Blacksteel Energy Inc.
TSX VENTURE : BEY

Blacksteel Energy Inc.

July 30, 2015 10:35 ET

Blacksteel Energy Inc. Announces Letter of Intent to Acquire TERIC Power Ltd.

CALGARY, ALBERTA--(Marketwired - July 30, 2015) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. WIRE SERVICES

Blacksteel Energy Inc. (TSX VENTURE:BEY) ("Blacksteel" or the "Corporation")) is pleased to announce that it has entered into a letter of intent dated June 26, 2015 (the "Letter Agreement") to acquire TERIC Power Ltd. ("TERIC") (the "Proposed Transaction"). The Proposed Transaction is considered to be a reverse take-over under the policies of the TSX Venture Exchange Inc. ("TSXV"). Completion of the Proposed Transaction will be subject to customary closing conditions, including regulatory and shareholder approval.

The Proposed Transaction

Blacksteel is acquiring all of the issued and outstanding shares of TERIC for an aggregate purchase price of $11,008,876.80 (the "Purchase Price"). The Purchase Price shall be satisfied through the issuance of 73,392,512 common shares of Blacksteel (the "Acquisition Shares") at a deemed price of $0.15 per share.

The acquisition of TERIC is an arm's length transaction. TERIC is an Alberta incorporated company and its principal shareholders are Kevin Gilbank, Craig Barnes, Tom Chapman, Brian Hunter, and Harrie Vredenburg. The management team and Board of Directors hold over 90% of the shares issued, with the remaining amount held by working shareholders.

Trading in the common shares of the Corporation (the "Common Shares") may remain halted pending review of the Proposed Transaction by the TSXV. There can be no assurance that trading in Common Shares will resume prior to completion of the Proposed Transaction.

Offering of Units and Convertible Debentures

In conjunction with the Proposed Transaction, Blacksteel is proposing to complete a non-brokered private placement of units (the "Units") and convertible debentures (the "Convertible Debentures") (the "Offering") for gross proceeds of up to $3,500,000. Each Unit consists of one Common Share and one half of one Common Share purchase warrant (the "Warrant") at a price of $0.15 per Unit. Each whole Warrant shall be exercisable for one Common Share at a price of $0.25 for a period of 18 months following the closing of the Offering. The Convertible Debentures will be issued in denominations of $1000 and have a term of four years from issuance (the "Maturity Date"), with an interest rate of 8.5% per annum, payable in cash on a semi-annual basis, with the first payment due on June 30, 2016. Each Convertible Debenture is convertible, at the holder's option, into Common Shares at any time prior to the earlier of the business day immediately preceding the Maturity Date and the business day immediately preceding any date fixed for redemption by the Corporation at a conversion price of $0.25 per Common Share (the "Conversion Price"). The Conversion Price shall be subject to standard anti-dilution adjustments. Prior to the Maturity Date, and after at least two years from the issuance of the Convertible Debentures, the Corporation may: (a) redeem the Convertible Debentures through payment of the outstanding principal and any accrued and unpaid interest; and/or (b) force the conversion of the Convertible Debentures if the 20 day weighted average volume trading price of the Common Shares is no less than $0.40.

The Offering shall consist of a maximum of $1,800,000 of Convertible Debentures subject to increase at the discretion of the Corporation. Proceeds of the Offering will be used for development of the Resulting Issuer's portfolio of energy projects, working capital and general corporate purposes.

It is contemplated that Blacksteel may pay a fee to finders equal to 8.0% of the gross proceeds of the Offering and issue the number of finder's warrants to acquire Common Shares equal to 8.0% of the gross proceeds from the Offering divided by $0.15. The finder's warrants shall have an exercise price of $0.15 per finder's warrant and have an expiry of 12 months from the date of the closing of the Offering.

TERIC Financial Information

TERIC is a private Canadian company focused on the development and ownership of distributed clean energy projects.

The most recent unaudited management prepared financial information for TERIC is set out below:

December 31, 2014 year end

Current Assets $ 767,260
Fixed Assets $ 830,963
Total Assets $ 1,598,223
Current Liabilities $ 1,369,384
Long term Liabilities $ Nil
Total Liabilities $ 1,369,384
Revenue $ 2,095,703
Expenses $ 2,366,863
Net Income (Loss) $ (271,160)

Resulting Issuer

Blacksteel currently has 30,084,785 Common Shares outstanding. Upon completion of the Proposed Transaction, it is expected that the resulting entity (the "Resulting Issuer") will have 103,477,297 Common Shares issued and outstanding, not including any Common Shares that may be issued upon completion of the Offering. The Resulting Issuer will be considered an industrial issuer under the policies of the TSXV.

The directors and officers of the Resulting Issuer are expected to be as follows:

Kevin Gilbank - President, Chief Executive Officer and Director

Mr. Gilbank is a co-founder of TERIC and has been the President and Chief Executive Officer since December 2013. Mr. Gilbank has over 15 years of oil and gas experience with a specialization in operations, and infrastructure project management and execution team leadership.

Mr. Gilbank has a Masters of Applied Science (Mechanical Engineering) from the University of Ottawa, a Bachelor of Mechanical Engineering Degree (Honours) from the University of Dundee and a Mechanical Engineering Technology Diploma from Durham College.

Craig Barnes - Vice-President of Development, Chief Financial Officer and Director

Mr. Barnes is a co-founder of TERIC and has held the positions of Vice-President, Development and Chief Financial Officer since December 2013. Mr. Barnes has extensive commercial, project management and execution team leadership experience in the oil and gas midstream sector.

