Kristina Capital Corp.

October 09, 2008 16:52 ET

Kristina Capital Corp.: Closing of Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Oct. 9, 2008) -

Closing of Asset Acquisition

Kristina Capital Corp. (the "Corporation" or "Kristina") (TSX VENTURE:KCA.P) is pleased to announce that is has completed the previously announced asset acquisition (the "Transaction") from Midway Gas Corp. ("Midway"). Pursuant to the Transaction, Kristina acquired from Midway a 75% interest in three exploratory permits in Saskatchewan (the "Assets") for an aggregate purchase price of $2,625,000. The purchase price was satisfied by the issuance of 5,250,000 common shares ("Common Shares") of Kristina at a deemed price of $0.50 per share. The Transaction constitutes Kristina's Qualifying Transaction for purposes of the policies of the TSX Venture Exchange (the "Exchange").

The Common Shares issued to Midway are subject to an escrow agreement for a period of 36 months (with 525,000 Common Shares being released upon the issuance of the Exchange bulletin and 787,500 Common Shares being released every six months thereafter) following the closing of the Transaction.

For more information regarding the Transaction and related matters see the Filing Statement of the Corporation dated September 24, 2008 available at (the "Filing Statement").

Carried Interest and Joint Venture

The 25% working interest of Midway remaining in the three exploratory permits will be carried 100% by Kristina through the drilling of the first ten exploratory drill holes for a total cost of not more than $2,500,000 the "Carried Interest"). After the first ten drill holes have been drilled and examined or Kristina has expended $2,500,000 with respect to exploratory wells on the properties underlying the permits, Midway will have the election to drop its working interest or to continue to hold its working interest. If Midway elects to continue its working interest it will bear its own costs for its 25% working interest and pay to Kristina 25% of the costs incurred following that date with respect properties underlying the permits.

Additionally, as previously announced, Midway, Radius Resources Corp. ("Radius") and Kristina have entered into a joint venture agreement dated effective July 1, 2008 whereby the parties will agree to jointly develop certain oil and gas prospectives in Western Canada (the "JV Agreement"). Pursuant to the JV Agreement, the initial prospect to be jointly developed are the Assets. In order to organize this joint development of the Assets, Midway, Radius and Kristina have entered into a farmout agreement dated effective July 1, 2008 (the "Farmout Agreement") whereby Midway agrees to grant Radius the right to earn 37.5% interest in the Assets by paying 100% of the costs of the initial development phase of up to $2,500,000 or the first ten exploration wells being drilled, including those costs associated with the Carried Interest. Additionally, Midway has agreed to act as the operator with respect to the development of the Assets in exchange for maintaining its 25% interest. As a result of the Joint Venture and Farmout Agreement, upon Radius paying 100% of the initial costs, the interests held in of the Assets will be Kristina 37.5%, Radius 37.5% and Midway 25%.

Closing Financing

Concurrent with completion of the Transaction, Kristina completed the previously announced private placement. The size of the private placement was increased from amounts previously disclosed by the Corporation by way of press release so that 3,700,000 units were issued with each unit ("Unit") being comprised of one Common Share and one Common Share purchase warrant with an exercise price of $0.65 per warrant and a expiry date of 2 years from the date of issuance (the "Warrants"). The price per Unit was $0.50 and proceeds of $1,850,000 were raised with Radius purchasing 3,600,000 Units and Richard Poirier purchasing 100,000 Units. Note that Radius increased the number of Units it acquired from 3,000,000 Units as described in the Filing Statement and previous press releases to 3,600,000 Units.

Post Transaction and Private Placement Common Share Ownership

After giving effect to the Transaction and the private placement the Corporation has 16,050,000 Common Shares issued and outstanding. Upon completion of the Transaction, Midway beneficially owns and controls 5,250,000 Common Shares, or approximately 32.7% of the total issued and outstanding Common Shares. Upon completion of the private placement, Radius beneficially owns and controls 3,600,000 Common Shares, or approximately 22.4% of the total issued and outstanding Common Shares. Additionally, Radius owns 3,600,000 Warrants which may be exercised into Common Shares.

All of the securities issued in connection with the Transaction and the private placement are subject to a four month restricted period that expires on February 9, 2009.

Board of Directors and Management

Concurrent with completion of the Transaction, Murray Atkins resigned as President and Chief Executive Officer of the Corporation and Richard Poirier was appointed President and Chief Executive Officer. William Borger resigned as a director of the Corporation and Richard Poirier was appointed to the board of directors of the Corporation.

The board of the Corporation is now comprised of Murray Atkins, Gordon Anderson, Clive Llewellyn and Richard Poirier. Management of the Corporation is now comprised of Richard Poirier as President and Chief Executive Officer and Gordon Anderson as Chief Financial Officer.

Trading Halt

Trading of the Common Shares on the Exchange are currently halted at Kristina's request and will remain so until the required documentation can be provided to the Exchange.

The TSX Venture Exchange has in no way passed upon the merits of the Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Kristina Capital Corp.
    Gordon Anderson
    Chief Financial Officer
    (403) 265-3733 ex 235