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TORONTO, April 15 /CNW/ - Goldbard Capital Corporation. GDB.P:TSX-V
Goldbard Capital Corporation ("Goldbard"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), is pleased to announce that it has entered into a letter of intent (the "Agreement") dated April 7, 2008 in respect of an arm's length merger (the "Qualifying Transaction") with Arch Energy Inc. ("Arch"), a Calgary-based, privately held oil and gas exploration company. It is intended that the merger with Arch will be Goldbard's "qualifying transaction" for purposes of the capital pool company policies of the Exchange.
At this time it is anticipated that the proposed Qualifying Transaction will be completed by way of an amalgamation of Goldbard with Arch. The issued and outstanding capital of Goldbard currently consists of 12,500,000 common shares (the "Goldbard Shares") and the issued and outstanding capital of Arch currently consists of 18,295,333 common shares (the "Arch Shares"). Except for adjustments resulting from the exercise of any currently issued and outstanding convertible securities of either Goldbard or Arch, and except for adjustments resulting from the securities to be issued pursuant to the Arch Financing as described below, it is the intention of the parties that the current shareholders of Goldbard will own 20% of the issued and outstanding common shares (the "Resulting Issuer Shares") in the capital of the issuer that will be formed upon the completion of the proposed Qualifying Transaction (the "Resulting Issuer") and that the current shareholders of Arch will own 80% of the Resulting Issuer Shares. Given the foregoing, pursuant to the proposed Qualifying Transaction:
(a) each 2.732938 Goldbard Shares shall be exchanged for one (1)
Resulting Issuer Share (i.e. an aggregate of 4,573,832 Resulting
Issuer Shares will be issued to the current shareholders of
Goldbard); and
(b) each one (1) Arch Share shall be exchanged for one (1) Resulting
Issuer Share at a deemed issuance price of $0.80 per share (i.e.
an aggregate of 18,295,333 Resulting Issuer Shares will be issued
to the current shareholders of Arch);
such that there will be an aggregate of 22,869,165 Resulting Issuer Shares
issued to the current shareholders of each of Goldbard and Arch.
Goldbard anticipates filing either an Information Circular or a Filing
Statement regarding the proposed Qualifying Transaction and related matters in
the near future.
Closing Conditions
The closing of the proposed Qualifying Transaction is subject to a number of conditions including, among others: (i) obtaining all necessary regulatory approvals, including the approval of the Exchange of the qualification of the acquisition as Goldbard's "Qualifying Transaction"; (ii) negotiating and entering into a definitive agreement; (iii) obtaining the approval of the directors of each of Goldbard and Arch; (iv) obtaining the approval of the shareholders of each of Goldbard and Arch, if necessary; (v) completion of satisfactory due diligence reviews of Arch and Goldbard by each of Goldbard and Arch, respectively; (vi) completing the Arch Financing as described below for minimum gross proceeds of $10,000,000; and (vii) other conditions typical of a transaction of this nature.
Arch Financing
Prior to completion of the proposed Qualifying Transaction, Arch intends to complete a private placement of up to 6,250,000 units ("Units") Units and up to 5,555,570 flow-through units ("Flow-Through Units") at a price of $0.80 per Unit and $0.90 per Flow-Through Unit to raise gross proceeds of up to $10,000,013 ("Arch Financing"). Each Unit will consist of one Arch Share, one half common share purchase warrant ("Arch Warrant") and one liquidity warrant ("Arch Liquidity Warrant"). Each Flow-Through Unit will consist of one flow-through Arch Share and one Arch Liquidity Warrant.
Each whole Warrant will entitle the holder to acquire one Arch Share at a price of $1.00 per Arch Share for a period of 24 months following the closing date of the Arch Financing.
Each Liquidity Warrant will entitle the holder to acquire 0.25 Arch Shares for each Liquidity Warrant held for no additional consideration in the event that the Arch Shares, or the Resulting Issuer Shares, are not listed on the Exchange within 12 months of the closing date of the Arch Financing.
Consequently, the number of Arch Shares issued and outstanding prior to the completion of the proposed Qualifying Transaction may increase. As such, the number of Resulting Issuer Shares to be issued to the Arch shareholders may increase by an equivalent amount. If the maximum amount is raised pursuant to the Arch Financing solely through the issuance of non-flow-through Units, this could result in the issuance of up to 12,500,000 additional Arch Shares, 6,250,000 Arch Warrants and 3,125,000 Liquidity Warrants to the shareholders of Arch.
