Birch Lake Capital Inc.
TSX VENTURE : BLA.P

June 16, 2010 18:27 ET

Birch Lake Capital Inc. and Canadian Rigger Energy Inc. Announce Letter Agreement for Business Combination

CALGARY, ALBERTA and VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 16, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

Birch Lake Capital Inc. (TSX VENTURE:BLA.P) ("Birch Lake" or the "Corporation") and Canadian Rigger Energy Inc. ("Canadian Rigger") are pleased to announce that they have entered into a letter agreement dated June 14, 2010 (the "Letter Agreement"), whereby the Corporation has agreed to acquire all of the currently issued and outstanding securities, including common shares of Canadian Rigger (the "Canadian Rigger Shares") via the issuance of approximately 12,192,525 common shares and 496,200 share purchase warrants exercisable into common shares in the capital of the Corporation (the "Birch Lake Shares"), which will be issued on the basis of point six six one nine five three seven (0.6619537) Birch Lake Share for every one (1) Canadian Rigger Share (the "Exchange Ratio"). The Birch Lake warrants to be issued to the holders of Canadian Rigger warrants, shall be on substantially the same terms as the Canadian Rigger warrants, except that the exercise price and number of Birch Lake Shares that may be purchased shall be adjusted in accordance with the terms of the Canadian Rigger warrants.

Birch Lake is a "capital pool company" as defined under the policies of the TSX Venture Exchange (the "Exchange") and intends for the proposed acquisition (the "Proposed Qualifying Transaction") to constitute the "Qualifying Transaction" of the Corporation as such term is defined in the policies of the Exchange. The Proposed Qualifying Transaction will be an arm's length transaction as the directors and officers of Birch Lake currently have no interest in Canadian Rigger.

Canadian Rigger is a private British Columbia oil and gas company with assets in the Nordegg and Normandville areas of Alberta and the Edam area of Saskatchewan.

Upon completion of the Proposed Qualifying Transaction, the board and management team of the Corporation will consist of the current directors and officers of the Corporation with the addition of David Stadnyk to the Board of Directors and George Tsafalas as the Chief Financial Officer of the Corporation such that the board of directors will be comprised of: William H. Petrie, Stanwill G.P. Grad, Raymond P. Antony, J. Scott Price, David Stadnyk and the officers of the Corporation will be William H. Petrie (President and Chief Executive Officer), George Tsafalas (Chief Financial Officer) and Donald B. Edwards (Corporate Secretary).

Mr. David Stadnyk is a proposed director of Birch Lake. Mr. Stadnyk is currently a Director of Canadian Energy Exploration Inc., listed on the TSX Venture Exchange. From 1998 to 2006, Mr. Stadnyk was the President of Patch International Inc., an international junior oil and gas exploration and production company. From 2006-2007 Mr. Stadnyk was President of Park Place Energy Corp., an international junior oil and gas exploration and production company. Mr. Stadnyk was co-founder and a director of Arsenal Energy Inc., President and founder of Starlight Sports and Entertainment Inc., founder of the TEAM 1040 AM Sports Radio Station, owned the Vancouver 86ers/Whitecaps Inc., founder of the Vancouver Angels/Breakers, Vancouver's first women's professional soccer team, and founder of the Vancouver Ravens Lacrosse team. Mr. Stadnyk was co-founder of Praxis Pharmaceuticals Inc. now Pharmaxis Pharmaceuticals Inc. Mr. Stadnyk is the Chairman of Stadnyk Foundation Inc., a sport philanthropic organization. Mr. Stadnyk will devote the time necessary to perform the work required in connection with being a director of Birch Lake.

Mr. George Tsafalas is the proposed Chief Financial Officer of Birch Lake. Mr. Tsafalas is currently the Chief Financial Officer and Director of Canadian Energy Exploration Inc., listed on the TSX Venture Exchange. Mr. Tsafalas is the President and CEO of a private oil and gas exploration company. Mr. Tsafalas was formerly President and CEO of AXQP Inc., listed on the TSX Venture Exchange and NEX. From 2002 to 2006, Mr. Tsafalas provided consulting roles and administrative contributions to various companies. Upon completion of the Proposed Qualifying Transaction Mr. Tsafalas will devote the time necessary to perform the work required with being the Chief Financial Officer of Birch Lake.

