Willowstar Capital Inc.

June 11, 2009 16:35 ET

Willowstar Announces Qualifying Transaction With Creso Resources Inc.

TORONTO, ONTARIO--(Marketwire - June 11, 2009) - WILLOWSTAR CAPITAL INC. ("Willowstar" or the "Corporation") (TSX VENTURE:WWM.P), a Capital Pool Company, is pleased to announce that it has entered into an arm's length binding letter agreement dated June 10, 2009 (the "Agreement") pursuant to which it has agreed to acquire, directly or indirectly, all of the issued and outstanding securities of Creso Resources Inc. ("Creso"). The acquisition of Creso will be Willowstar's qualifying transaction (the "Qualifying Transaction") pursuant to the rules and policies of the TSX Venture Exchange (the "Exchange").

Willowstar has agreed to acquire all of the issued and outstanding common shares of Creso in exchange for Willowstar common shares (each, a "Willowstar Share"), having a deemed value of $0.15 per share, to Creso shareholders in exchange for all of their common shares in the capital of Creso (each, a "Creso Share"). Each Creso shareholder will be entitled to receive one Willowstar Share for each Creso Share. In addition, Willowstar has agreed to issue replacement options, warrants and a debenture to all holders of Creso options, warrants and a debenture who surrender such securities to Willowstar pursuant to the Agreement. The replacement options, warrants and debenture issued by Willowstar will have identical exercise terms as the Creso options, warrants and debenture that are surrendered.

Creso has entered into an engagement letter with Pope & Company ("Pope") pursuant to which Pope has agreed to conduct a best efforts financing for gross proceeds of a minimum of $750,000 and a maximum of $2,000,000, consisting of the offering by Creso of a minimum of 5,000,000 and a maximum of 13,333,333 units at a price of $0.15 per unit, with each such unit being comprised of one Creso Share and one-half of one common share purchase warrant (each, a "Creso Warrant"), with each whole Creso Warrant being exercisable into one Creso Share at a price of $0.25 for a period of twenty-four months from the date of issuance or a minimum of 4,545,455 and a maximum of 12,121,212 units at a price of $0.165 per unit, with each such unit being comprised of one Creso Share issued on a flow-through basis and one-half of one Warrant (collectively, the "Concurrent Financing"). It is expected that an initial tranche of the Concurrent Financing for gross proceeds of not less than $750,000 will close on or before June 23, 2009. As compensation for its services as agent under the Concurrent Offering, Pope will be provided with a cash commission in the amount of 8% of the gross proceeds raised and a number of compensation warrants as is equal to 10% of the total of number of units sold under the Concurrent Financing, with each compensation warrant being exercisable into one (non-flow-through) unit. The proceeds of the Concurrent Financing will be used for the purposes of exploration on Creso's properties in the Shining Tree District of Ontario and for general working capital purposes.

Creso presently has approximately 47 shareholders holding an aggregate of 32,675,014 Creso Shares. A further 3,380,000 Creso Shares are issuable in connection with certain property acquisitions that are pending. In addition, there are a further 2,925,000 options to acquire Creso Shares outstanding, together with 500,000 share purchase warrants and a convertible debenture in the principal amount of $1,900,000 (convertible at the lower of (i) $0.75 per common share or (ii) the price per common share at which the common shares are issued pursuant to any issuance of common shares (or financial instruments or securities convertible into or exercisable or exchangeable for common shares) by the Creso or any other person (including any selling shareholder) in connection with which application is made to list the common shares (or financial instruments or securities convertible or exercisable or exchangeable for common shares) for trading on a recognized stock exchange in Canada, the United States, the United Kingdom or elsewhere, the whole subject to adjustment. There are no parties that hold a controlling interest in Creso.

Completion of the Qualifying Transaction will be subject to the satisfaction of a number of conditions, including, but not limited to: receipt of gross proceeds of not less than $750,000 pursuant to the Concurrent Financing on or before June 23, 2009; completion or waiver of sponsorship; receipt of all necessary consents, approvals, etc.; completion of all due diligence reviews; the entering into of a definitive agreement in respect of the business combination; the approval of the respective board of directors of Willowstar and Creso; and satisfaction of the Minimum Listing Requirements of the Exchange and all requirements under Exchange rules relating to completion of a "Qualifying Transaction". It is expected that, upon completion of the Qualifying Transaction, Willowstar will change its name to "Creso Resources Ltd." or some similar such name as the directors determine and as is acceptable to applicable regulatory authorities.