It is anticipated that the Arch Financing will be conducted on a brokered basis, in which case applicable commissions and fees will be paid and broker warrants will be issued. Further details on the Arch Financing will be provided when available.
Source Transaction
Pursuant to an asset purchase agreement (the "Asset Purchase Agreement") with Source Petroleum Inc. (Pink Sheets: SOPD) ("Source"), an arm's length oil and gas exploration and production company, on February 22, 2008 Arch acquired (the "Asset Acquisition") certain oil and gas assets from Source (the "Assets"). The Assets include Source's interest in properties in Harmon Valley, Alberta, Woking, Alberta, and Pasquia Hills, Saskatchewan. The interest in the Harmon Valley property is a 50% working interest in 3,840 gross acres (1,920 net acres) in the Harmon Valley area of North Central Alberta. The interest in the Woking property consists of a 37.5% working interest in 3 sections of land in the Woking area of Central Alberta. The interest in the Pasquia Hills property consists of a 60% working interest in 358 sections of land in the Pasquia Hills area of East Central Saskatchewan.
The aggregate purchase price paid by Arch to Source pursuant to the Asset Acquisition was $9,000,000, which was paid via the assumption of liabilities equal to $1,053,500.54 and the issuance of 10,595,333 Arch Shares at a deemed price per Arch Share of $0.75.
Pursuant to the Asset Purchase Agreement, Source will use its commercially reasonable efforts to dividend out the securities provided as consideration for the Assets to Source's shareholders on a pro rata basis, subject to compliance with United States securities regulations. Arch has committed to pay one half, up to a maximum of $100,000, of the costs associated with meeting United States securities regulations in order to complete this dividend. Source has agreed that, until such time as the Arch Shares, or, if applicable, the Resulting Issuer Shares, have been distributed to the Source shareholders, it shall not trade or vote the securities held by it other than to exchange the Arch Shares for Resulting Issuer Shares.
Other Arch Assets
In addition to the assets acquired from Source described above, Arch owns an interest in one gas well in the Newbrook area of Alberta (working interest of 40%) and an interest in one gas well in the Whitecourt area of Alberta (working interest of 30%).
Selected Reserve Information - Arch Assets
Arch has retained DeGolyer and McNaughton Canada Limited to provide a report on certain of its conventional oil and gas assets (i.e. its Newbrook and Whitecourt properties) and certain of its unconventional oil and gas assets (i.e. its Harmon Valley property). That report is currently being reviewed by regulatory authorities. Once that review is complete, it is anticipated that Goldbard will issue another press release which will provide selected reserve and resource information on Arch's assets.
Selected Financial Information
The financial statements of Arch for the period ended December 31, 2007 are in the process of being audited. Once that audit is complete, it is anticipated that Goldbard will issue a press release providing selected financial information on Arch.
Information Regarding Arch
Arch was incorporated in June 2007 under the Business Corporations Act (Alberta) for the purpose of acquiring and operating oil and gas exploration and production properties. Its focus is on resource development in the Western Canadian Sedimentary Basin. Arch's strategy is to combine organic growth through internally generated drilling prospects with selected acquisitions which bring exploitation opportunities. Its focus is on heavy oil producing properties with a secondary focus of finding gas reserves to fuel its own internally generated requirements for secondary oil recovery. Arch currently has seven employees with over 125 combined years of oil and gas industry experience in the Western Canadian Sedimentary Basin.
Board of Directors and Management
Upon completion of the proposed Qualifying Transaction, the directors and senior officers of the resulting issuer are anticipated to be:
Don Martin (Director, President and Chief Executive Officer): The President and Chief Executive Officer of Arch and a director of Arch, Mr. Martin is a professional geologist with over 27 years experience largely in the Western Canadian Sedimentary Basin. Over that time, Mr. Martin has held positions with PanCanadian Petroleum, Anderson Exploration, Carbon Energy, Evergreen Resources and Storm Cat Energy and has drilled over 400 prospects.
Brian Carr (Director, Vice President, Finance and Chief Financial Officer): The Vice President, Finance and Chief Financial Officer of Arch and a director of Arch, Mr. Carr is a Canadian Chartered Accountant with over 27 years experience in the upstream oil & gas sector. Mr. Carr has been Vice President Finance and Chief Financial Officer of several publicly listed companies and in those positions, has been involved in raising $75 million through public financings and private placements. Mr. Carr has been a management consultant to Canadian and international oil companies in the area of accounting systems, reporting and analysis, corporate planning and modeling, and Sarbanes-Oxley compliance. He has a Bachelor of Commerce, Accounting from University of Calgary.