The Proposed Qualifying Transaction

Subject to any regulatory, shareholder, director or other approvals that may be required, the completion of satisfactory due diligence by Birch Lake and other conditions contained in the Letter Agreement, it is intended that Birch Lake will acquire Canadian Rigger in a reverse take-over transaction which will be effected by way of an amalgamation or other similar form of transaction.

There are currently 18,419,000 Canadian Rigger Shares issued and outstanding and warrants to acquire up to 733,600 Canadian Rigger Shares at an exercise price of $0.10 per share and up to 16,000 Canadian Rigger Shares at an exercise price of $0.15 per share issued and outstanding. Birch Lake currently has 6,765,000 issued and outstanding shares and options to acquire up to 660,000 Birch Lake Shares issued and outstanding. Upon completion of the Proposed Qualifying Transaction it is anticipated that the current holders of Canadian Rigger Shares will own over 64% of the issued and outstanding Birch Lake Shares and the current Birch Lake shareholders will own less than 36% of the issued and outstanding Birch Lake Shares. The Birch Lake Shares to be issued pursuant to the Proposed Qualifying Transaction may be subject to the escrow requirements of the Exchange, if applicable. 

Upon completion of the Proposed Qualifying Transaction, the Corporation will continue to carry out the business of Canadian Rigger as currently constituted.

Trading Halt and Suspension of Trading

On March 25, 2010 the Exchange issued a Bulletin indicating that if Birch Lake failed to complete a qualifying transaction on or before April 26, 2010 trading in the Birch Lake Shares will be halted or suspended for failure to complete a qualifying transaction within 24 months of the listing. On April 27, 2010 the Exchange issued a Bulletin indicating that effective the opening of markets on April 28, 2010 trading in the Birch Lake Shares will be suspended. Trading of the Birch Lake Shares remains suspended pending receipt and review by the Exchange of acceptable documentation regarding the Proposed Qualifying Transaction. The Proposed Qualifying Transaction has not been approved by the Exchange and remains subject to Exchange approval.

Description of Significant Conditions to Closing

Completion of the Proposed Qualifying Transaction is subject to the satisfaction of a number of conditions, including, but not limited to, Exchange acceptance. Other necessary conditions to the closing of the Proposed Qualifying Transaction, include obtaining all other necessary regulatory and third-party approvals and authorizations, the completion of a definitive agreement setting forth the terms and conditions set out in the Letter Agreement and the completion of due diligence. As the Proposed Qualifying Transaction is an arm's-length transaction, it is anticipated that Birch Lake shareholder approval will not be required. There can be no assurance that the Proposed Qualifying Transaction will be completed as proposed or at all.

If and when a definitive agreement between Birch Lake and Canadian Rigger is reached, in accordance with the policies of the Exchange, Birch Lake will issue a subsequent press release containing the details of the Proposed Qualifying Transaction, including information relating to sponsorship, summary financial information in respect of Canadian Rigger, reserves information relating to the properties of Canadian Rigger, and details with respect to the proposed directors, officers, and insiders of the Corporation upon completion of the Proposed Qualifying Transaction.

Investors are cautioned that, except as disclosed in the filing statement or other disclosure document to be prepared in connection with the Proposed Qualifying Transaction and associated transactions, any information released or received with respect to the Proposed Qualifying Transaction and associated transactions, 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.

In accordance with Exchange policy, the Birch Lake Shares are currently suspended from trading and will remain suspended until further notice.

Cautionary Statements

This news release contains forward-looking statements and information ("forward looking statements") within the meaning of applicable securities laws relating to the proposal to complete the Proposed Qualifying Transaction and associated transaction, including statements regarding the terms and conditions of the Proposed Qualifying Transaction and associated 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 Qualifying Transaction and associated transactions, that the ultimate terms of the Proposed Qualifying Transaction and associated transactions will differ from those that currently are contemplated, and that the Proposed Qualifying Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this press release are made as of the date of this release. Neither the Corporation nor Canadian Rigger undertakes any obligation to comment on analyses, expectations or statements made by third-parties in respect of the Corporation, Canadian Rigger or their respective financial or operating results or (as applicable), their securities, except as otherwise required by applicable securities law.

Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Proposed Qualifying Transaction and associated transactions and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.

Contact Information

  • Birch Lake Capital Inc.
    William H. Petrie
    President, Chief Executive Officer and Chief Financial Offic
    (403) 850-2064