Maple Leaf Resource Corp. and 1532497 Ontario Inc. Sign Letter of Intent to Complete Business Combination

CALGARY, AB / ACCESSWIRE / June 18, 2014 / Maple Leaf Resource Corp. ("Maple Leaf") (TSX-V: MPL.P) is pleased to announce that it has entered into an arm's length non-binding letter of intent dated June 3, 2014, with 1532497 Ontario Inc. (formerly Cogency Semiconductor Inc.) ("Cogency") that sets out the basic terms and conditions pursuant to which it is intended that Maple Leaf and Cogency will complete a business combination (the "Proposed Transaction"). The Proposed Transaction is intended to constitute its "Qualifying Transaction" under Policy 2.4 of the TSX Venture Exchange (the "Exchange").

Following the consummation of the Proposed Transaction, Maple Leaf will be classified as an investment issuer and will carry on the business of acquiring high quality, long life oil and gas royalty and non-operated working interest assets in order to deliver yield and capital appreciation to shareholders. 

The New Management Team and Board of Directors will include Dan Gundersen, Chief Executive Officer; Adam Thomas, President; John Dickson, Interim Chief Financial Officer and Corporate Secretary; Lowell Jackson, Chairman; Hugh Cartwright, Managing Director; Shane Doyle, Managing Director; Martin Cheyne, Director; and John Zahary, Director. 

Collectively, the team has over 100 years of experience in senior roles with both large and small capitalization companies focused on oil and gas development, production, operations and management, as well as acquisitions and divestitures.

Lowell Jackson
P.Eng. Chairman

Mr. Jackson is currently the Executive Chairman of Kaisen Energy Corp., a private oil and gas company currently producing approximately 1,100 boe/d. Prior to Kaisen, Mr. Jackson was President & CEO of Westfire Energy Ltd. Over a period of five years, Mr. Jackson and his team grew production from 14 boe/d to approximately 11,500 boe/d, an annualized growth rate of 81% per share. Prior thereto, Mr. Jackson was President & CEO of Real Resources Inc. Over a period of 10 years with Real Resources, Mr. Jackson and his team grew production from 365 boe/d to 11,000 boe/d, an annualized growth rate of 9% per share.

Dan Gundersen
P.Eng., CFA, Chief Executive Officer

Mr. Gundersen has over 17 years of oil and gas industry experience. He is the former Vice President, Energy Finance for Sandstorm Metals & Energy Ltd. where approximately $33 million was deployed into oil and gas streaming transactions. Prior to Sandstorm, he was Vice President, Engineering for DeeThree Exploration Ltd., a Calgary-based TSX-listed oil and gas exploration and production company. Prior thereto, he was Vice President, Engineering at Dual Exploration Inc. and he has also held management roles with Cyries Energy Inc. and Devlan Exploration Inc. Mr. Gundersen is a professional engineer, a member of APEGA, and a Chartered Financial Analyst (CFA) charterholder.

Adam Thomas
CFA, CIM, President

Mr. Thomas is an investment professional bringing 13 years of buy-side and corporate finance experience focused on the energy sector. Most recently, Mr. Thomas was President and CEO of Casimir Capital Ltd., where he founded the Energy Group in July 2010 completing 47 oil and gas transactions totaling approximately $1.5 billion in capital. Mr. Thomas was involved in financing such companies as Americas Petrogas Inc., Arsenal Energy Inc., DeeThree Exploration Ltd., Crocotta Energy Inc., Iona Energy Inc., Sterling Resources Ltd., Tag Oil Ltd., Westfire Energy Ltd. and Whitecap Resources Inc.

Hugh Cartwright
Managing Director

Mr. Cartwright is the Chairman and a Director of Maple Leaf Energy Income Management Corp., the General Partners of Maple Leaf Energy Income Limited Partnerships and of Maple Leaf Energy Income Holdings Corp. Maple Leaf Energy Income programs provide Canadian resident investors with exclusive energy sector investments that provide monthly income, up to a 100% tax deduction (over time), liquidity and the opportunity to convert income into capital gains. Further, he is the Chairman and a Director of the Maple Leaf Short Duration Flow-Through group of companies including the General Partner of each Maple Leaf Short Duration Flow-Through Limited Partnership which typically acquire portfolios of flow through shares issued by resource companies. As well, Mr. Cartwright is Chief Executive Officer and a Director of Maple Leaf Corporate Funds Ltd. a mutual fund management company of CADO Bancorp Ltd. (an investment banking company) and its wholly-owned subsidiary CADO Investment Fund Management Inc. which is a registered investment fund manager. Mr. Cartwright has over 20 years of experience in the investment management industry specializing in structured finance, syndication and fund administration.

