Enterprise Oil Limited
TSX VENTURE : EON.P

Enterprise Oil Limited

August 03, 2005 14:00 ET

Enterprise Oil Limited: Formal Agreement for Acquisition of Assets from A & G Grant Construction '1983' Inc.

ST. ALBERT, ALBERTA--(CCNMatthews - Aug. 3, 2005) - Further to its news release issued April 22, 2005, Enterprise Oil Limited ("Enterprise") (TSX VENTURE:EON.P) is pleased to announce that it has entered into an asset purchase agreement (the "Asset Purchase Agreement") dated August 3, 2005 with A & G Grant Construction (1983) Inc. ("A & G"), an arm's length Alberta based private company involved in pipeline construction and the provision of oilfield maintenance services, and 1166424 Alberta Limited ("Subco"), a wholly owned subsidiary of Enterprise. Pursuant to the terms of the Asset Purchase Agreement, Enterprise, through Subco, has agreed to purchase the business assets of A & G, other than real property, as a going concern (the "Proposed Transaction"). Closing of the Proposed Transaction is expected to occur in August, 2005.

The total consideration (the "Purchase Price") to be paid to A & G pursuant to the Proposed Transaction is $3,000,000, which will be funded as follows: $1,450,000 from Enterprise's cash; $1,100,000 from a bank loan from ATB Financial (the "Loan") to be secured against the assets of the resulting entity; and $50,000 worth of Common Shares of Enterprise (the "Share Consideration") to be issued to A & G at a deemed value of $0.25 per Common Share.

The Purchase Price will be paid as follows: $2,550,000 in cash and the Share Consideration upon closing of the Proposed Transaction; $200,000 in cash payable on the first anniversary of the closing of the Proposed Transaction; and $200,000 in cash payable on the second anniversary of the closing of the Proposed Transaction.

The remaining amounts payable after the closing of the Proposed Transaction will be secured by way of a general security interest from Subco granted in favour of A & G. The security interest will be over all present and after acquired property of Subco; however, the security interest will be subordinated to the security interest of any senior lender, including security to be taken in connection with the Loan. In addition, Enterprise will provide a guarantee to A & G for the amounts payable on the first and second anniversaries of the closing of the Proposed Transaction.

Upon completion of the Proposed Transaction, the resulting issuer is expected to be a Tier 1 Industrial issuer on the TSX Venture Exchange ("TSXV").

A non-refundable deposit in the amount of $25,000 (the "Deposit") has been paid to A & G. In the event that the Proposed Transaction is completed, the Deposit will be applied against the Purchase Price.

A & G is based in Slave Lake, Alberta and provides pipeline construction (approximately 80%) and oilfield maintenance services (approximately 20%) in Central and Northern Alberta.

A & G has operated since 1983. The sole shareholder of A & G is 496597 Alberta Limited. Ronald Ingram, the President of A & G and his wife are the sole shareholders of 496597 Alberta Limited. A & G employs 12 employees on a full time basis, and its workforce reaches a maximum of 70 persons during peak periods.

A & G's pipeline construction business includes: low pressure gas tie-ins, insulated pipeline installation, cement-lined pipeline installation, fibreglass pipeline installation and water injection lines.

A & G's oilfield maintenance services include tying in wellheads and repairs and maintenance to lines.

Based on the audited financial statements of A & G, as at June 30, 2004, A & G had total assets of $3,457,634 and total liabilities of $3,245,065. Based on the audited financial statements of A & G for the year ended June 30, 2004, A & G had revenue of $6,203,741, expenses of $6,003,929 and net earnings of $169,264.

Enterprise was incorporated under the laws of Alberta and is a reporting issuer in the provinces of British Columbia, Alberta and Saskatchewan. The Common Shares are listed on the TSXV. Trading of the Common Shares was halted pending issuance of the news release on April 22, 2005. Enterprise is a "capital pool company" which filed its prospectus on July 25, 2004 and completed its initial public offering on August 6, 2004.

Currently, there are 9,000,000 issued and outstanding Common Shares and 1,500,000 options to acquire Common Shares outstanding. There are no other outstanding options, warrants or other convertible securities to acquire Common Shares.

The Proposed Transaction was negotiated at arm's length between the parties and as at the date hereof, no directors or officers of Enterprise hold any position with A & G or own shares of A & G. The Proposed Transaction is therefore an arm's length transaction.

Also in conjunction with the Proposed Transaction, it is contemplated that new stock options will be granted to Ron Ingram within permitted regulatory requirements. An exercise price of $0.25 per Common Share is hereby reserved for any grant of stock options to directors and/or officers on or around the closing of the Proposed Transaction.

Additionally, in exchange for giving his personal guarantee for up to $750,000 which is required to be given as collateral security for the Loan, Leonard Jaroszuk, the President, Chief Executive Officer, Secretary-Treasurer, Promoter and a Director of Enterprise will be entitled to receive up to 600,000 Common Shares ("Bonus Shares"), representing up to 20% of the value of Mr. Jaroszuk''s guarantee, at a price of $0.25 per Common Share. The issuance of the Bonus Shares is a "related party transaction" as defined in the policies of the TSXV and under securities legislation; however, an exemption is available from both the valuation requirement and the majority of the minority approval requirement in Ontario Securities Commission Rule 61-501, on the basis that the fair market value of the maximum number of Bonus Shares that may be issued is less than 25% of the market capitalization of Enterprise. A price of $0.25 per share is hereby reserved for Common Shares issuable pursuant to the Bonus Shares.