Dennis Nerland (Director): A director of Arch, Mr. Nerland has been a partner in the law firm Shea Nerland Calnan LLP since 1990 practising primarily in the areas of tax and trust law. Prior thereto he was a partner with the law firm Burnet, Duckworth and Palmer LLP practising in the same area. Mr. Nerland is a present and past director and officer of numerous private businesses, holding and investment companies and public companies listed on the TSX Venture Exchange and the Toronto Stock Exchange.
Patrick McDonald (Director): A director of Arch, Mr. McDonald has served as Chief Executive Officer, President and a director of Nytis Exploration Company, an oil and gas exploration company, since April 2003. From 1998 to 2003, Mr. McDonald served as President and Chief Executive Officer and a director of Carbon Energy Corporation, an oil and gas exploration and production company. From 1987 to 1997, he served as Chairman, Chief Executive Officer and President of a company that he founded, Interenergy Corporation, a natural gas gathering, processing, and marketing company. He is also currently a director of Forest Oil Corporation.
Greg Smith (Director): A director of Arch, Mr. Smith is a Canadian Chartered Accountant and the President of Oakridge Financial Management Inc., a financial management services company. He is also currently a director of CDG Investments Inc., a director of Tyler Resources Inc., a director of Okalla Corp., a director and CFO of Maglin Furniture, and a director and President of Alberta-Pacific Management Ltd., a private fund manager. Mr. Smith was previously a partner in the Calgary based chartered accounting firm of Smith Cageorge Perry, Chartered Accountants.
Steven Berger (Director): A Director of Goldbard, Mr. Berger is the current Vice President of Harborview Advisors LLC, a New York-based investment firm focused on providing capital to small emerging growth companies. From February 2004 to December 2006, Mr. Berger was the Chief Financial Officer of Global/CHC Worldwide LLC, a chemical coatings company, and from October 1999 to January of 2004, Mr. Berger was President of Morgan Harris & Co. where he was involved in equity trading. From June 2000 to June 2003, Mr. Berger was Chief Financial Officer of Virtual BackOffice Inc., a company that provided "virtual" secretarial services, and from June 1983 to June 1999, Mr. Berger was the treasurer, controller and chief compliance officer with LaBranche & Co., the parent corporation of LaBranche & Co. LLC, one of the oldest and largest specialists in equity securities listed on the New York Stock Exchange and the American Stock Exchange. Mr. Berger holds a Bachelor of Science degree in business administration with a concentration in finance from Boston University.
Floyd Krukoff (Director, Vice President Engineering): The Vice President of Engineering of Arch, Mr. Krukoff is a registered professional engineer with over 30 years of experience in the oil industry, primarily in the Western Canadian Sedimentary Basin. His experience is a blend of management, technical and strategic planning. Most recently he served as Vice President, Engineering with Direct Energy Resources before joining the Arch team. From 1999 to 2003 he served as an independent consultant, with emphasis in the operational area of the industry. For 18 years he was employed with 2 junior oil and gas companies, Benson Petroleum Ltd and Penn West Petroleum Ltd., as Operations Manager, with emphasis on heavy oil and natural gas assets. He started his career with Unocal and spent 9 years with the firm. He is a graduate of the University of Saskatchewan.
Name Change
Upon completion of the proposed Qualifying Transaction, it is anticipated that the name of the Resulting Issuer will be Arch Energy Inc.
Sponsorship
Given the oil and gas assets held by Arch, and given the anticipated Arch Financing to be completed prior to completion of the proposed Qualifying Transaction, Goldbard will apply to the Exchange for an exemption from the Exchange's sponsorship requirements. There is no guarantee that such exemption will be provided by the Exchange.
Trading Halt
The Goldbard Shares are currently halted at Goldbard's request and will remain so until the documentation required by the Exchange for the proposed Qualifying Transaction can be provided to the Exchange.
Completion of the proposed Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange approval. There can be no assurances that the proposed Qualifying Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the proposed Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Goldbard should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the
proposed Qualifying Transaction and has neither approved nor disapproved
the contents of this press release.
ADVISORY: Certain information in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects" and similar expressions. Forward-looking statements in this press release include, but are not limited to, statements with respect to the closing or completion of the proposed Qualifying Transaction. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with oil and gas production, marketing and transportation; loss of markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve estimates; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
The forward-looking statements contained in this news release are made as of the date of this news release, and Goldbard does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.