BTU Capital Corp.
TSX VENTURE : BTU.H

March 08, 2011 11:08 ET

BTU Capital Corp. Announces Qualifying Transaction, Completes Letters of Intent for Acquisition of the Shares of Irtysh Petroleum Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 8, 2011) - BTU Capital Corp. (TSX VENTURE:BTU.H) -

Irtysh Petroleum Acquisition -- BTU Capital Corp. ("BTU" or "the Company") is pleased to announce it has entered into a non-binding Letter of Intent with Irtysh Petroleum Ltd. ("IPC"), pursuant to which the Company will acquire (the "IPC Acquisition") all of IPC's business and assets or all of IPC's issued and outstanding securities. IPC is a United Kingdom-based corporation holding oil and gas interests in Siberia, Russia.

The structure of the IPC Acquisition will be determined in a tax-effective manner for both the Company and IPC, and will be governed by a definitive purchase agreement to be entered at a future date. The IPC Acquisition, if completed, will constitute the Company's "Qualifying Transaction" under TSX Venture Exchange (the "TSXV" or the "Exchange") Policy 2.4. The IPC Acquisition is an arm's length transactions and management anticipates that shareholder approval will not be required. Additional details regarding the IPC Acquisition will be announced as they become available.

Material Terms of IPC Acquisition

The material terms of the IPC Acquisition are set out in a Letter of Intent signed March 7, 2011 by both the Company and IPC (the "LOI"). The material terms of the LOI can be summarized as follows:

1. Subject to certain terms and conditions set out in the LOI, including the issuance of all approvals required by the Exchange, the Company will acquire all of the business and assets of IPC or the issued and outstanding shares of IPC, in consideration of which the Company will issue 299.7 million shares from its treasury to (or to the direction of) IPC (in the event of an asset purchase) or its shareholders (in the event of a share purchase). The exact number of shares which are to be issued by the Company may be revised prior to completion of the transaction, which will be disclosed by the Company in subsequent news releases.

2. The obligations of the Company and IPC to complete the IPC Acquisition are subject to a number of conditions, including:

(a) the Company being satisfied with its due diligence review of IPC and its properties (principally being its oil and gas rights in Siberia, Russia, discussed below), on or before the closing of the transaction (the "Due Diligence Period");

(b) the Company raising $6,500,000 by way of a series of private placements (see below);

(c) the Company entering into a sponsorship agreement if required by the Exchange;

(d) execution by all parties of a definitive share purchase agreement (the "Agreement", discussed below);

(e) receipt of the approval of the shareholders of the Company; and

(f) acceptance of the Qualifying Transaction and any related matters by the Exchange.

During the Due Diligence Period, the Company shall have the exclusive right to acquire IPC's assets and outstanding securities, and the Company has agreed that it will not enter into any other Agreement in Principal (as defined in TSXV Policy 2.4) with any other party. If the Company is satisfied with its due diligence review of IPC, the LOI contemplates that at the conclusion of the Due Diligence Period, the Company and IPC shall proceed with preparation of a definitive share purchase agreement and related documents necessary to give effect to the IPC Acquisition in accordance with the following terms:

(a) the Company shall complete the IPC Acquisition in consideration for the issue of 299.7 million common shares of the Company to IPC (in the case of an asset purchase), it shareholders (in the case of a share purchase), or their respective nominees (the "Share Consideration"), which shall be issued effective as of closing of the Qualifying Transaction. The Share Consideration shall be issued at a price of CDN $0.06 per common share, for aggregate consideration of CDN $70 million, as supported by a business valuation, and will also be subject to Exchange approval;

(b) if required by the Exchange, the Company shall retain an Exchange member brokerage firm to act as sponsor for the Qualifying Transaction in accordance with the rules and policies of the Exchange, on terms to be negotiated;

(c) the Company shall retain the services of a firm acceptable to BTU and IPC to provide a due diligence/valuation material package or other form of comfort with respect to the value of the Assets to be acquired by the Company. Furthermore, a qualified and competent party will complete a oil and gas reserves report with respect to IPC's Siberian oil and gas interests, which will comply with N.I. 51-101;

(d) IPC shall provide a comprehensive list of the Assets supported by a legal opinion that all Assets are owned or will be owned by IPC prior to the closing of the Qualifying Transaction;

(e) IPC shall provide all financial statements required under Exchange policies; and

(f) The Share Consideration to be issued under the Qualifying Transaction, as well as shares held by "principals" of the "Resulting Issuer" (as such terms are defined in Exchange policies) shall be subject to resale restrictions and escrow requirements under applicable securities laws and Exchange requirements, and, if necessary in order to complete the Qualifying Transaction, may also include a performance-based escrow release formula.

New Transition Committee

Additionally, two outside individuals at arm's length to both BTU and IPC have been nominated and agreed to serve on a Transition Committee with current BTU Director Walter Brenner. They are:

Anthony Garson, Toronto, Ontario

Anthony obtained a B.Sc. in Earth Science in 1969 from University of Waterloo, Ontario. He received a MBA from University of Toronto, Ontario in 1983. He began his career with the Ontario Department of Mines and subsequently with Derry, Michener and Booth, a geological consulting firm in Toronto.

