TrinCan Capital Corp.

March 04, 2010 10:26 ET

TrinCan Capital Corp. Announces Acquisition of Heavy Oil Assets From an Arm's Length Party as Its Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - March 4, 2010) - TrinCan Capital Corp. (TSX VENTURE:TRN.P) (the "Corporation")

The Transaction

The Corporation is pleased to announce that it has entered into a letter of intent (the "LOI") dated February 11, 2010 and effective February 1, 2010 for the acquisition (the "Transaction") of certain heavy oil assets located in the Buzzard area of Saskatchewan (the "Assets"). It is anticipated that the Transaction will constitute the Corporation's Qualifying Transaction pursuant to the applicable policies of the TSX Venture Exchange (the "Exchange"). The Transaction is expected to close on March 31, 2010 (the "Closing Date"). This Transaction is an "Arm's Length Transaction" as defined by the applicable policies of the Exchange; accordingly it is not anticipated that the Transaction will be subject to shareholder approval. Pursuant to the terms of the Transaction, the Corporation will acquire the Assets for $700,000 in cash (subject to adjustments), which will be paid out of the proceeds of the Private Placement (as defined below).

The Assets

The Assets consist of freehold and Crown non-operated working interests ranging from 25 to 50% in lands located in the Buzzard area of Saskatchewan, which is approximately 40 km south of Lloydminster. The Assets are encumbered by the normal royalties applicable to such assets and certain of the Assets are also encumbered by various gross overriding royalty interests. A major integrated oil company is the third party operator of the Assets. The production associated with the Assets is approximately 35-40 barrels of 13-4 degree API heavy oil per day from the Lloydminster, Sparky, and GP Formations. The proved developed producing portion of the Assets have been independently valued at approximately $550,000 on a constant pricing and cost basis, before income taxes and using a discount rate of 15%. Based on the nature of the Assets, the Corporation will be an oil and gas issuer following the closing of the Transaction.

The Private Placement

As a condition of the Transaction and contemporaneously with closing of the Transaction, the Corporation will complete a private placement (the "Private Placement") of (i) a minimum of 3,500,000 and a maximum of 6,000,000 units of the Corporation (the "Units") at a price, subject to the approval of the Exchange, of $0.10 per Unit; and (ii) up to $250,000 of principal amount of 10% convertible debentures, maturing two years from the Closing Date, redeemable no earlier than one year from the Closing Date, and convertible into Common Shares at $0.13 per Common Share (the "Convertible Debentures") for aggregate gross proceeds from the sale of the Units and the Convertible Debentures under the Private Placement of up to $850,000. Each Unit is to be comprised of one common share of the Corporation (a "Common Share") and one-half of one Common Share purchase warrant of the Corporation (each whole Common Share purchase warrant of the Corporation, a "Warrant"). Each Warrant will entitle the holder thereof to purchase one Common Share at an exercise price of $0.20 at any time up to 5:00 p.m. (Calgary time) on the date which is 12 months from the Closing Date.

The Units and Convertible Debentures to be issued under the Private Placement will be issued pursuant to exemptions from the prospectus requirements of applicable securities legislation and will be subject to resale restrictions as required under the applicable securities legislation.


Following the completion of the Transaction, assuming the maximum Private Placement and assuming no insiders of the Corporation participate in the Private Placement the Corporation is expected to have 14,000,000 Common Shares outstanding on a non-diluted basis of which approximately 14.3% will be held by insiders of the Corporation, and no shareholders of the Corporation are expected to hold in excess of 10% of the Common Shares.

The Corporation will also have outstanding director and employee share options to acquire 800,000 Common Shares at an exercise price of $0.10 per Common Share and agent's options to acquire 200,000 Common Shares at an exercise price of $0.10 per Common Share that were issued in connection with the Corporation's initial public offering.


Upon closing of the Transaction, assuming the maximum Private Placement, the Corporation is expected to have $250,000 of debt in the form of the Convertible Debentures and an aggregate of approximately $440,000 (less fees and expenses of the Private Placement and the Transaction) of capital available to fund its G&A and future acquisition, exploitation and exploration opportunities.

