii) 7,427,674 warrants to purchase Hansar Shares held by certain insiders of Hansar will be cancelled for nominal consideration; (iii) 1,137,395 warrants to purchase Hansar Shares will be exchanged for 1,137,395 replacement warrants to purchase Resulting Issuer Shares at an exercise prices of $0.65 or $0.75, as applicable, and having an expiry date of April 2, 2013; (iv) 27,650 broker warrants to purchase Hansar Shares will be exchanged for 27,650 replacement broker warrants to purchase Resulting Issuer Shares at an exercise price of $0.64, and having an expiry date of April 2, 2013; (v) all stock options to purchase Primewest Shares will be exchanged for replacement stock options to purchase Resulting Issuer Shares with the number and exercise prices thereof adjusted to reflect the Consolidation, and having an expiry date of November 1, 2014.
The Resulting Issuer Shares issuable pursuant to the Transaction will be issued at a deemed issue price of $0.50 per share. It also anticipated that at closing the Resulting Issuer will grant options to acquire an Resulting Issuer Shares at a price of $0.50 per share to the directors, officers, employees and consultants of the Resulting Issuer. Further details will be provided in a subsequent news release.
About Hansar Energy Corp.
Hansar is an oil and gas exploration and production company with a farm-in agreement on 12 3/4 sections of land for an expected 65% working interest in the Daly Sinclair field in South East Manitoba as well as a 100% working interest (subject to an 8% gross overriding royalty) on 32.5 sections of land in the Kidney, Sturgeon, Bigoray, Camrose, Provost, Halkirk, Chin Coulee and Many Berries areas of Alberta. Hansar currently has 16,391,768 Hansar Shares outstanding. 6,160,000 Hansar Shares are owned or controlled, directly or indirectly, by Andrew Watts and 6,160,000 Hansar Shares are owned or controlled, directly or indirectly, by Michael Palmer, each of whom may be considered to be a "control person" of Hansar under applicable securities laws.
When a definitive agreement between the Corporation and Hansar is reached, which is anticipated shortly, in accordance with the policies of the Exchange, the Corporation will issue a subsequent press release containing the details relating to sponsorship, summary financial information in respect of Hansar, and P&NG reserves information relating to the properties of Hansar.
Immediately prior to closing the Transaction, Hansar expects to complete separate brokered and non-brokered private placements for minimum gross proceeds of $2,500,000 and maximum gross proceeds of up to $12,000,000 (with both private placements collectively referred to as the "Offering"). The Offering will consist of the issuance of Hansar Shares or securities convertible into Hansar Shares, at an issue price of $0.50 per Hansar Share. The proceeds from the Offering will be used for exploration and development of Hansar's properties and for general working capital requirements. Further details regarding the Offering will be provided in a subsequent news release. All securities issued under the Offering will ultimately be exchanged for Resulting Issuer Shares on a one for one basis pursuant to the Transaction.
Insiders and Board of Directors of the Resulting Issuer
The current directors and officers of the Corporation, with the exception of Victor Luhowy, will resign and be replaced by the existing management team and board of directors of Hansar, who collectively possess several years of oil and gas experience. Mr. Dvorkin and Mr. Chapman, currently directors of the Corporation, will be retained as advisors and consultants to the Corporation. The following is a description of the proposed directors and officers of the resulting issuer.
Andrew Watts - Calgary, Alberta - Proposed President, CEO and Director of the Resulting Issuer
Mr. Watts is currently the President, Chief Executive Officer and a Director of Hansar. He has previously held positions with Tier One Energy Corp. and Player Petroleum Corporation, both junior energy companies with operations in central and south-eastern Alberta. Mr. Watts is also the former Chief Executive Officer of Watts Mechanical Services Ltd., a mechanical contracting company, ranked as 1st in Alberta Venture Magazine's Fast Growth 50, in 2009 in the over $20 million category. He was also listed in Avenue Magazine's 2009 Top 40 Under 40 in 2009 (at age 32). Mr. Watts graduated from MIT's Entrepreneurial Master's Program in 2012 and is also a member in good standing of YPO (Young Presidents Organization).
Michael Palmer - Calgary, Alberta - Proposed Vice President of Operations of the Resulting Issuer
Mr. Palmer is currently the Chief Operating Officer of Hansar. Mr. Palmer has 20 years of oil and gas industry experience in business development, project management and finance. He has previously acted as Vice President of Northern Hunter Energy Inc., Keller Resources, and Sunrise Resources. Mr. Palmer has also held management positions with Remington Energy, Texaco, Syncrude, Jacos, and Imperial Oil. Mr. Palmer has also previously provided senior consulting services to Syncrude, Suncor, and CNRL.