Shane Doyle
Managing Director

Mr. Doyle is the Chief Executive Officer and a Director of Maple Leaf Energy Income Management Corp., the General Partners of Maple Leaf Energy Income Limited Partnerships and of Maple Leaf Energy Income Holdings Corp. Further he is the President, Chief Executive Officer and a Director of Maple Leaf Short Duration Flow-Through Management Corp., the General Partner of Maple Leaf Short Duration Flow-Through Limited Partnership and President and a Director of Maple Leaf Corporate Funds Ltd.

John Dickson
CGA, Interim Chief Financial Officer and Corporate Secretary

Mr. Dickson is the Chief Financial Officer of Maple Leaf Energy Income Management Corps, the General Partners of Maple Leaf Energy Income Limited Partnerships and of Maple Leaf Energy Income Holdings Corp. Further he is the Chief Financial Officer and a Director of Maple Leaf Short Duration Flow-Through Management Corp., the General Partner of Maple Leaf Short Duration Flow-Through Limited Partnerships and Chief Financial Officer of Maple Leaf Corporate Funds Ltd.

Mr. Dickson is also Chief Financial Officer of CADO Bancorp Ltd. and its wholly-owned subsidiary CADO Investment Fund Management Inc. Mr. Dickson also acts as the Chief Compliance Officer of CADO Investment Fund Management Inc. 

Martin Cheyne
Director

Mr. Cheyne is currently President and CEO of DeeThree Exploration Ltd., a publicly-traded oil and gas company founded in January 2007 with approximately $3.0 million in capital. Mr. Cheyne and his team have successfully grown DeeThree to a market capitalization of approximately $1.03 billion with current production of approximately 11,500 boe/d. Prior to DeeThree, Mr. Cheyne was President and CEO of Dual Exploration Inc. and prior thereto he was President and CEO of Devlan Exploration Inc.

John Zahary
Director

Mr. Zahary has more than 25 years of experience in several large integrated and upstream companies in the oil and gas industry in Canada and internationally. Mr. Zahary was past President & CEO of Viking Energy Royalty Trust; Harvest Energy Trust and Sunshine Oilsands. He has experience with heavy oil, oil sands, light oil, natural gas, and refining and marketing operations.

THE PROPOSED TRANSACTION

Maple Leaf currently has the following securities outstanding: (i) 6,440,000 Maple Leaf Shares; (ii) options granted to Maple Leaf's founders to purchase 173,334 Maple Leaf Shares, at an exercise price of $0.10 per Maple Leaf Share; and (iii) options granted to Maple Leaf's brokers to purchase 120,000 Maple Leaf Shares, at an exercise price of $0.10 per Maple Leaf Share. 

Cogency currently has the following securities outstanding: (i) 1,097,156 class "A" common shares (the "Cogency Shares"); and (ii) $923,828 principal amount of convertible senior secured debentures (the "Cogency Debentures").

Pursuant to the Proposed Transaction:

I. Cogency will complete (i) a non-brokered private placement of 6,944,444 subscription receipts (each a "Subscription Receipt" and collectively the "Cogency Subscription Receipts"), at a purchase price of $0.36 per Cogency Subscription Receipt, for total gross proceeds of $2.5 million; and (ii) a brokered private placement of 1,388,888 Cogency Subscription Receipts, at a purchase price of $0.36 per Cogency Subscription Receipt, for total gross proceeds of $0.5 million. Each Subscription Receipt will be automatically exchangeable without payment of any additional consideration for one unit of Cogency (each a "Cogency Unit" and collectively the "Cogency Units"), subject to the receipt of all necessary regulatory approvals and the satisfaction of certain conditions precedent to the consummation of the Proposed Transaction. In the event that the conditions precedent are not satisfied, the Cogency Subscription Receipts will automatically be repurchased by Cogency at their purchase price, plus accrued interest earned thereon, if any. Each Cogency Unit will be comprised of one common share of Cogency (each a "Cogency Share" and collectively the "Cogency Shares") and one Cogency Share purchase warrant (each a "Cogency Warrant" and collectively the "Cogency Warrants"). Each Cogency Warrant will entitle the holder to purchase one additional Cogency Share (each a "Cogency Warrant Share" and collectively the "Cogency Warrant Shares") at an exercise price of $0.43 per Cogency Warrant Share at any time prior to the day that is twenty-four (24) months from the closing date of the Proposed Transaction. Proceeds will be used to fund the acquisition of and drilling for oil and gas royalties and non-operated working interest production and for general corporate purposes; 