Conditions to Closing the Transaction

The completion of the Transaction is subject to a number of conditions including, but not limited to, the following:

  1. the execution of a definitive agreement with respect to the Transaction (the "Definitive Agreement");

  2. receipt by the Corporation of a satisfactory title opinion related to the Assets from its legal counsel;

  3. any consents, rights of first refusal or other restrictions on transfer, sale or assignment shall have been waived or complied with;

  4. the Corporation shall have had the opportunity to review, and shall be satisfied with, all agreements related to the Assets;

  5. the Corporation shall have had the opportunity to conduct an environmental audit or environmental inspection of the Assets and upon completion of same shall have remedies relating to the environmental defects in the Definitive Agreement;

  6. releases and registerable discharges from all parties holding security interests in the Assets;

  7. the completion of the Private Placement;

  8. the receipt of all necessary regulatory, corporate and third party approvals, including the approval of the Exchange, and compliance with all applicable regulatory requirements and conditions in connection with the Transaction;

  9. the delivery of standard completion documentation including, but not limited to officers' certificates and certificates of good standing; and

  10. other conditions precedent customary for a transaction such as the Transaction.

Board of Directors

The board of directors of the Corporation will remain unchanged following the completion of the Transaction, and will continue to be comprised of Daryl Fridhandler (Chair), Burkhard Franz, Kevin Gibson and Li (Julie) Zhu.

Daryl S. Fridhandler, Q.C. is a Partner with the law firm of Burnet, Duckworth & Palmer LLP and practices as a member of the firm's corporate, securities, mergers and acquisitions and commercial transactions groups. He has been active as a founder, director, officer or legal counsel of numerous for profit (public and private) and not for profit organizations, including government related entities. He was Chairman and a director of Innova Exploration Ltd. (TSX) (Cdn $400,000,000 on sale), Calgary Public Library, the Epcor (Calgary) Centre for the Performing Arts and Calgary Economic Development. He also served on the Board of Governors of the Alberta College of Art and Design and was chairman of the College's finance committee. Mr. Fridhandler has over 25 years experience in various legal and business aspects of the oil and gas business. Mr. Fridhandler is presently a member of the Board of Governors of the Calgary Petroleum Club, the Chairman and a director of Palliser Oil and Gas Corporation (TSXV) and a director of The Institute of Modern and Contemporary Art. In October, 2008, he was appointed to the Calgary Police Commission and is presently a Vice Chairman. Mr. Fridhandler received a BA (Distinction) from McGill University (1980), a law degree from Dalhousie University (1983) and is a graduate of the Institute of Corporate Directors program (2006). In 2004 he was appointed Queen's Counsel by the Government of Alberta. In 2005 he received the Alberta Centennial Medal for community service.

Kevin J. Gibson joined Palliser Oil & Gas Corporation (TSXV) in March 2008. Palliser is the fourth junior oil and gas company which Kevin has successfully led as President and Chief Executive Officer. Prior to Palliser, Kevin was President and a Director of TSX listed Innova Exploration Ltd. from November 2000 to April 2007. Innova was sold to Crescent Point Energy Trust for approximately $400 million ($7.55/share) plus assumption of bank debt in October 2007. At the time of the sale, Innova had one of the largest undeveloped acreage positions in the Southeast Saskatchewan Bakken light oil field, which Innova co discovered with Star Point Energy in the summer of 2004. Kevin was also President and a Director of TSE listed Western Star Exploration Ltd. from February 1992 to January 2000. Western Star was producing 1,800 boe/d at the time of its sale to Enerplus Resources Ltd. for $21 million. Since graduating from the University of Calgary in 1976 with a B.Sc. in Geology, Kevin has accumulated over 33 years of experience in the oil and gas industry in the Western Canadian Sedimentary Basin. In 1976, he joined Atlantic Richfield (Canada) Ltd., which was later acquired by Petro Canada Exploration, where he was responsible for the development of several of that corporation's most active fields. Kevin also spent five years as a consultant to a number of intermediate oil and gas companies for which he provided prospect generation and economic and acquisition analysis. Kevin was instrumental to the start up success of Grad & Walker Resources and Rio Alto Exploration Ltd. He is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

Burkhard Franz has been an entrepreneurial businessman for over 35 years. He has over 20 years experience in the international resources equity markets. He has held several executive positions with varied responsibilities in mining and oil and gas companies in Canada and Ecuador, South America. He brings a comprehension of financial equity markets and management of oil operations to the Corporation. He has raised equity capital for several companies in the mining and oil and gas companies. He started his career owning and directing several silviculture projects in Austria and Canada, and owning, directing and managing resort projects in Austria. Mr. Franz has actively served as President and director on boards of many private and public companies. Mr. Franz graduated from the federal college for Agriculture and Forestry in Raumberg, Austria. He earned an engineering degree in Agriculture from the Ministry of Agriculture and Forestry, Vienna, Austria in 1977. Mr Franz is fluent in German and English.

