CALGARY, May 29 /CNW/ - Savary Capital Corp. (the "Corporation" or "Savary") (TSX-V - "SCA.P"), a capital pool corporation, is pleased to announce that it has entered into an Arrangement Agreement (the "Agreement") dated April 27, 2009 with Verge Energy Corp., a Calgary-based private oil and gas exploration and production company ("Verge"), whereunder Savary will acquire all of the issued and outstanding common shares of Verge (the "Transaction"). The Transaction is not a Non-Arm's Length Transaction and as such will not require approval of the shareholders of Savary under applicable policies of the TSX Venture Exchange (the "TSX-V") and will constitute Savary's "Qualifying Transaction".
About Verge Energy Corp. ------------------------
Verge is a private Alberta based oil and gas exploration and production company incorporated under the Business Corporations Act (Alberta) which is currently focused on activity in east central Alberta. Verge currently produces 180 BOEs per day (140 bbls/day medium gravity oil and 240 Mcf/day gas). Verge's assets include 18 net sections of land and three producing batteries. Verge operates the batteries and has an 88% working interest in the wells and facilities. Production is obtained from Ellerslie, Glauconite and Viking formations. Verge has identified over 40 infill drilling locations and 10 recompletions to further develop its properties.
DeGolyer and MacNaughton Canada Ltd., independent oil and gas reserves evaluators, evaluated Verge's reserves of oil and natural gas effective December 31, 2008 in accordance with Canadian Securities Administrators National Instrument 51-101 and Canadian Oil and Gas Evaluation Handbook standards and based on forecast prices. The report estimates Verge's net proved reserves at 201 Mbbl of oil and 657 MMcf of natural gas and its total proved and probable reserves at 398 Mbbl of oil and 3,409 MMcf of natural gas.
Verge's principal offices are located at 430, 736 8th Avenue SW, Calgary, Alberta, T2P 1H4
Summary of the Transaction --------------------------
The Transaction will be completed as a Plan of Arrangement under the Business Corporations Act (Alberta). Pursuant to the Transaction, Savary will acquire all of the issued and outstanding shares of Verge on the basis of 2.1 common shares of Savary for each common share of Verge. As a result of the foregoing, Verge will become a wholly-owned subsidiary of Savary. Closing of the Transaction is anticipated to occur by June 30, 2009.
In conjunction with the Transaction, Savary will undertake a non-brokered private placement (the "Non-Brokered Private Placement") of 7,500,000 common shares at a price of $0.10 per share to yield gross proceeds of $750,000. Closing of the Non-Brokered Private Placement is a condition precedent to the closing of the Transaction. The net proceeds from the Non-Brokered Private Placement will be used to supplement Savary's working capital. No finders fee or commission has or will be paid in relation to the Non-Brokered Private Placement.
At closing of the Transaction, Savary will issue 7,293,363 common shares at a deemed price of $0.10 per share in exchange for the common shares of Verge and 7,500,000 common shares pursuant to the Non-Brokered Private Placement. As a result, there will be an aggregate of 17,793,363 common shares of outstanding upon completion of the Transaction.
Prior to the close of the Transaction, Verge will have cancelled all of its existing 520,950 stock options to acquire shares of Verge.
Rundle Energy Partners Ltd. will receive a finder's fee of $150,000 plus GST payable as to $50,000 plus GST on closing and the remainder in three monthly installments which may vary in amount, with the full balance scheduled for payment by September 30, 2009. Any balance remaining unpaid on September 30, 2009 will bear interest at the rate of 2% per month until paid.
A general policy of the TSXV requires that a sponsor be retained to prepare a sponsor report in compliance with TSXV Policy 2.2. Savary has applied for an exemption from sponsorship requirements, however, there is no assurance that Savary will obtain this exemption.
Trading in the common shares of Savary will remain halted until certain required documents have been provided to the TSXV.
Financial Information Concerning Verge
--------------------------------------
The following selected audited financial information as at and for the
years ended December 31, 2008 and 2007 is derived from the audited financial
statements of Verge as at and for the years then ended.