II. the holders of the Cogency Debentures will reduce the aggregate principal amount of the Cogency Debentures to $554,297, and waive all of the accrued and unpaid interest currently payable thereunder, in addition to the write-down of the Debentures, Cogency will issue to the holders of the Cogency Debentures a total of 100,000 Cogency Shares at the rate of $0.36 per Cogency Share. The remaining debentures will carry a 5% APR coupon rate; conversion price of $0.36 and mature in October 31, 2014; 

III. the Maple Leaf Common Shares issued and outstanding immediately prior to the completion of the Proposed Transaction shall be consolidated on the basis of one (1) post-consolidation Maple Leaf Share for every 4 pre-consolidation Maple Leaf Common Shares outstanding prior to the consolidation (the "Consolidation"); 

IV. the outstanding options to acquire Maple Leaf Common Shares ("Maple Leaf Options"), of which there are currently options outstanding to acquire up to 293,334 Maple Leaf Common Shares at an exercise price of $0.10 per share, will be exchanged for options to purchase a number of post-Consolidation Maple Leaf Common Shares on such economic terms so as to account for the Consolidation; 

V. the holders of the Cogency Common Shares, including any Cogency Common Shares issued pursuant to the Non-Brokered and Brokered Private Placements, presuming completion in the amounts noted above, will receive, in aggregate, 11,150,671 post-Consolidation Maple Leaf Shares, representing an exchange ratio of 1.17 post-Consolidation Maple Leaf Shares for each Cogency share; and

VI. the Cogency Common Share purchase warrants to purchase Cogency Common Shares, issued pursuant to the Non-Brokered and Brokered Private Placements, will be exchanged for Maple Leaf Warrants on the same economic terms pursuant to which the Cogency Common Shares are exchanged for post-Consolidation Maple Leaf Common Shares under section (V).

As a result, the consideration provided to Cogency in connection with the Proposed Transaction will be 1,400,673 post-Consolidation Maple Leaf Shares (to be issued at a deemed price of $0.40 per post-Consolidation Maple Leaf Share for an aggregate deemed consideration of approximately $560,269) exclusive of post-Consolidation Maple Leaf Shares that will be exchanged for Cogency Shares in connection with the subscription receipt financing. Following the consummation of the Proposed Transaction, Maple Leaf will have the following securities outstanding: (i) 12,760,671 Maple Leaf Shares; (ii) options granted to Maple Leaf's founders to purchase 43,334 Maple Leaf Shares, at an exercise price of $0.40 per Maple Leaf Share; (iii) options granted to Maple Leaf's brokers to purchase 30,000 Maple Leaf Shares, at an exercise price of $0.40 per Maple Leaf Share; (iv) 9,750,000 Maple Leaf Warrants outstanding, at an exercise price of $0.37; and (v) $554,297 principal amount of Maple Leaf Debentures outstanding. The company's initial principal asset will be approximately $3.1 million in cash or cash equivalents (net of estimated transaction costs). 

Finder's Fees and Agents

The non-brokered private placement will not pay any finder's fees.

The brokered private placement will rely on Canaccord Genuity Corp. to act as agent (the "Agent") for the brokered private placement, who is not a non-arm's length party, and the Agent shall be paid a cash commission of 6% of the gross proceeds from the brokered private placement. 

About Cogency

Cogency is an Ontario corporation that formerly specialized in the design and production of asynchronous or self-timed semiconductor chips.

Cogency does not have any shareholder who holds more than 20% of the outstanding Cogency Shares. 

Financial information for Cogency shall be provided in a subsequent press release as part of the disclosure requirements for the Proposed Transaction. 

