Blacksteel Energy Inc.

November 18, 2015 17:56 ET

Blacksteel Energy Inc. Provides Update on Its Proposed Acquisition of Teric Power Ltd.

CALGARY, ALBERTA--(Marketwired - Nov. 18, 2015) -


Blacksteel Energy Inc. (TSX VENTURE:BEY) ("Blacksteel" or the "Corporation") would like to provide an update to its press release of July 30, 2015 on the Corporation's proposed acquisition of 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. Completion of the Proposed Transaction will be subject to customary closing conditions, including regulatory and shareholder approval.

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 "Common 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 of TERIC hold over 90% of the issued shares, with the remaining amount held by working shareholders.

Private Placement

In conjunction with the Proposed Transaction, Blacksteel has proposed 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 from issuance. The Convertible Debentures will be issued in denominations of $1000 and expire on September 30, 2019 (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 March 31, 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 September 30, 2017, 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 originally consisted of a maximum of $1,800,000 of Convertible Debentures, but this figure has been increased to $2,200,000. 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 issuance.

The Corporation has completed three closings under the Offering, on September 15, 2015, September 30, 2015 and October 30, 2015, resulting in cumulative gross proceeds of $2,511,099.90. The gross proceeds consist of $1,803,000 in Convertible Debentures and $708,099.90 in Units.

Loan to TERIC

Blacksteel and TERIC have entered into an agreement dated November 10, 2015 (the "Loan Agreement") whereby the Corporation has loaned $610,000 (the "Loan") to TERIC to assist it with current operational and capital expenditures until completion of the Proposed Transaction.

The Loan accrues interest at 8.5% per annum and interest is payable semi-annually commencing March 31, 2016. As security for the Loan, TERIC has entered into a general security agreement with Blacksteel whereby TERIC has pledged all of its present and after acquired personal property and agreed to a floating charge over its oil and gas assets.

Resulting Issuer

Blacksteel currently has 34,805,451 Common Shares outstanding. Upon completion of the Proposed Transaction, it is expected that the resulting entity (the "Resulting Issuer") will have 108,197,963 Common Shares issued and outstanding, including the Common Shares that have been issued to date under the Offering. The Resulting Issuer will be considered an industrial issuer under the policies of the TSXV.

Please refer to the Corporation's press release of July 30, 2015 for full details on the biographies and backgrounds of the directors and officers of the Resulting Issuer.

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

Canaccord Genuity Corp., subject to completion of satisfactory due diligence and the execution of a formal sponsorship agreement, has agreed to act as sponsor to Blacksteel in connection with the Proposed Transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Proposed Transaction or the likelihood of completion.

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.

Trading in the Common Shares is currently halted, will remain halted until certain requirements pursuant to Section 3.4 of TSXV Policy 5.2 have been met and may remain halted pending review and approval of the Proposed Transaction by the TSXV.

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.

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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