Charlotte Resources Ltd.

September 06, 2011 10:15 ET

Charlotte Resources and Tanglewood Energy Enter Into Letter of Intent for the Reverse Take-Over of Charlotte Resources and Concurrent $11.2 Million Financing

CALGARY, ALBERTA--(Marketwire - Sept. 6, 2011) -


Charlotte Resources Ltd. ("Charlotte") (CNSX:CHT) and Tanglewood Energy Inc. ("Tanglewood"), a privately-held Alberta corporation based in Calgary with assets located in Toole County, Montana, announced today that they have entered into a letter of intent for Charlotte to acquire all of the outstanding shares of Tanglewood resulting in the reverse take-over of Charlotte. In addition, Charlotte announced today that it is proceeding with a brokered private placement offering of subscription receipts at a price of $0.35 per receipt for gross proceeds of up to $11.2 million.

Overview of the acquisition

Under the letter of intent, each outstanding common share of Tanglewood will be exchanged for one common share of Charlotte pursuant to an exempt take-over bid. It is expected that Charlotte will issue up to 60.0 million Charlotte shares to complete the acquisition. Upon completion of the acquisition and related financing described, it is expected that Tanglewood shareholders would own approximately 51.0% of the combined entity.

It is proposed that each holder of Tanglewood shares and Tanglewood options agree that 95% of the Charlotte shares issuable to such holders on completion of the acquisition (including Charlotte shares issuable on the exercise of the Tanglewood options assumed by Charlotte in connection with the acquisition) would be subject to certain prohibitions on resale which would expire as follows:

  • 45% of such Charlotte shares would be released of such prohibitions in equal instalments on the 6, 12 and 15 month anniversaries of the completion of the acquisition; and
  • 50% of such Charlotte shares would be released of such prohibitions in equal instalments on the 18 and 24 month anniversaries of the completion of the acquisition.

In addition, it is expected that (i) Charlotte will assume all the outstanding Tanglewood options which will continue to be exercisable at a price of $0.20 per common share of Charlotte, (ii) all outstanding Charlotte options will either be exercised or terminated prior to the closing of the acquisition, and (iii) the terms of Charlotte's outstanding warrants will be amended effective upon closing of the acquisition to: increase the exercise price of such warrants from $0.10 to $0.35 per share; extend the term of such warrants to the date that is two years from the date the acquisition is completed; and provide for the acceleration of the expiry date of such warrants if, during the period commencing on the date that is four months following the date the acquisition is completed and ending on the expiry date of such warrants, the daily volume weighted average trading price of the common shares underlying such warrants exceeds $0.50 each day for a period of 22 consecutive trading days. In such case, the holders of such warrants will be provided written notice within 30 days of such occurrence, and shall have 30 days from the date of such notice in order to exercise the warrants, failing which such warrants will expire.

The letter of intent is non-binding except for obligations relating to a period of exclusive dealing, rights of first refusal in favour of Charlotte, confidentiality and other non-material matters. The letter of intent provides that in certain circumstances where the parties do not enter into a definitive agreement or the transaction does not complete, then Charlotte will have the right for a period of two years to match any proposal to acquire Tanglewood or any of its subsidiaries or all or substantially all of their assets.

If a definitive agreement is reached, the parties expect to complete the acquisition as soon as practicable subject to the receipt of all necessary regulatory, securityholder and other approvals and satisfaction of all other customary closing conditions, including the completion by Charlotte of the financing described in further detail below. The acquisition must be approved by the Canadian National Stock Exchange ("CNSX") and Charlotte shareholders. Further details concerning the acquisition and other matters referred to in this news release will be announced if and when a definitive agreement is reached.

Overview of the Charlotte Financing

Prior to the completion of the acquisition, Charlotte proposes to complete a brokered private placement offering, on a best efforts basis, of subscription receipts at a price of $0.35 per receipt for gross proceeds of up to $11.2 million, subject to the requirements of the CNSX. Each subscription receipt will entitle the holder to receive one unit of Charlotte without additional payment or further action by the holder immediately prior to the completion of the acquisition. Each unit will be comprised of one Charlotte share and one half common share purchase warrant of Charlotte, with each whole warrant entitling the holder thereof to one Charlotte Share at a price of $0.50 per share for a period of 24 months following the date the warrants are issued. The gross proceeds of the financing will be held in escrow pending completion of the Tanglewood acquisition. If the Tanglewood acquisition closes on or before a specified date, the net proceeds of the offering will be released to Charlotte. Charlotte has engaged Canaccord Genuity Corp. as agent for the financing.

About Tanglewood

Tanglewood is a privately-held Alberta corporation based in Calgary with 52,000 gross acres of exploration lands located in Toole County, Montana covered by thirty nine square miles of 3D seismic data.. Tanglewood has engaged Sproule Associates Limited to prepare a resource evaluation of its Montana assets. Further details concerning the Montana assets and the results of Sproule's report will be announced in due course.

Management of the combined company

The combined company will be led by an experienced management team with a track record in developing and managing oil and gas companies. Upon completion of the acquisition, the existing board of directors (other than John Proust) and senior management team of Charlotte would resign and would be reconstituted with: Cory Dosdall (Chief Executive Officer), Darrell Nimchuk (Chief Financial Officer), Eric Johnson (Vice President Exploration), Ross Ewaniuk (Vice President, Business Development) and Scott Reeves (Corporate Secretary), and the board of directors with: John Proust, Cory Dosdall, Brad Nichol and Michael Stark. The following is a summary of experience and qualifications of the Tanglewood senior management team:

Cory Dosdall, President, Chief Executive Officer and a Director: Cory has lived in Calgary, Alberta since 2000 after leaving the financial industry in Wichita, Kansas where he developed professional relationships with many key personnel in the oil and gas industry in Oklahoma. Cory has been involved in numerous financings for public oil and gas companies in both Canada and the United States. Further, as part of management, Cory has participated in several successful mergers and acquisitions since 2006, several successor entities of which have subsequently become publicly traded companies.

