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TSXV:LCP | TSX Venture | Common Stock |
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NOT FOR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW. Lateral Capital Corp. ("Lateral" or the "Company") (TSX VENTURE:LCP) announces that it has completed the previously announced acquisition of Vector Exploration Corp. ("Vector"), a private Alberta company, for an aggregate purchase price of $3,525,000 comprised of cash in the amount of $750,000 and the issuance of an aggregate of 15,416,667 common shares in the capital of the Company ("Common Shares") at a deemed price of $0.18 per Common Share (the "Vector Acquisition") (see news releases dated February 16, 2014, February 28, 2014 and May 1, 2014 available on SEDAR at www.sedar.com). Upon closing of the Vector Acquisition the Company completed an amalgamation with Vector, and will continue as "Lateral Capital Corp." Pursuant to an amending agreement dated May 30, 2014 amending the terms of the acquisition, Vector and the shareholders of Vector waived Lateral's obligations under the purchase and sale agreement (the "Purchase and Sale Agreement") in respect to the payment of a non-refundable deposit of approximately $130,000 and a work commitment amount of approximately $267,000 payable on or before March 7, 2014. In addition, the condition of the Purchase and Sale Agreement requiring Lateral to complete a subsequent financing of more than $30.0 million of debt or $45.0 million of equity has been waived by Vector and the shareholders of Vector. Completion of the Vector Acquisition provides Lateral with a 50% earned interest in two significant land blocks, consisting of 376,000 acres (580 sections over 16 townships) in the east Saskatchewan portion of the Williston Sedimentary Basin (the "Lands"). Based on available public records searches of recent Saskatchewan Crown land sales, the value of the lands may be up to approximately $400 per acre. The Lands represent the largest exploration permits within the province of Saskatchewan and hold the potential for light oil accumulations. The oil bearing structures observed from the initial seismic data and airborne surveys are similar to those found in the Red River "Tyvan" oil pool located to the south of the Lands. The Term Loan The Company also announces that it has closed a first lien, senior secured 120-day term loan agreement with Shadow Tree Income Fund A L.P. ("Shadow Tree"), a fund managed by Shadow Tree Capital Management LLC, for US$3,533,000 (the "Term Loan"). Proceeds from the Term Loan were used to complete the Vector Acquisition and will be used to fund certain costs, fees and expenses related to the Term Loan, other transactions, and future acquisitions and for working capital with respect to its existing Medicine Hat Assets and the Lands. The Term Loan is subject to final TSX Venture Exchange approval. The term of the Term Loan is 120 days and is repayable anytime during that period. The principal amount of the Term Loan was reduced at closing by an issuance discount of US$283,000 and a structuring fee equal to 2% of the Term Loan or US$70,660, providing the Company with US$3,179,340 in immediately available funds. The Term Loan is secured by: (i) a first priority secured lien on the Medicine Hat Assets; (ii) a first priority secured lien on the previously announced oil and gas assets located in southeast Saskatchewan acquired by Lateral contemporaneously with closing of the Term Loan (as set forth below); and (iii) a general security agreement granting a security interest over all present and after-acquired personal property of Lateral. No securities of the Company were issued in connection with the Term Loan, and no guarantees were required. If the Term Loan is not fully repaid by September 1, 2014, the Company will be obligated to grant to Shadow Tree a 1.0% gross overriding royalty interest in perpetuity on all of the Company's current and future production from the Medicine Hat Assets and the Lands. In connection with the Term Loan, the Company has agreed to pay a finder's fee to an arm's-length finder for services provided to Lateral equal to a cash payment of 4.5% of the Term Loan. Proposed Equity and Debt Financings As previously announced, Lateral is also proposing to complete a private placement of debt or equity securities in certain of the provinces of Canada and in the United States. D&D Securities Inc. will continue to provide advisory services to support Lateral's continued growth plans through opportune accretive acquisitions in the Canadian and U.S. Markets. Trading of the Common Shares on the TSX Venture Exchange was halted at the request of the Company pending completion of the Vector Acquisition and closing of the Loan. Trading is expected to resume immediately. About Lateral Lateral's business strategy is to seek to provide shareholders with growth by exploiting existing assets in a financially disciplined manner and by acquiring additional (predominantly) light oil assets. As part of its corporate strategy of acquiring additional assets, the Company is typically in the process of evaluating several potential transactions at any time which individually or together could be material. The Company cannot predict whether any current or future opportunities will result in one or more transactions involving the Company. The Company may complete financings of equity or debt or issue equity or utilise debt facilities to finance all or a portion of any such potential acquisitions. 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. This press release does not constitute an offer of the securities of the Company for sale in the United States. The securities of the Company have not been registered under the United States Securities Act of 1933, (the "1933 Act") as amended, and may not be offered or sold within the United States absent registration or an exemption from registration under the 1933 Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful. 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. More particularly and without limitation, this news release contains forward-looking statements and information relating to the future acquisitions including the completion thereof, the proposed private placements of debt and equity including, without limitation, the proposed terms thereof, the completion of such financings, and the Company's growth strategy and opportunities including the Company's exploitation plans with respect to its existing assets and the acquisition of additional assets (including the nature of any such assets and the materiality of any such acquisition or combination of acquisitions). The forward-looking statements and information are based on certain key expectations and assumptions made by management of the Company, including, without limitation, the Company's ability to obtain financing on acceptable terms or at all and its ability to complete future acquisitions on acceptable terms or at all. Although management of the Company 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 Company 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 Company's ability to service its obligations under the Term Loan, the Company's ability to efficiently and successful explore and develop the Lands, the Company's ability to identify and complete additional suitable acquisitions to further the Company's growth as well as 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 (including for capital, assets and skilled personnel); 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 on acceptable terms or at all; 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. FOR FURTHER INFORMATION PLEASE CONTACT: Lateral Capital Corp. Corbin Blume President & CEO Main Phone: (587) 350-7500 (587) 350-7505 (FAX) Lateral Capital Corp. 730, 1015 - 4th Street SW Calgary, Alberta T2P 2V7
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