Kristina Capital Corp.
TSX VENTURE : KCA.P

September 18, 2008 12:19 ET

Kristina Capital Corp.: Update on Qualifying Transaction and Private Placement

CALGARY, ALBERTA--(Marketwire - Sept. 18, 2008) - Kristina Capital Corp. (TSX VENTURE:KCA.P)

Kristina Capital Corp Ltd. ("Kristina"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), is providing additional information with respect to its previous press releases issued on May 28, 2008 and June 20, 2008 regarding its qualifying transaction (the "Qualifying Transaction").

Joint Venture

The vendor pursuant to the Qualifying Transaction, Midway Gas Corp. ("Midway"), Radius Resources Corp. ("Radius"), a public company listed on the Exchange, that is arm's length to Kristina, 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 which Kristina is acquiring a 75% interest in per the Qualifying Transaction (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. If Radius is unable to meet its obligations under the farmout Agreement, Kristina will be required to meet any shortfall in order to maintain its 75% interest in the Assets. Additionally, Midway has agreed to act as the operator with respect to the development of the Assets in exchange for maintaining its 25% interest. Further, pursuant to the Farmout Agreement, Kristina acknowledged this arrangement and agreed that upon Kristina obtaining the 75% interest in the Assets pursuant to the Qualifying Transaction, it will honour the Farmout Agreement and grant to Radius the right to earn half of Kristina's 75% interest by paying 100% of the costs associated with initially developing the Assets (up to $2,500,000 or the drilling of the first ten exploration wells). 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% on closing of the Qualifying Transaction.

Kristina believes this arrangement is beneficial and superior to not having a joint venture partner as it allows Kristina to retain a significant interest in the Assets while avoiding the costs and risk associated with developing the Assets. Additionally, Kristina will have sufficient funds to develop the Assets on its own if Radius fails to meet some or all of its obligations under the Farmout Agreement. Further, the Joint Venture will allow Kristina to be involved in additional prospects presented by Midway and Radius.

PRIVATE PLACEMENT UPDATE

The non-brokered private placement to be completed concurrently with completion of the Qualifying Transaction originally announced to be a common share offering is now anticipated to be conducted as a unit offering with each unit ("Unit") being comprised of one common share of Kristina ("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 price per Unit will be $0.50 and it is anticipated proceeds of $1,500,000 will be raised with Radius subscribing for 3,000,000 Units and Richard Poirier (the proposed President and CEO of Kristina following completion of the Qualifying Transaction) subscribing for 100,000 Units. As a result of its participation in the offering, Radius will become a new control person of Kristina and as such its subscription for Units is subject to approval by the Exchange and is also subject to approval by Kristina shareholders. Kristina will be obtaining such shareholder approval by way of written consents of 50% + 1 of its shareholders. Any of Radius' directors, officers and insiders and associates and affiliates thereof who are also shareholders of Kristina are not eligible to provide their consent. To the knowledge of Kristina and prior to the closing of the private placement, no director, officer or insider of Radius, or associates or affiliates thereof, hold shares of Kristina.

The advances to Midway in the amount of $155,000 previously disclosed in the June 20, 2008 news release of Kristina have been completed.

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.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange approval. There can be no assurances that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Kristina Capital Corp. should be considered highly speculative.

ADVISORY: Certain information in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects" and similar expressions. Forward-looking statements in this press release include, but are not limited to, statements with respect to the closing or completion of the Qualifying Transaction. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with oil and gas production, marketing and transportation; loss of markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve estimates; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters. Readers are cautioned that the foregoing list of factors is not exhaustive. 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 placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward looking statements contained in this press release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this news release are made as of the date of this news release, and Kristina does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

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

Contact Information

  • Kristina Capital Corp Ltd.
    Murray K. Atkins
    Chief Executive Officer
    (403) 244-3555
    or
    Kristina Capital Corp Ltd.
    Gordon D. Anderson
    Chief Financial Officer
    (403) 265-3733 ext. 235