Darrell Nimchuk, Vice President, Finance and Chief Financial Officer: Darrell has numerous years experience in construction, manufacturing and various oil and gas sectors. His most recent endeavour was as a founder of a start up oil and gas services company where he was directly responsible for financial, administrative and information systems and aided in growing the company from incubation in 2002 to $90 million in revenue in 2008, at which time they successfully marketed the sale of the company. Mr. Nimchuk has also been involved in mergers and acquisitions, internal auditing, investor relations, corporate governance and business development for companies of varying sizes. Darrell holds a Masters of Business and Administration from Athabasca University and a Certified Management Accountants designation. He was the chairman of the finance committee for the Petroleum Services Association of Canada and sits on the board of directors for a handful of private companies and non-for profit organizations, most notably The Impact Society, a not-for-profit organization.

Eric Johnson, Vice President Exploration: Mr. Johnson is a respected geophysical and geological consultant with 37 years of experience in domestic and international petroleum exploration and development. He is proficient at 3D seismic interpretation, geological interpretation, prospect generation, evaluations, reviews and recommendations and is experienced with 2D and 3D seismic data acquisition and processing, supervising land and marine seismic surveys, gravity and magnetic surveys, and sonic/velocity surveys in wells. Mr. Johnson is a Registered Professional Geologist (Wyoming) and expert witness for geological and geophysical matters before state oil and gas commissions. Mr. Johnson has been directly involved in the discovery and development of numerous oil and gas fields. He has generated and mapped prospects in northern and central Montana, the Montana Disturbed Belt, Wyoming Thrust Belt, Williston Basin, Big Horn Basin, Powder River Basin, Wind River Basin, northwest Colorado, Nevada, and the Gulf Coast (offshore and onshore).

Ross Ewaniuk, Vice President, Business Development: In 1992, Mr. Ewaniuk pursued a career with a national retail oil company, managing operations which included setting up procedure manuals and training commission agents to operate retail service stations through-out western Canada. In 1994, he began working with numerous start-up venture companies where he managed marketing, financing, corporate set up, construction, operations and exit strategies. In 2001, Mr. Ewaniuk started with Leede Financial Markets Inc. then moved over to Northern Securities Inc. where he managed a large net worth of retail and institutional clients. Focused in oil and gas as well as mining assets, Ross was active in optimizing capital structure, raising capital from institutional money managers and retail clients, valuations and strategies for achieving the appropriate valuation. In 2009, Mr. Ewaniuk began investing and working in various oil and gas exploration companies in Oklahoma.

About Charlotte

Charlotte Resources Ltd. is a publicly traded company listed on the CNSX and trading under the symbol "CHT". Charlotte owns mining assets in the Osoyoos mining district of British Columbia. In connection with the acquisition, Charlotte intends to cease carrying on its mining business.

In accordance with the policies of the CNSX, trading in Charlotte Shares is currently halted and will remain halted until further notice.

Charlotte and Tanglewood caution that no definitive agreement has been entered into and accordingly no assurance can be given that the process contemplated by the letter of intent will lead to a definitive agreement relating to the acquisition on the terms contemplated by the letter of intent or otherwise or any other transaction. Neither Charlotte nor Tanglewood intend to make any further announcements or communications regarding these potential transactions until either a definitive agreement has been reached or discussions are terminated without such an agreement being reached.

Completion of the acquisition is subject to a number of conditions, including CNSX acceptance and shareholder approval (including on a disinterested basis to the extent required). The acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the acquisition will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the authorized disclosure documents required to be prepared in connection with the acquisition, any information released or received with respect to the acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of Charlotte Resources Ltd. should be considered highly speculative.

Forward-looking statements

This news release contains forward-looking statements relating to the acquisition and Charlotte financing, including statements regarding the exchange ratio for the acquisition, the anticipated reverse take-over of Charlotte, the anticipated closing date of the acquisition, and other related matters, issuing further announcements concerning the acquisition and other matters, the terms and conditions of the Charlotte financing, the anticipated minimum proceeds of the Charlotte financing, minimum pricing of the Charlotte financing and the number of shares to be issued under such offering, projected timing of closing the Charlotte financing and the receipt of all necessary regulatory approvals and satisfaction of all other customary closing conditions in connection with the acquisition and Charlotte financing, 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 acquisition will not be completed if a definitive agreement is not reached or that the necessary approvals and/or exemptions are not obtained or some other condition to the closing of the acquisition is not satisfied; the risk that the terms of the Charlotte financing will be changed; the risk that closing of the acquisition and Charlotte financing could be delayed if Tanglewood is not able to obtain the necessary approvals on the timelines it has planned; risks that the marketing efforts will not result in the completion of the Charlotte financing or the realization of the anticipated proceeds under the offering; the assumptions relating to the parties entering into the definitive agreement in respect of the acquisition and the timing thereof, the timing of obtaining required approvals and satisfying closing conditions for the acquisition and offerings, state of the economy in general and capital markets in particular, investor interest in the business and future prospects of Charlotte and Tanglewood, the ability of the agents under the offerings to successfully market the proposed offering.

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, Charlotte and Tanglewood 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. Additionally, Charlotte and Tanglewood undertake no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

The CNSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Charlotte Resources Ltd.
    John Proust
    President and Chief Executive Officer
    (604) 696-9020

    Tanglewood Energy Inc.
    Cory Dosdall
    President and Chief Executive Officer
    (403) 283-0010