As at As at
December 31, December 31,
2008 2007
and for the and for the
year ended year ended
December December
31, 2008 31, 2007
Category ($) ($)
------------------------------------------ ----------------------------
Assets 7,298,185 7,849,945
Liabilities 2,227,253 2,227,253
Working Capital (Deficiency) (760,222) (788,274)
Shareholders' Equity 2,458,008 2,962,255
Retained Earnings (Deficit) (983,502) (346,356)
Revenue 5,654,339 1,579,553
Loss Before Income Taxes (462,313) (461,554)
Net Loss and Comprehensive Loss (637,146) (346,356)
Management:
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The board of directors of Savary currently consists of Harvey Lalach, Mansoor Anjum and Sanjay Sharma. The current directors will remain on the board following completion of the Transaction and Richard Lewanski (who is currently a director of Verge) will be added to the Board. None of the current directors or officers of Savary are directors, officers, shareholders or insiders of Verge and have no relationship to any director, officer, promoter or insider of Verge.
At closing of the Transaction, Harvey Lalach will resign as President, CEO, CFO and Secretary of Savary, Mansoor Anjum, currently a director of Savary, will be appointed as President and CFO of Savary and Harold Hay, currently the President of Verge, will be appointed as the CEO of Savary.
The current directors and officers of Verge are: Harold Hay (President, Chief Executive Officer and Director), Bob Chiasson (Director), Richard Lewanski (Director), Scott Sangster (Director), Craig N. Spurn (Corporate Secretary), Christopher Baker (Vice President, Land) and Frank Madadi (Vice President, Exploration). As a group, the directors and senior officers of Verge own or control (directly or indirectly) 965,030 common shares of Verge representing approximately 28% of Verge's outstanding common shares. Verge currently has in excess of 70 shareholders. Upon completion of the Transaction, the board of directors of Verge will be changed so that the board of directors of Verge is the same as the board of directors of Savary. After giving effect to the Transaction, the holdings of the directors and officers of Savary, and their Associates and Affiliates, as a group, whether, beneficial, direct or indirect, will be 1,819,021 Savary Shares, representing approximately 10.2% of the outstanding Savary Shares (9.6% on a fully diluted basis). In the event that directors and officers or their Associates or Affiliates participate in the Non-Brokered Private Placement, the above figures may increase.
The biographies and municipalities of residence of the Corporation's proposed directors and key officers are as follows:
Harold Hay - Chief Executive Officer - (Calgary, Alberta)
Harold Hay has been the President of Verge since August 2007. He has over 25 years of experience in the oil and gas industry and has held managerial positions in senior and junior production and exploration companies. Mr. Hay was the Heavy Oil Manager with Pearl E&P (2007) and the VP of Operations for Atlas Energy Ltd., a TSX listed oil and gas company producing 35,000 BOE per day, from October 2002 to December 2006. Between December 1998 and November 2004, Mr. Hay progressed from Production Engineer to Group Leader with Encana. He holds a Bachelor's Degree in Engineering from the Technical University of Nova Scotia and is an active member of the Alberta Association of Professional Engineers Geologists and Geophysicists and the Society of Petroleum Engineers. Mr. Hay is 51 years of age and expects to devote 100% of his time to the business and affairs of Savary, following the Transaction.
Mansoor Anjum - President, Chief Financial Officer and a Director -
(Calgary, Alberta)
Mansoor Anjum has over 17 years of experience in financial management and marketing and has worked in the oil and gas industry for the last 14 years. He is the President and a director of Java Capital Corp., a capital pool corporation and a director of Pyramid Petroleum Inc., a public oil and gas company where he also held the position of President and Chief Financial Officer from March 2005 to September 2008. Between June 2005 to December 2006 he was the Chief Financial Officer of Capco Energy Inc., a U.S. based oil and gas company where he also acted as a Consultant from July 2002 to June 2004. From July 2003 to September 2005 he was the President of Meteor Marketing Inc., U.S., a petroleum products distributor. He held the position of Vice President International for Saba Petroleum Company, a U.S. based oil and gas company, from June 1995 to July 2000 and worked mainly out of the company's Indonesia office. He holds a Masters degree in Business Administration from the Rotman School of Management at the University of Toronto and a Masters of Mathematics from the University of Punjab in Pakistan. Mansoor Anjum is 43 years of age and expects to devote 50% of his time to the business and affairs of Savary, following the Transaction.