The proposed Qualifying Transaction is not a "non-arm's length qualifying transaction" within the meaning of Policy 2.4 of the Exchange and, as such, shareholder approval is not required, unless otherwise required by the Exchange. Willowstar also intends to apply for a waiver from the requirement to retain a Sponsor in connection with the Qualifying Transaction.

A filing statement in respect of the proposed Qualifying Transaction will be prepared and filed in accordance with Policy 2.4 of the Exchange on SEDAR at www.sedar.com no less than 7 business days prior to the closing of the proposed Qualifying Transaction. A press release will be issued once the filing statement has been filed as required pursuant to Exchange policies.

Creso Resources Inc.

Creso Resources Inc. is a private mineral exploration company that was incorporated on February 22, 2005 under the Canada Business Corporations Act. Its registered and head offices are located at 2750 600 de Maisonneuve Blvd. West, Montreal, Quebec H3A 3J2. Creso's principal mining exploration holdings are located in Knight and Tyrell townships in the Shining Tree district of Northern Ontario (over 120 square kilometres of claims) and additional interests are held in past producing copper, zinc and lead properties in Guatemala. Creso is engaged, through its subsidiaries, in the identification and acquisition of early stage gold and base metals properties with demonstrable potential of hosting higher grade ore deposits. Creso spent approximately $1.4million in exploration on its Ontario property.

Proposed Management

As part of the completion of the Qualifying Transaction, Creso's current management will assume responsibility for Willowstar and Willowstar' board of directors will be comprised of five nominees of Creso and one nominee from Willowstar's current board. The following are brief descriptions of the management team and its proposed nominees that will, collectively, assume management responsibility for Willowstar upon completion of the Qualifying Transaction:

Marc Filion - President, Chief Executive Officer

Dr. Filion obtained his B.A. in 1966 and his B.Sc. in Development and Exploration Geology in 1970. In 1973, Dr. Filion obtained his Ph.D. in Economic Geology and Geostatics from the Royal School of Mines Imperial College in London, England. Dr. Filion also has a M.B.A. in International Management from the Ecole des Hautes Etudes Commerciales. Dr. Filion has more than 30 years of experience in the development and management of industrial projects in joint venture with international business partners. He has also been involved in the negotiation, start-up and management of international projects as well in marketing of engineering and construction projects in the energy, light and heavy industrial and environmental sectors in Europe, Southeast Asia, the Middle East, Africa and South America. From 1998 April 2006 Dr. Filion was Senior Vice-President - Mines and Metals Sector of Societe Generale de Financement du Quebec ("SGF"), responsible for the development of mineral resource investment projects at the SGF. From May 2006 until October 2007, Dr. Filion was President and controlling shareholder of CHIM International Inc., a consulting company in the field of development and financing of mining and metallurgical projects. Dr. Filion has been Executive Vice-President of Nichromet Extraction Inc. since November 2007.

Vatche Tchakmakian - Chief Financial Officer

Mr. Tchakmakian is a chartered accountant specialized in the field of public companies and securities regulations in Canada. He has served as Chief Financial Officer for Dacha Capital Inc. an Exchange listed venture capital company, since August 2002 and for Beaufield Resources Inc., an Exchange listed mining exploration company, since January 2005. In addition, Mr. Tchakmakian was the CFO of Gold Hawk Resources Inc., an Exchange listed mining company, from June 1997 until January 2007, at which time that company ceased to be a mining exploration company and became a producing company. He also served as CFO of Franc-Or Resources Corporation, a Toronto Stock Exchange listed mining exploration company, from December 1999 to October 2008. From 1988 to 1993, he managed audit assignments at one of the predecessors of PricewaterhouseCoopers LLP, a national accounting firm, for a number of large private and public companies. Mr. Tchakmakian received his B.S. in Public Accounting from Ecole des Hautes Etudes Commerciales, Universite de Montreal in 1988.