Mr. Barnes holds a Bachelor of Commerce degree from the University of Cape Town and a Project Management Professional designation from the Project Management Institute.

Tom Chapman - Vice-President, Engineering

Mr. Chapman is a co-founder of TERIC and has been Vice-President, Engineering since December 2013. Mr. Chapman is an electrical engineer with over 30 years of Canadian and international experience in the oil and gas, pulp and paper, and power generation industries. Mr. Chapman has built his reputation on his extensive technical knowledge and understanding of the AESO regulatory requirements and transmission and distribution infrastructure, and his experience in operating distributed generation projects.

Mr. Chapman has a Bachelor of Electrical Engineering and Electrical Engineering Technologist designation from Lakehead University.

Brian Hunter - Director

Mr. Hunter is an independent businessman active in a variety of industries. He is the founder, President and a director of Windy Field Ltd., a consulting company with investments and operations in land, cattle, farming and energy properties in Alberta. Mr. Hunter was a founder, Director, Vice-President and Chief Operating Officer of Bashaw Oil Ltd., a private oil and gas company from March 2009 to September 2014, and was also a founder, Director and Vice-President of Montane Resources Ltd. and Brigus Resources Ltd., both private companies involved in natural gas exploration and production in Alberta.

Mr. Hunter studied engineering at the University of Calgary and is a member of the Association of Professional Engineers and Geoscientists of Alberta and the Society of Petroleum Engineers.

Dr. Harrie Vredenburg - Director

Dr. Harrie Vredenburg is Professor of Strategy at the University of Calgary's Haskayne School of Business and holds the Suncor Energy Chair in Strategy and Sustainability. Dr. Vredenburg also holds an appointment as an International Research Fellow at Oxford University's Said Business School and is the Academic Director of the Haskayne Global Energy Executive MBA.

Besides serving as an advisor to corporations and governments, Dr. Vredenburg is a non-executive member of the board of directors of Touchstone Exploration Inc., a TSX listed technology-focused oil company with operations in Canada and Trinidad and Tobago and of Kainji Resources, a private Nigeria-focused oil company. Previously he served for eight years on the board of directors of Petrobank Energy and Resources Ltd., a TSX-listed mid-cap technology-focused oil and gas company with operations in Canada, Colombia, Peru and Brazil.

Dr. Vredenburg holds a PhD in Strategic Management from the University of Western Ontario, a MBA in International Business and Finance from McMaster University and a Bachelor of Arts (Honours) in History from the University of Toronto. He holds the ICD.D designation as a certified corporate director from the Institute of Corporate Directors.

Harry R. Munro, QC - Corporate Secretary

Mr. Munro is a lawyer with 33 years of extensive experience in corporate commercial, private enterprise and real estate law. He has held various board positions, including the Chair of the Aberdeen Hospital Foundation and the Chair of the Board of Governors for Kings-Edgehill Private School. Mr. Munro also served as an outside Director of the Sobeys Inc. Pension Plan. He continues to sit on the Board of Kings-Edgehill School and the Aberdeen Health Foundation and is also a Trustee of a private family charitable foundation.

Mr. Munro holds a Bachelors of Business Administration from St. Francis Xavier University, and a law degree from the University of Western Ontario. He is a member of the Canadian Bar Association.

Upon completion of the Proposed Transaction, it is expected that the Resulting Issuer will grant stock options to directors and officers to acquire up to 10,477,297 Common Shares. Each grant of options will be for a ten year term and exercisable at a price of $0.15 per share. Furthermore, additional stock options may be granted to directors, officers, employees and consultants subject to the number of Common Shares issued under the Offering.

Sponsorship of the Proposed Transaction

It is contemplated that pursuant to the policies of the TSXV, unless Blacksteel is able to obtain an exemption or waiver, it will be required to engage a TSXV member or participatory organization to act as sponsor in connection with the Proposed Transaction.

Significant Conditions to Completion of the Proposed Transaction

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to: (a) entering into a formal agreement; (b) completion of due diligence; (c) TSXV acceptance; and (d) Common Shareholder approval.

The Proposed Transaction cannot close until the required shareholder approvals are obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Blacksteel Energy Inc. 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 press release.

Blacksteel Energy Inc.

Blacksteel is a junior oil and gas company involved in the exploration, exploitation, development and production of petroleum and natural gas resources. The Corporation has a 25% working interest in one section of land in the Crossfield area, which the Corporation believes is oil prospective in the Elkton formation.

This news release contains forward-looking statements relating to the Proposed Transaction, including statements regarding the anticipated acquisition of TERIC, the anticipated election of directors for the Resulting Issuer, the completion of the Offering, the receipt of all necessary regulatory approvals and satisfaction of all other closing conditions in connection with the Proposed Transaction and other statements that are not historical facts. 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 based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These assumptions, risks and uncertainties include, among other things: the risk that the Proposed Transaction will not be completed if a formal agreement is not reached or that the necessary approvals and/or exemptions are not obtained or some other condition to the closing of the Proposed Transaction is not satisfied; the risk that closing of the Proposed Transaction could be delayed if TERIC is not able to obtain the necessary approvals on the timelines planned; the assumptions relating to the parties entering into the formal agreement in respect of the Proposed Transaction, its structure, and the timing thereof, the timing of obtaining required approvals and satisfying closing conditions for the Proposed Transaction, state of the economy in general and capital markets in particular, investor interest in the business and future prospects of Blacksteel and TERIC.

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, Blacksteel and TERIC disclaim any intention and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Additionally, Blacksteel, and TERIC undertake no obligation to comment on the expectations of, or statements made, by third parties in respect of the matters discussed above.

Neither 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.

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.

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