The Proposed Transaction is subject to several conditions precedent that must be satisfied or waived by the parties before the Proposed Transaction can proceed. Closing of the Proposed Transaction is contingent upon fulfillment of standard conditions, including but not limited to, obtaining the requisite approval from the TSXV, satisfaction of sponsorship requirements or a waiver therefrom, the entering into of a management contract and a non-competition agreement, both with Ron Ingram.

The Proposed Transaction, if completed, will constitute the "qualifying transaction" of Enterprise under the policies of the TSXV and as a result, is subject to regulatory approval. Enterprise has made an application for an exemption from the sponsorship requirements of the TSXV that would otherwise apply to a qualifying transaction on the basis that the business being purchased has a long history of operations, is profitable and the majority of the Purchase Price is being funded through bank financing.

Upon completion of the Proposed Transaction, Enterprise will have four directors, three of whom will be the current directors of Enterprise and the fourth, Ronald Ingram, is currently the President of A & G. The following is a summary of the proposed directors and senior officers of Enterprise upon completion of the Proposed Transaction:

Leonard D. Jaroszuk - President, Chief Executive Officer, Secretary-Treasurer, Director and Promoter

Mr. Jaroszuk is currently the President and Chief Executive Officer of Bancshares Capital Corp., a private financial investment corporation based in Edmonton, Alberta. Since November of 1993, Mr. Jaroszuk has been the President and a director of Secure One, Inc. (formerly Westone Ventures Inc.), a western Canadian based, full service industrial security corporation listed on the Exchange. Since November of 1999, Mr. Jaroszuk has also been a director of Raydan Manufacturing Inc., a corporation listed on the Exchange which is involved in the manufacturing industry. Mr. Jaroszuk was recently appointed to the board of directors of Dalmac Energy Inc., a public oil and gas service company listed on the TSXV.

In addition to his eighteen years experience dealing with public companies, Mr. Jaroszuk has been involved in significant positions in the real estate, exploration and natural resources, financial, construction and manufacturing industries.

Owen C. Pinnell - Director

Mr. Pinnell is currently the President and Chief Executive Officer of i3 Capital Partners Inc., a private venture capital firm based in Calgary, Alberta. From November of 2000 until October of 2002, Mr. Pinnell was a director of Holy Smoke Capital Corp. and has been the President, Chief Executive Officer and a director of its successor, Anterra Corporation, an oil and natural gas exploration and development company listed on the Exchange, since October of 2002. Since January of 2004, Mr. Pinnell has been a director of Regal Energy Corp., an oil and gas exploration and production company listed on the Exchange. From January of 1997 until August of 2003, Mr. Pinnell was a director of Belair Energy Inc., and has continued to be a director of its successor, Purcell Energy Inc., an oil and gas production company listed on the Toronto Stock Exchange, since August of 2003. Since December of 2002, Mr. Pinnell has been a director of Deep Resources Ltd., an oil and gas production company listed on the Exchange. Since June of 2001, Mr. Pinnell has been a director of Virtus Energy Ltd., an oil and gas exploration and production company listed on the Exchange. From July of 2003 until April of 2004, Mr. Pinnell was a director of Predator Exploration Ltd., an oil and gas production and exploration company listed on the Exchange. From August 1996 to February 2002, Mr. Pinnell was a director of Net Shepherd Inc., a software publishing company listed on the Exchange. From September of 2003 until April of 2004, Mr. Pinnell was a director of Damian Capital Corp., a clothing and textile wholesale and distribution company listed on the Exchange. From January of 1986 until August of 2001, Mr. Pinnell was the Chief Executive Officer and a director of Anadime Corporation, an oilfield services company, listed on the Toronto Stock Exchange.

Mr. Pinnell has twenty years of experience dealing with various public and private companies in Canada and the U.S. Mr. Pinnell is a mechanical engineer by training and received his professional engineering designation in Alberta in July of 1980 and in British Columbia in October of 1992.

Douglas C. Bachman - Director

From May of 2001 until March of 2003, Mr. Bachman was a director of Vista Investments Inc., an investment company listed on the Exchange. From June of 2002 until May of 2003, Mr. Bachman was the Vice-President of Corporate Finance of Altachem Pharma Ltd., a biotechnology company listed on the Exchange. From April of 2004 until the present, Mr. Bachman has been the Chief Financial Officer and a director of Westone Ventures Inc., a real estate development company listed on the Exchange.

In addition to his experience dealing with public companies, Mr. Bachman has been employed in various capacities by the Bank of Montreal for an aggregate period of approximately 16 years, most recently and at present, as a Commercial Banking Area Manager at the Bank of Montreal in Edmonton. Additionally, Mr. Bachman was the Manager of Design Group Staffing Inc., a private company specializing in personnel services, from June of 2000 until June of 2002.

Mr. Bachman completed the Corporate Executive Program at the University of Alberta in 2002, possesses a Business Management Degree granted by Reeves Business College in 1974, and completed the Canadian Securities Course in 1997.

Ronald Ingram - Proposed Director

Mr. Ingram has been indirectly the owner and has operated A & G since 1984. As the President of A & G, he has overseen all projects undertaken. Mr. Ingram has 26 years of experience in the pipeline and oilfield maintenance business.

Investors are cautioned that, except as disclosed in the filing statement 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 a capital pool company should be considered highly speculative.

The TSXV has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Enterprise Oil Limited
    Leonard Jaroszuk
    President and Chief Executive Officer
    (708) 418-0608
    Email: jaroszuk@shaw.ca