Julie Zhu has been a freelance business consultant since 2004, providing consulting services to companies interested in financing Chinese projects. Prior thereto, Ms. Zhu was a Principle Consultant at Beijing Financial Services Centre from 2002 to 2003 and from 2002 to 2003 Ms. Zhu was Vice President at Bank of China International Ltd. From 1997-2000, Ms. Zhu was a Commercial Account Manager at the Canadian Imperial Bank of Commerce. Ms. Zhu obtain a Bachelor of Arts Degree from Peking University in Beijing, China in 1987 and a Masters of Arts from the University of British Columbia in 1993. In 1995 Ms. Zhu obtained a Masters of Business Administration from the University of British Columbia. In 1999 she received the Certified Financial Planner designation and in 2002 the Chartered Financial Analyst designation from the Association for Investment Management and Research (USA).

Management Team

It is currently anticipated that the management team of the Corporation, post-Transaction, will consist of Kevin J. Gibson, Burkhard Franz and Wayne Fast:

Kevin J. Gibson, President and Chief Executive Officer. Mr. Gibson is the President and Chief Executive Officer of the Corporation.

Burkhard Franz, Chief Financial Officer. Mr. Franz is the Chief Financial Officer of the Corporation.

Wayne Fast, Chief Operating Officer. Mr. Fast is the Chief Operating Officer of the Corporation. Mr. Fast has held numerous positions with junior, medium and large multinational oil and gas corporations. His positions have focused primarily on drilling, production, and operations matters in Western Canada and also on mergers and acquisitions. Mr. Fast has served in positions with Saskatchewan Oil and Gas Corporation (Wascana) and Amerada Hess (Canada), Canadian Pioneer Energy Inc. Prime West, Foothills Oil and Gas Ltd. and RSX Energy Inc. Mr. Fast has also acted as a consultant to numerous enterprises. Mr. Fast earned a BSc in Chemical Engineering from University of Saskatchewan and his Certificate in Management Development from University of Calgary. He is a member of the Association of Professional Engineers and Geologists of Alberta, Society of Petroleum Engineers, Canadian Gas Processors Association and Canadian Association of Drilling Engineers.


The Transaction will be subject to Policy 2.4 of the Exchange relating to sponsorship and sponsorship requirements. The Corporation has not engaged a sponsor for the Transaction and will make an application to the Exchange to exempt the Qualifying Transaction from sponsorship requirements. The granting of such an exemption is within the discretion of the Exchange and there are no assurances that the Exchange will grant the exemption. If the Exchange does not grant such an exemption, the Transaction may not close.

Additional Information

The Corporation is a capital pool company within the meaning of the policies of the Exchange and is listed on the Exchange. The Corporation does not have any operations and has no assets other than cash. the Corporation's business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction under the policies of the Exchange.

Trading in the Common Shares has been halted on the Exchange since March 3, 2010 and will resume trading on upon receipt of the required documentation by the Exchange.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and, if applicable pursuant to TSX Venture Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. 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 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.

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


Certain information in this news release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among other things, information with respect to the Corporation's beliefs, plans, expectations, anticipations, estimates and intentions, the completion of the Private Placement pursuant to prospectus and registration exemptions, the Corporation's acquisition of certain assets, the execution of the Definitive Agreement for the Transaction, and the activities of the Corporation after the Transaction. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes the Corporation's expectations as of the date of this news release.

The results or events anticipated or predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from such forward- looking information include, among others, risks arising from general economic conditions and adverse industry events, risks arising from operations generally, reliance on contractual rights such as licences and leases in the conduct of its business, reliance on third parties, reliance on key personnel, possible failure of the business model or business plan or the inability to implement the business model or business plan as planned, competition, environmental matters, and insurance or lack thereof.

The Corporation cautions that the foregoing list of material factors is not exhaustive. When relying on the Corporation's forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Corporation has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.


Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • TrinCan Capital Corp.
    Burkhard Franz
    Chief Financial Officer and a Director
    (250) 860-4604