About Maple Leaf

The Maple Leaf Shares are listed for trading on the Exchange under the trading symbol "MPL.P" and Maple Leaf is classified as a "capital pool company" pursuant to Policy 2.4 of the Exchange. As a capital pool company, the current business of Maple Leaf is to identify and evaluate potential acquisitions or businesses for the purpose of completing a Qualifying Transaction, and once identified and evaluated, to negotiate an acquisition subject to receipt of regulatory and, if required, shareholder approval. Maple Leaf has not yet commenced any other operations and its only asset of significance at today's date is cash.

Maple Leaf was incorporated under the Business Corporations Act (British Columbia) on February 20, 2012.The table below sets forth certain selected financial information for Maple Leaf as at each of March 31, 2014, the last day of the most recently completed interim period of Maple Leaf, and December 31, 2013, the last day of the most recently completed financial year for Maple Leaf:

Complete financial statements are available on SEDAR, at www.sedar.com. Maple Leaf is a "reporting issuer", as defined in applicable Canadian securities legislation, in the provinces of British Columbia, Alberta and Ontario.

Arm's Length Qualifying Transaction

The Proposed Transaction was negotiated by the parties to the letter of intent dealing at arm's length with each other and therefore, in accordance with the policies of the Exchange, is not a Non-Arm's Length Qualifying Transaction. As a result, approval of the Proposed Transaction by holders of the Maple Leaf Shares is not required under the policies of the Exchange as a condition to the completion of the Proposed Transaction.

Sponsorship 

Maple Leaf will apply to the Exchange for an exemption from the sponsorship requirements in connection with the Proposed Transaction. There is no assurance that such exemption will be granted. If such exemption is not granted, Maple Leaf will be required to engage a sponsor for the Proposed Transaction.

Trading Halt

It is currently anticipated that trading in the Maple Leaf Shares on the Exchange will remain halted until further documentation required by the Exchange pursuant to Policy 2.4 of the Exchange is submitted to the Exchange.

Further Information 

Pursuant to Policy 2.4 of the Exchange, it is expected that Maple Leaf will file on SEDAR a Joint Information Circular in respect of the Proposed Transaction.

For further information, please contact Shane Doyle President and Chief Executive Officer of Maple Leaf, by telephone at [phone].

Reader Advisory

Completion of the Proposed Transaction is subject to a number of conditions including but not limited to: (i) the satisfactory completion of due diligence of each of Cogency and Maple Leaf on one another; (ii) the successful negotiation and execution of a definitive agreement for the Proposed Transaction; (iii) the receipt of regulatory approvals for the Proposed Transaction, including but not limited to the approval of the Exchange and, if applicable pursuant to the requirements of the Exchange, shareholder approval; and (iv) Cogency raising adequate equity financing pursuant to the Cogency private placements. There can be no assurance that these conditions precedent, or any other conditions precedent, will be satisfied. Further, there can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Information contained herein regarding Cogency is based on information provided to Maple Leaf by Cogency and Maple Leaf assumes no responsibility for such information. While Maple Leaf has no reason to believe that such information is inaccurate or that such information is misleading, it has not yet completed its due diligence review of Cogency.

Investors are cautioned that, except as disclosed in the management information circular or filing statement 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 a capital pool company should be considered highly speculative

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved of the contents of this press release.

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.

Forward-Looking Statements

This news release contains forward-looking statements and information ("forward-looking statements") within the meaning of applicable securities laws. The use of any of the words "expect”, "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward-looking statements within the meaning of applicable securities laws relating to the proposal to complete the Proposed Transaction and the Cogency private placements, including statements regarding the terms and conditions of such transactions. Readers are cautioned to not place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Proposed Transaction or the Cogency private placements, that the ultimate terms of the Proposed Transaction or the Cogency private placements will differ from those that currently are contemplated, and that the Proposed Transaction or the Cogency private placements will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities and shareholders or failure to raise sufficient funds). The statements in this press release are made as of the date of this release. Neither Maple Leaf nor Cogency undertakes any obligation to update the forward-looking statements expressed herein, except as otherwise required by applicable securities law.

- Not for distribution to U.S. news wire services or dissemination in the United States - 

 

SOURCE: Maple Leaf Resource Corp.