Lateral Capital Corp.
TSX VENTURE : LCP.P

July 27, 2012 09:15 ET

Lateral Capital Corp. Announces Entering Into a Letter of Intent for the Acquisition of Assets from Privately Held Alberta Company

CALGARY, ALBERTA--(Marketwire - July 27, 2012) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

Lateral Capital Corp. (the "Corporation") (TSX VENTURE:LCP.P) is pleased to announce that the Corporation has entered into a letter of intent effective July 23, 2012, (the "Letter of Intent") with a private Alberta based company ("PrivateCo"), whereby the Corporation has agreed to acquire certain oil production, oil and gas reserves, lands, leases and miscellaneous interests held by PrivateCo in Southern Alberta (the "Proposed Acquisition"). It is intended that the Proposed Acquisition will constitute the Qualifying Transaction of the Corporation in accordance with Policy 2.4 of the TSX Venture Exchange (the "Exchange") and that upon completion of the Qualifying Transaction, the Corporation will meet Initial Listing Requirements for an oil and gas issuer under the policies of the Exchange.

PrivateCo is a Canadian private corporation incorporated under the provisions of the Business Corporations Act (Alberta) with its registered office in Calgary, Alberta.

The Proposed Acquisition

The assets to be acquired pursuant to the Proposed Acquisition include a 100% working interest in 576 hectares of oil and gas mineral rights in the Medicine Hat area of Southeast Alberta (the "Medicine Hat Assets"). Production from the Medicine Hat Assets is comprised of approximately 30 bbls/d of sweet, 20 degrees API oil from five Sunburst oil wells. Based on a review of available data on the Medicine Hat Assets, including logs from existing wells, PrivateCo's management has identified five drilling locations on the lands being acquired as well as additional prospective zones in the Barrons, 2WS, and Medicine Hat formations.

Subject to any regulatory, shareholder, director or other approval that may be required, the completion of satisfactory due diligence by the Corporation, and other terms and conditions of the Letter of Intent, it is intended that the Corporation will acquire the Medicine Hat Assets for a purchase price of $1,350,000 cash. The Corporation shall pay PrivateCo a $25,000 deposit, which shall be non-refundable and be applied against the Purchase Price after the Corporation has completed a satisfactory review of and has accepted (a) the NI 51-101 Report; (b) certain financial statements relating to the transaction; (c) and a title opinion in respect of the property.

A National Instrument 51-101 compliant Reserve and Economic Evaluation report is being prepared which will be submitted to the Exchange for review and the detailed results will be disclosed in a subsequent press release.

Upon completion of the Proposed Acquisition, the Corporation will conduct the business of oil and gas exploration and development. The transaction will result in a change of board and management.

The Proposed Offering

Concurrently with closing of the Qualifying Transaction, the Corporation expects to complete a brokered, best efforts, private placement financing for gross proceeds of up to $2,000,000 (the "Offering"). The Offering will consist of the issuance of up to 14,285,714 common shares of the Corporation ("Common Shares"), or securities convertible into Common Shares, at an issue price of $0.14 per Common Share. The proceeds from the Offering will be used for the acquisition, exploration and development of the Medicine Hat Property and for general working capital requirements. Additional amounts have been allocated for expenses related to the completion of the Proposed Acquisition, the Offering and the Qualifying Transaction. Any securities issued pursuant to the Financing may be subject to escrow and shall be subject to applicable statutory hold periods. After giving effect to the Offering, the Corporation expects to have approximately 21,285,714 Common Shares outstanding. In addition, the Corporation currently has issued and outstanding incentive stock options entitling the holders thereof to purchase up to 700,000 Common Shares at an exercise price of $0.10 per Common Share. In accordance with the policies of the Exchange, the existing incentive stock options will have an expiry date of 90 days after closing of the Qualifying Transaction.

New Management Team and Board of Directors of the Corporation

In connection with its Qualifying Transaction, the Corporation has also entered into a separate letter of intent with Steel Petroleum Inc., a privately held oil and gas exploration and development company based out of Calgary, Alberta, whereby the current directors and officers of the Corporation will resign and be replaced by the existing management team and board of directors of Steel Petroleum Inc., who collectively possess many years of oil and gas experience. Further details regarding the backgrounds of the incoming management team and board will be provided in a subsequent news release.

Sponsorship

The Corporation intends to apply to the Exchange for an exemption from sponsorship requirements. There is no assurance that such exemption will be granted and the Corporation will engage a sponsor should a sponsorship exemption not be granted.

Reinstatement to Trading

The common shares of the Corporation will remain halted pending receipt by the Exchange of certain required materials from the Corporation and until the Corporation engages a sponsor or a sponsorship exemption is granted. The Corporation will issue a further press release upon finalization and filing of the aforementioned report pursuant to NI 51-101.

About the Corporation

The Corporation is incorporated under the provisions of the Business Corporations Act (Alberta) and has a registered office in Calgary, Alberta. It is a "capital pool company" under the policies of Exchange. As such it intends for the Proposed Acquisition to constitute the "Qualifying Transaction" of the Corporation as such term is defined in the policies of the Exchange.

Additional Information

The Qualifying Transaction will be carried out by parties dealing at arm's length to one another and therefore will not be considered to be a Non-Arm's Length Qualifying Transaction, as such term is defined under the policies of the Exchange.

A Filing Statement in respect of the proposed Qualifying Transaction will be prepared and filed in accordance with Policy 2.4 of the Exchange on SEDAR at www.sedar.com no less than 7 business days prior to the closing of the proposed Qualifying Transaction. A press release will be issued once the filing statement has been filed as required pursuant to Exchange policies.

Completion of the Proposed Acquisition is subject to a number of conditions including, but not limited to, the closing of the Offering, the satisfaction of the Corporation and of PrivateCo in respect of certain due diligence investigations to be undertaken by each party, the completion of a definitive agreement setting forth the terms and conditions set out in the Letter of Intent, closing conditions customary to transactions of the nature of the Proposed Acquisition, Exchange acceptance and, if required by Exchange policies, majority of the minority shareholder approval. Where applicable, the Proposed Acquisition cannot close until the required shareholder approval is obtained and there can be no assurance that the Proposed Acquisition will be completed as proposed or at all. The Corporation intends to obtain any requisite shareholder approval by written consent, and shall provide a copy of any applicable documentation with the written consent.

If and when a definitive agreement between the Corporation and PrivateCo is executed, in accordance with the policies of the Exchange, the Corporation will issue a subsequent press release containing the details of the definitive agreement and additional terms of the Proposed Acquisition, including information relating to sponsorship, summary financial information in respect of the Medicine Hat Assets, and to the extent not contained in this press release, additional information with respect to the Offering, history of the Medicine Hat Assets and the proposed directors, officers, and insiders, of the Corporation upon completion of the Qualifying Transaction.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying 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.

Cautionary Statements:

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the proposal to complete the Proposed Acquisition and associated transactions, including statements regarding the terms and conditions of the Proposed Acquisition and associated transactions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Proposed Acquisition and associated transactions, that the ultimate terms of the Proposed Acquisition and associated transactions will differ from those that currently are contemplated, and that the Proposed Acquisition and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, RSR, the Properties or their respective financial or operating results or (as applicable), their securities. Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Neither the TSX Venture Exchange, Inc. nor its Regulation Service Provider (as that term is defined under the policies of the TSX Venture Exchange) has in any way passed upon the merits of the Proposed Acquisition and associated transactions and has neither approved nor disapproved of the contents of this press release.

Contact Information

  • Lateral Capital Corp.
    Ken Leigh
    President and Chief Executive Officer
    (604) 318-4106