For the past 30 years, Mr. Garson has been extensively involved in the brokerage industry having served as a Mines & Metals Analyst. Previous positions include: Mines and Metals analyst, Equities Investment Division of Bank of Nova Scotia, Toronto (1975-80); Vice President and Senior Mining Analyst for Canadian operations of Dean Witter Reynolds (Canada) Ltd. (1981-85); and Vice-President and Senior Mining Analyst of Canaccord Capital (1990-1993); London, England. Mr. Garson was a principal and founding partner of Union Capital Markets (U.K.) Ltd, licensed under the Securities and Futures Authority of London, England (1993-95);

He has acted as a director of several public companies that include Chairman and director of Global Pacific Minerals, Vancouver, BC, a director of Grayd Resource Corporation and a director of Colibri Resource Corp. Anthony Garson was President/CEO, Vice-Chairman and director of Great China Mining Inc., an American mineral exploration company with substantial copper-gold resources in the People's Republic of China. In December 2006, Great China merged with Continental Minerals Corporation in a $60 million transaction.

After the Continental Minerals transaction, Anthony Garson became President/CEO and director of Excalibur Resources Ltd., a junior Canadian mineral exploration company until August 2009. He joined the Boards of Argex Mining Inc. and St Georges Platinum and Base Metals Inc. as a director in October 2009 and March 2010 respectively.

He remains a director of these Companies. Anthony joined the Board of Alamos Gold Inc. as director in June 2010 and is currently a director. Alamos Gold produces approximately 160,000 oz of gold per year from its Mexican Mulatos project and has a market capitalization of about $2 billion.

Loren D. Currie, Vancouver, B.C.

Mr. Currie has been a Professional Corporate Secretary for over 20 years. He was the President of Toba Industries Ltd that merged with Brand Marvel Worldwide Consumer Product in 2008 and still is on the Board of Brand Marvel. He is the CFO and director of Oracle Energy Corp since 2004. He recently joined Vatic Ventures as the Corporate Secretary. Mr. Currie has extensive experience in corporate governance and is very knowledgeable on Exchange and Securities Commission policies.

Sponsorship

Sponsorship of a Qualifying Transaction of a capital pool company is required by the TSX-V unless exempt in accordance with Exchange policies. The Company anticipates that sponsorship will be required and has not yet engaged a sponsor.

Name Change

Subject to all necessary approvals, the Company intends to change its name to "Irtysh Petroleum Corp." or a similar name, effective upon the closing of the Qualifying Transaction.

Proposed Private Placement

In order to finance the IPC Acquisitions, the recommended work programs, costs associated with the Qualifying Transaction and for general working capital of the resulting issuer, the Company intends to complete multiple financing transactions with a view to raising aggregate gross proceeds of $6,500,000. It is currently anticipated that the financing will be undertaken, subject to applicable TSX-V policies, by brokered and non-brokered private placements.

Management of the Company is currently negotiating terms of the proposed financing with prospective agents and third party institutional investors and will make a further announcement once terms are established.

Resulting Issuer's Capital Structure

BTU currently has approximately 8.3 million common shares issued and outstanding. It is intended that no additional common shares will be allocated or reserved for issuance on the exercise of options and broker warrants except as described in BTU's most recent interim financial statements for the period ending October 31, 2010, or as may be contemplated under the financings forming part of BTU's qualifying transaction.

Finder's fees may be payable on closing of the IPC Acquisition and the financings described above in accordance with the policies of the TSX-V. The shares issuable to the vendor in connection with the IPC Acquisition and the securities issued pursuant to the proposed private placement will be subject to escrow requirements and hold periods as required by applicable securities laws. Upon completion of the IPC Acquisition, the Company will be designated as a Tier 2 natural resource issuer on the TSX-V. At closing of the Qualifying Transaction, the Company will grant additional options to the directors, officers, employees and consultants of the resulting issuer.

Significant Closing Conditions

Closing and final acceptance of the transaction is subject to the satisfaction of certain conditions, including the completion of satisfactory due diligence, the negotiation and execution of definitive agreements, completion of the private placement, approval of shareholders to the proposed name change (if required), approval of the TSXV and any other regulatory bodies and the maintenance of the Company's listing on the TSXV.

Directors, Officers and other Insiders

On completion of the Acquisition, the directors, senior officers, insiders and senior advisors of the resulting issuer are anticipated to include two directors nominated by BTU and three directors nominated by IPC. All will be subject to Exchange approval.

About BTU

The Company is designated as a Capital Pool Company by the TSXV. It has not commenced commercial operations and has no assets other than cash. Since the completion of its initial public offering, the Company's sole business has been to identify and evaluate businesses or assets with a view to completing a Qualifying Transaction (as defined in the Exchange Policy 2.4). Any proposed Qualifying Transaction must be approved by the TSXV and, in the case of a non arm's length Qualifying Transaction, must also receive majority approval of the minority shareholders. Until the completion of a Qualifying Transaction, BTU will not carry on any business other than the identification and evaluation of businesses or assets with a view to completing a proposed Qualifying Transaction. For further information regarding BTU, the offering, and BTU's management team, see the Prospectus and BTU's disclosure documents on SEDAR at www.sedar.com.

On Behalf of the Board of Directors of BTU Capital Corp.

Walter Brenner, President & CEO

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States.

The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Completion of the IPC Acquisition 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 Exchange and 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 Statement

Statements contained in this news release that are not historical facts constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date of this release. Forward-looking statements include, without limitation, possible events, statements with respect to possible events, the future price of gold and silver, the realization of mineral resource estimates and success of exploration activities. The words "is expected" or "estimates" or variations of such words and phrases or statements that certain actions, events or results "may" or "could" occur and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. All of the forward-looking statements made in this release are qualified by these cautionary statements and those made in our other filings with the securities regulators in Canada. These factors are not intended to represent a complete list of the factors that could affect the Company. Although the Company believes that the expectations in the forward-looking statements are reasonable, actual results may vary, and future results, levels of activity, performance or achievements cannot be guaranteed.

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. 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.

Contact Information

  • BTU Capital Corp.
    Walter Brenner
    President & CEO
    604 818-2617
    604 648-9013 (FAX)