Harvey Lalach - Director - (Kelowna, British Columbia)
Harvey Lalach holds a management diploma from B.C.I.T Since April 2006, he has been the President, Chief Financial Officer, Secretary and a Director of Anavex Life Sciences Corp., an emerging biopharmaceutical company. Between September 2002 and September 2005, he was the President and a Director of Assure Energy Inc., a company involved in the exploration and development of natural gas and oil in Canada's western sedimentary basin. From July 2003 to December 2004, he was President and a Director of Quarry Oil & Gas Ltd., a company also involved in the exploration and development of natural gas and oil in Canada's western sedimentary basin. From November 1998 to March 2001, he was Vice-President of GlobalNetCare Inc., a medical internet company. He was the Business Manager for Goldtex Resources Ltd., a public mining company between July 1997 and November 1998 and between July 1992 and July 1997 he was the Branch Manager for TD Green Line Investor Services Inc. Harvey Lalach is 43 years of age and expects to devote 10% of his time to the business and affairs of Savary, following the Transaction.
Sanjay Sharma - Director - (Calgary, Alberta)
Sanjay Sharma has over 21 years of experience in the oil and gas industry holding managerial positions with both senior and junior exploration companies. He has been the Chief Geophysicist for Cabrerra Resources Ltd., an oil and gas company, since July 2006. Between March 2001 and June 2006, he was an Exploration Manager for Penn West Petroleum Ltd. and between April 1995 and March 2001 he was a Geophysicist for Magin Energy Inc. He holds a degree in geophysics from the University of Calgary and is an active member of the Alberta Association of Professional Engineers Geologists and Geophysicists. Sanjay Sharma is 45 years of age and expects to devote 10% of his time to the business and affairs of Savary, following the Transaction.
Richard Lewanski - Director - (Calgary, Alberta)
Richard Lewanski has 30 years of experience in the oil and gas industry. Mr. Lewanski is President and Director of Meridian Exploration Ltd. and Plenty Energy Inc., both privately held oil and gas companies operating in Saskatchewan. From October 2002 to December 2006, Mr Lewanski was President, CEO and Director of Atlas Energy Ltd., a TSX listed oil and gas company producing 6,000 BOE per day. From December 1999 to October 2002, Mr. Lewanski was President and Director of Castle River Resources Ltd., a privately held oil and gas company operating in northern Alberta. From December 1998 to December 1999 Mr. Lewanski consulted to a number of oil and gas companies and investment management firms. From March 1993 to December 1998, Mr. Lewanski was President, CEO, and Director of Amber Energy Inc., a TSX listed oil and gas company producing 35,000 BOE per day. Prior thereto, Mr. Lewanski was employed as an exploration geophysicist at Co-Enerco Resources Ltd. and Chevron Canada Resources Ltd. Mr. Lewanski holds a B. Sc. (Hons.) in Geophysics from the University of Manitoba. Mr. Lewanski is 51 years old and expects to devote 10% of his time to the business and affairs of Savary, following the Transaction.
Completion of the Transaction is subject to a number of usual conditions, including, but not limited to, approval by shareholders of Verge, completion of the Non-Brokered Private Placement, Court approval of the Plan of Arrangement, agreement by Verge's Banker to continue with current financing arrangements and acceptance of the Transaction by the TSX-V. There can be no assurance that the Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the 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. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.
Except for statements of historical fact, this news release may contain certain "forward-looking information" within the meaning of applicable securities law including opinions, assumptions, estimates and management's assessment of future plans and operations, budgeted capital expenditures and funding thereof. Forward-looking information in this news release is characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" "will" or "could" occur. There are uncertainties inherent in forward-looking information, including factors beyond Savary's control, and no assurance can be given that such events will occur on time or at all. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including the possibility of not completing the Transaction mentioned in this press release.
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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.