Primeline Energy Holdings Inc.
TSX VENTURE : PEH

Primeline Energy Holdings Inc.

March 17, 2017 13:23 ET

GEMS Announces Primeline Holdings

HONG KONG, CHINA--(Marketwired - March 17, 2017) - GEMS Investment Management Limited ("GEMS") announces that on December 15, 2015, $US 10 million principal amount of Tranche A Bonds issued by Primeline Energy Holdings Inc. ("Primeline") (TSX:PEH) to GRF Prime Limited ("GRF Prime"), a special purpose vehicle owned by a resources fund managed by GEMS (GEMS as fund manager has control and direction over all securities beneficially owned by GRF Prime) on August 14, 2015 became convertible into Common Shares at a price of Cdn. $0.70 per share. The Tranche A Bonds were issued pursuant to a subscription agreement between Primeline and GRF Prime dated June 5, 2015, as amended and restated by a supplemental deed made by Primeline dated November 10, 2015 (the "Subscription Agreement"), and constituted by a Deed Poll made by Primeline dated August 14, 2015, as amended by a supplemental deed made by Primeline dated November 10, 2015 (the "Deed Poll"). Pursuant to the Deed Poll, the term of the Tranche A Bonds is three years extendable for two one-year periods. Interest is payable quarterly at 7% per annum, of which 4.5% is payable in cash and 2.5% in Common Shares, issuable at a deemed price per share equal to the greater of (i) the closing price of the Common Shares on the TSX Venture Exchange (the "TSX-V") on the trading day prior to the interest payment date; and (ii) the volume-weighted average trading price of the Shares on the for the 10 days preceding the interest payment date, on March 15, June 15, September 15 and December 15 of each year of the term of the bonds ("Share Interest"). At the Bank of Canada noon rate for conversion of $US to $Cdn. of 1.3728 on Dec. 15 2015, 19,611,429 Common Shares became issuable upon conversion of the Tranche A Bonds. On December 15, 2015, GEMS also acquired 760,881 Common Shares as Share Interest at a deemed price of Cdn. $0.1479 per share.

At the open of business on Dec. 15, 2015, GEMS had control and direction over 131,647 Common Shares issued as Share Interest on September 15, 2015 at a deemed price of Cdn. $0.21 per share and pursuant to the Subscription Agreement was entitled to acquire 3,140,775 Common Shares as a finder's fee (the "Finder's Fee Shares") at a deemed price of Cdn. $0.16 per share, which became issuable on December 5, 2015, together representing 1.83% of Primeline's issued and outstanding Common Shares assuming issuance of the Finder's Fee Shares. At the close of business on Dec. 15 2015 GEMS had control or direction over 23,644,732 Common Shares assuming conversion of the Tranche A Bonds and issuance of the Finder's Fee Shares on such date, or 11.69% of the issued and outstanding Common Shares assuming such conversion and issuance, representing a change in the percentage of the issued and outstanding shares over which GEMS had control or direction of 9.86%.

On March 11, 2016, $US 8 million principal amount of Tranche B Bonds issued by Primeline to GRF Prime on November 10, 2015 became convertible into Common Shares at a price of Cdn. $0.85 per share. The term of the Tranche B Bonds is three years extendable for two one-year periods. Interest is payable quarterly at 7% per annum, of which 4.5% is payable in cash and 2.5% in Share Interest . At the Bank of Canada noon rate for conversion of $US to $Cdn. of 1.3215 on Mar. 11 2016, 18,878,571 Common Shares were issuable upon conversion of the Tranche A Bonds and 12,437,647 on conversion of the Tranche B Bonds. At the close of business on March 11, 2016 GEMS had control or direction over 35,349,521 Common Shares assuming conversion of the Tranche A and B Bonds, or 16.52% of the issued and outstanding Common Shares assuming such conversion, representing a change in the percentage of the issued and outstanding shares over which GEMS had control or direction of 4.83% from Dec 15, 2016.

On December 15, 2016, GEMS was issued 2,480,625 Common Shares as Share Interest at a deemed price of Cdn. $0.06 per share At the Bank of Canada noon rate for conversion of $US to $Cdn. of 1.3397 on December 15, 2016, 19,138,571 Common Shares became were upon conversion of the Tranche A Bonds and 12,608,941 Common Shares on conversion of the Tranche B Bonds. At the close of business on December 15, 2016 GEMS had control or direction over 42,333,453 Common Shares assuming conversion of the Tranche A and B Bonds, or 19.15% of the issued and outstanding Common Shares assuming such conversion, representing a change in the percentage of the issued and outstanding shares over which GEMS had control or direction of 2.64% from March 11, 2016.

GRF Prime will acquire beneficial ownership of further Common Shares as Share Interest, and may convert Tranche A Bonds or Tranche B Bonds, or purchase or sell Common Shares in the market, in the future depending on market conditions and other factors relevant to GEMS' investment decisions. It has no plans or future intentions by itself or with any joint actors which relate to or would result in: a corporate transaction involving Primeline or any of its subsidiaries; a sale or transfer of a material amount of Primeline's assets or those of any of its subsidiaries; a material change in the present capitalization or dividend policy of Primeline; a material change in Primeline's business or corporate structure; a change in Primeline's Articles or another action which might impede the acquisition of control of Primeline by any person or company; any class of Primeline's securities being delisted from the TSX-V; Primeline ceasing to be a reporting issuer in any jurisdiction of Canada; a solicitation of proxies from Primeline's securityholders; or any similar action or actions. Pursuant to the Subscription Agreement, GRF Prime is entitled to appoint one director to Primeline's Board of Directors. GRF Prime appointed Timothy Baldwin to Primeline's board effective November 3, 2015. GEMS intends that GRF Prime will continue to exercise such rights under the Subscription Agreement. GEMS has no further plans or future intentions that would result in a change in the board of directors or management of Primeline, including any plans to change the number or term of directors or fill any existing vacancy on the board.

Contact Information

  • A copy of GEMS' early warning report relating to the
    transactions described above can be obtained from
    Patrick Lam
    Tel. +852 2501-1328