Daryn Gordon - Calgary, Alberta - Proposed Chief Financial Officer of the Resulting Issuer
Mr. Gordon is currently the Chief Financial Officer of Silver Mountain Mines Inc. and the Chief Financial Officer, Corporate Secretary and a Director of Aroway Energy Inc. Mr. Gordon previously served as Senior Financial Analyst at Maxim Power Corp. from 2006 to 2010, an independent power producer which owns and operates power plants in Canada, the United States and France. Mr Gordon also served as Senior Analyst with ConocoPhillips from 2003 to 2004 and prior thereto, worked with PricewaterhouseCoopers LLP in audit, corporate reporting and financial control analysis with junior energy companies.
Chris Barton - Calgary, Alberta - Proposed Vice President of Exploration of the Resulting Issuer
Mr. Barton most recently acted as Geophysical Manager at Reliable Energy Ltd. as part of a team with a successful drilling record in the Manitoba region. Mr. Barton also previously served at VP Exploration at Kereco Energy Ltd. Mr. Barton previously worked as Senior Geophysicist and team leader at Burlington Resources, where he worked in the Kaybob, Slave, Godin areas in the Viking, Notikewin, Gething, Jurassic and Nordegg plays. Mr. Barton also has previous experience with Groundswell Energy, Pinnacle Resources Ltd., Conoco Canada Ltd., and Unocal Canada Ltd.
Paul Baay - Calgary, Alberta - Proposed Director of the Resulting Issuer
Mr. Baay is currently Chairman and Chief Executive Officer of Touchstone Resources Inc., positions he has held since September 2010 and also serves as Chairman of Vero Energy Inc. and Chairman of Veraz Petroleum Ltd. Mr. Baay is formerly the Managing Director of Abacus Energy Inc. and also served as the President and Chief Executive Officer of True Energy Inc. from September 2000 to September 2007. Mr. Baay was a member of the board of directors of Millennium Seismic Ltd. from 2001 to 2007 and Chairman of the board of directors of Request Seismic Surveys Ltd. from March 1998 to September 2000. He also served as President, Chief Executive Officer, and as a director of Remington Energy Ltd. from 1993 to 1999. Mr. Baay is also currently a director of the Rundle Mountain charitable foundation.
Wayne Henuset - Calgary, Alberta - Proposed Director of the Resulting Issuer
Mr. Henuset is President and Owner of Willow Park Resources Ltd. (a consortium of companies including Willow Park Wines and Spirits, Branch of the Willow Ltd., Keller Williams Realty South Calgary, Rackets Incorporation, Conquest Developments Canada and 50 percent ownership in the former Energy Alberta Corporation). Mr. Henuset has also been the owner and operator of Willow Park Wines & Spirits since 1994, the largest private liquor retailer in Canada. He has also acted as a Director of Acme Capital Corporation since October 25, 2011.
Mr. Henuset is a long-standing member of the oil and gas business community. In 1981, he established his own pipeline company, WHH Enterprises, whose clients included Pan Canadian and Norcen. Between 1985 and 1997, Mr. Henuset owned and operated Santa Fe Oil & Gas and Roundup Oil Servicing. His most recent oil and gas company was Wrangler Snubbing, which he sold to Precision Drilling in 1997. Mr. Henuset is also former President and CEO of Energy Alberta Corp., an Alberta-based company that established nuclear power as a source of energy for Alberta and filed an application to prepare a site in Peace River, Alberta.
Victor Luhowy - Priddis, Alberta - Proposed Director of the Resulting Issuer (and currently a Director of the Corporation)
Mr. Luhowy has over 40 years of experience in the petroleum industry. He graduated from the University of Alberta with a B.Sc. in Engineering in 1971 and obtained an MBA from the University of Calgary in 1992. Most recently he has been President and CEO of BelAir Petroleum Management Ltd. (2011-Present) and President and Chief Executive Officer of Mystique Energy Inc. (2004-2009).
Mr. Luhowy is also currently a Director of the Corporation as well as a Director of Black Pearl Resources Inc. and a Director of the Canadian Petroleum Hall of Fame Society. Mr. Luhowy is also the former President Chief Executive Officer of Mystique Energy Inc.