Jacques Bouchard - Director

Mr. Jacques Bouchard obtained a Bachelor degree in Law from McGill University in 1984 and was called to the Quebec Bar in 1985. He is a partner in the Montreal office of Heenan Blaikie and the firm's Director of International Development since March 2005. Prior to March 2005 he was a partner with the law firm Desjardins Ducharme since March 2000, a law firm which has since dissolved. He acts as advisor for several governments, public corporations, multilateral development banks and major companies. Mr. Bouchard is acting on behalf of public, as well as private, companies and is specialized in the energy and mining sectors, in telecom, banking, engineering and construction. Among other mandates, Mr. Bouchard has acted as coordinator for projects in Burundi, Burkina Faso, Tanzania and the Democratic Republic of the Congo. Mr. Bouchard has been selected by the International Who's Who of Professionals for his achievements in major projects.

Andre Thibault - Director

Mr. Andre Thibault obtained a Bachelor in Commerce (1967) from the Hautes Etudes Commerciales of the University of Montreal and became a chartered accountant in 1968. In 1970, he founded the firm of chartered accountants, Thibault Marchand, that merged with Peat Marwick (now KPMG) in 1986. In 1991, he joined the firm Price Waterhouse that became later PricewaterhouseCoopers LLP as a partner. Mr. Thibault was responsible for major clients, public and private companies, including in the mining industry. He is currently retired, having retired from PricewaterhouseCoopers in 2004.

Barry Coughlan - Director

Mr. Coughlan obtained a Bachelor of Arts from the University of British Columbia in 1975. Mr. Coughlan is a self-employed Vancouver based businessman and financier, who over the past 25 years has been involved in the financing of publicly-traded companies. His principal occupation since is President and Director of TBC Ventures Ltd., a private investment company, which provides management, technical and financial services to a number of publicly-trades companies. Mr. Coughlan's focus has been the identification, negotiation and securing of viable resource projects worldwide, while concurrently developing long-term relationships within domestic and international investment communities. Mr. Coughlan is an officer and or a director of the various listed companies in the mining sector.

Pierre R. Gauthier - Director

Mr. Gauthier holds a Bachelor Degree in Economics (B.A. 1967) from Universite de Montreal and a Bachelor Degree in Commerce (B.Com. 1969) from Ottawa University. He also holds a Master Degree in Business and Administration (M.B.A. 1976) from Concordia University. Mr. Gauthier has over 35 years of experience in the financial field. From 1970 to 1986, he worked in the investment banking business where he was involved in corporate finance, institution sales (as manager) and research (as director). He has worked for several brokerage firms, namely Dominion Securities, Burns Fry and Geoffrion Leclerc. He was Vice-President and Director at A.E. Ames from 1976 to 1981 and Vice-President and Director at Bell Gouinlock from 1981 to 1986. From 1986 to the present, he has occupied various positions in numerous resource companies. Since March 2000, he is the President of Seed Capital Inc., a venture capital firm.

Richard Groome - Director

Mr. Groome has a BA in Economics (1981) from McGill University. He has been in the financial industry for more than 20 years. He is Managing Partner of Notre-Dame Capital Inc., a financial advisory firm based in Montreal, Quebec. His expertise is in the financing of small and mid-size emerging growth companies. Prior to starting this business in September 2005, he was Senior Vice-President of Strategic Capital Inc. from January 2003 through September 2005 and Senior Vice-President of Institutional Equity Sales from August 2001 to January 2003 at Desjardins Securities, a Quebec-based firm.

Mark Raguz - Director

Mark Raguz is the President of New Texmont Explorations Ltd., a private company involved in mineral exploration. Mr. Raguz is a graduate of the Lassonde Mineral Engineering Program at the University of Toronto and also serves as a director of Gowest Amalgamated Resources Ltd., a TSX Venture Exchange listed company.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to 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.

Forward Looking Statements

Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

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.

Contact Information

  • Willowstar Capital Inc.
    Mark Raguz
    President and CEO
    (416) 200-3847
    (416) 447-1381 (FAX)
    Creso Resources Inc.
    Pierre R. Gauthier
    (514) 866-6001 x 239
    (514) 866-6193 (FAX)