Essex Oil Ltd.

March 02, 2015 11:42 ET

Essex Announces Restructuring

TORONTO, ONTARIO--(Marketwired - March 2, 2015) - ESSEX OIL LTD. ("Company") reports that with the current decline in the price of oil, the Company believes that it will not be able to raise the necessary funds to bring the lease payments current and retain its interest in its oil and gas properties prior to the expiry dates of the leases. Accordingly, the Company has decided to terminate its oil and gas operations. The Company will refocus its efforts to identify and evaluate potential business acquisitions in Canada and elsewhere, and once identified and evaluated, to negotiate a business combination transaction, subject to the receipt of regulatory and shareholder approval.

In order to terminate its oil and gas operations and to put the Company in a position to complete a business combination transaction, on February 27, 2015, the Board of Directors of the Company approved the following transactions:

  1. the conversion of outstanding debt of $720,974 as at February 28, 2015 into 14,419,487 common shares with a deemed value of $0.05 per common share;
  2. subject to the conversion of outstanding debt owed to Randsburg International Gold Corp. ("Randsburg"), the transfer of all geophysical data with respect to oil and gas properties in the possession of the Company's wholly-owned subsidiary, 2124861 Ontario Corp. ("2124861") to Randsburg, in return for the release of a security interest in the assets of the Company and 2124861; and
  3. the transfer of the Company's investment in 2124861 to a director of the Company for consideration of $10.

The conversion of outstanding debt will include outstanding debts of $240,597 owed to Randsburg and $275,948 owed to directors and officers and companies controlled by them. A director of the Company is a director of Randsburg.

The Company will rely on Financial Hardship Exemptions of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, to exempt it from obtaining minority approval for the above related party transactions, on the basis that:

  1. the Company is insolvent or in serious financial difficulty;
  2. the transactions are designed to improve the financial condition of the Company;
  3. the transactions are not subject to court approval, or court order that the transactions be effected under bankruptcy or insolvency law or section 191 of the CBCA, or equivalent legislation of a jurisdiction;
  4. the Company has one or more independent directors in respect of each the transactions; and
  5. the Company's board of directors, acting in good faith, has determined, and at least two-thirds of the Company's independent directors, acting in good faith, determined that
    1. subparagraphs (i) and (ii) apply, and
    2. the terms of the transaction are reasonable in the circumstances of the Company.

Statements made in this news release that are not historical facts are "forward-looking statements" and readers are cautioned that any such "forward-looking statements" are not guarantees of future performance and that actual developments or results may vary materially from those in such "forward-looking statements".

Contact Information

  • Essex Oil Ltd.
    Miles Nagamatsu
    Chief Financial Officer and Director
    (416) 360-8006