Trevor Mitzel CA, CFA - Calgary, Alberta - Proposed Director of the Resulting Issuer
Mr. Mitzel has been the Chief Financial Officer of Big Country Energy Services L.P., a private energy services company, since January 2005. Mr. Mitzel is also a Director of Touchstone Exploration Inc. Mr. Mitzel has also previously acted as Chief Financial Officer to Arsenal Energy Inc. and Environmental Management Solutions Inc. Mr. Mitzel has designations as a Chartered Accountant and a Chartered Financial Analyst.
Doug McCartney - Calgary, Alberta - Proposed Corporate Secretary of the Resulting Issuer
Mr. McCartney has been the Managing Partner of Burstall Winger LLP, a law firm, since January 2012 and has been a Partner of Burstall Winger LLP since January 1, 2008. He practices in the areas of securities and corporate finance and corporate/commercial law.
Sponsorship of Qualifying Transaction
Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. The Corporation intends to apply for an exemption from the sponsorship requirements. There is no assurance that the Corporation will ultimately obtain an exemption from sponsorship.
Reinstatement to Trading
The Primewest Shares will remain halted pending receipt by the Exchange of certain required materials from the Corporation, including a reserve report regarding the oil and gas properties of Hansar, and until the Corporation engages a sponsor or a sponsorship exemption is granted. The Corporation will issue a further press release when further updates on these items are available.
Additional Information and Description of Significant Conditions to Closing
The Transaction will be carried out by parties dealing at arm's length to one another and therefore will not be considered to be a Non-Arm's Length Qualifying Transaction, as such term is defined under the policies of the Exchange.
A Filing Statement in respect of the Transaction will be prepared and filed in accordance with Policy 2.4 of the Exchange on SEDAR at www.sedar.com no less than 7 business days prior to the closing of the proposed Transaction. A press release will be issued once the Filing Statement has been filed as required pursuant to Exchange policies.
Completion of the Transaction is subject to a number of conditions including, but not limited to, the closing of the Offering, the satisfaction of the Corporation and of Hansar in respect of certain due diligence investigations to be undertaken by each party, the completion of the Consolidation and Name Change, the completion of a definitive agreement setting forth the terms and conditions set out in the Letter of Intent, closing conditions customary to transactions of the nature of the Transaction, Exchange acceptance and, if required by Exchange policies, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained and there can be no assurance that the Transaction will be completed as proposed or at all. The Corporation intends to obtain any requisite shareholder approval by written consent, and shall provide a copy of any applicable documentation with the written consent. However, the Consolidation and Name Change will require the approval by holders of two-thirds (66 2/3%) of the Primewest Shares voting at a meeting of the Shareholders of Primewest to approve such matters.
If and when a definitive agreement between the Corporation and Hansar is executed, in accordance with the policies of the Exchange, the Corporation will issue a subsequent press release containing the details of the definitive agreement and additional terms of the Transaction, including information relating to sponsorship, summary financial information in respect of Hansar's assets, and to the extent not contained in this press release, additional information with respect to the Offering, history of the assets, and the proposed directors, officers, and insiders of the Corporation upon completion of the Transaction.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the 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 securities of a capital pool company should be considered highly speculative.
Cautionary and Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements or information. Forward-looking statements and information are often, but not always, identified by the use of words such as "appear", "seek", "anticipate", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions.
More particularly and without limitation, this news release contains forward-looking statements and information concerning the expected results of the Transaction; the Corporation's petroleum and natural gas production and reserves with respect to the assets owned by Hansar; anticipated closing dates of the Transaction; the closing of the Offering and the anticipated timing thereof and the expected use of proceeds from the Offering. The forward-looking statements and information are based on certain key expectations and assumptions made by management of the Corporation, including expectations and assumptions concerning well production rates and reserve volumes in respect of the assets owned by Hansar; project development and overall business strategy. Although management of the Corporation believes that the expectations and assumptions on which such forward looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information since no assurance can be given that they will prove to be correct.
Forward-looking statements and information are provided for the purpose of providing information about the current expectations and plans of management of the Corporation relating to the future. Readers are cautioned that reliance on such statements and information may not be appropriate for other purposes, such as making investment decisions. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions and failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Accordingly, readers should not place undue reliance on the forward-looking statements, timelines and information contained in this news release. Readers are cautioned that the foregoing list of factors is not exhaustive.
The forward-looking statements and information contained in this news release are made as of the date hereof and no undertaking is given to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws or the TSX Venture Exchange. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.
This press release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, nor shall there be any sale of securities mentioned in this press release in any state in the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
FOR FURTHER INFORMATION PLEASE CONTACT:
Primewest Exploration Inc.
Hansar Energy Inc.
President and Chief Executive Officer