Lateral Capital Corp.
TSX VENTURE : LCP.P

August 28, 2012 17:11 ET

Lateral Capital Corp. Provides an Update on Its Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Aug. 28, 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) provides the following update in connection with its proposed Qualifying Transaction as previously announced on July 27, 2012. The Corporation has executed a definitive asset purchase agreement dated August 7, 2012 with a private Alberta based company, whereby the Corporation has agreed to acquire certain oil production, oil and gas reserves, lands, leases and miscellaneous interests held by the private company in Southern Alberta (the "Proposed Acquisition") as described in the Corporation's press release dated July 27, 2012. The Proposed Acquisition is intended to constitute the Qualifying Transaction of the Corporation in accordance with Policy 2.4 of the TSX Venture Exchange (the "Exchange"), subject to the Exchange's approval.

The company is a privately held corporation incorporated under the provisions of the Business Corporations Act (Alberta) with its registered and head office in Calgary, Alberta.

The Proposed Acquisition and Reserve Disclosure

As previously reported, the assets to be acquired include a 100 per cent working interest in 576 hectares of oil and gas mineral rights in the Medicine Hat area of Southeast Alberta (the "Medicine Hat Assets") for a purchase price of $1,350,000 cash, subject to customary post closing adjustments. 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, the private company'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.

A National Instrument 51-101 Reserve and Economic Evaluation Report has been prepared by Chapman Petroleum Engineering Ltd. and has been submitted to the Exchange. The Corporation will provide information respecting the reserves in a subsequent press release.

Upon completion of the Qualifying Transaction the Corporation will meet the Initial Listing Requirements for an oil and gas issuer under the policies of the Exchange and will operate as an oil and gas exploration and development company.

The Proposed Offering

In connection with the Transaction, the Corporation has engaged Stonecap Securities Inc. and Wolverton Securities Ltd. as co-lead agents (the "Co-Lead Agents") for a private placement offering, on a reasonable commercial efforts basis, of a minimum of 14,300,000 and a maximum of 35,750,000 subscription receipts ("Subscription Receipts") at a price of $0.14 per Subscription Receipts for minimum gross proceeds of $2,002,000 and maximum gross proceeds of $5,005,000.

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 between approximately 21,510,000 and 42,960,000 common shares outstanding.

The net proceeds from the sale of Subscription Receipts will be held in escrow pending conditional approval from the Exchange for the Qualifying Transaction (the "Escrow Release Conditions"). If the Escrow Release Conditions are met on or before September 30, 2012, the net proceeds from the sale of the Subscription Receipts will be released to the Corporation and each Subscription Receipt will be automatically exchanged for one common share of the Corporation for no additional consideration. If the Escrow Release Conditions are not met on or before September 30, 2012, or the Proposed Acquisition or the Qualifying Transaction is terminated at an earlier time, then the purchase price for the Subscription Receipts shall be returned to subscribers, together with a pro rata portion of the interest accrued on the subscription funds attributable to the Subscription Receipts.

Completion of the Offering is subject to certain conditions including the receipt of all necessary regulatory approvals, including the approval of the Exchange.

The Offering will be made in Canada, in the provinces of Alberta, British Columbia, Saskatchewan, Manitoba and Ontario, pursuant to the "accredited investor" exemption contained in National Instrument 45-106 Prospectus and Registration Exemptions ("NI 45-106") and pursuant to other applicable Canadian private placement exemptions contained in NI 45-106. Subscription Receipts will be sold to US buyers on a private placement basis pursuant to an exemption from the registration requirements pursuant to Rule 144A and/or Regulation D of the United States Securities Act of 1933, as amended, and in other eligible foreign jurisdictions pursuant to applicable private placement exemptions under applicable securities laws in such jurisdictions, and in such other jurisdictions outside of Canada as agreed upon by the Company and the Co-Lead Agents.

All securities issued in connection with the Offering will be issued under exemptions from the prospectus requirement and will be subject to a statutory hold period of four months and a day from the date of issuance.

The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, which include, but are not limited to, the approval of the Exchange.

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, as described below, collectively possess many years of oil and gas experience.

Corbin Blume, Calgary Alberta - Proposed President, Chief Executive Officer, and Director

Mr. Blume has 18 years of oil and gas experience in senior business development roles at Canadian 88 Energy, Canadian Superior Energy and Sunshine Oil Sands.

Brent Defosse, Calgary, Alberta - Proposed Executive Vice President and Chief Operating Officer

Mr. Defosse has over 30 years of experience in drilling, production, and exploitation. He was formerly the Vice President, Drilling & Completions at Pengrowth Energy Trust and Chief Operating Officer of Acclaim Energy Trust. Mr. Defosse was formerly the Manager of Production & Operations for Chevron's Western Canada properties.

Diane Zuber, Calgary, Alberta - Proposed Controller & Chief Financial Officer

Ms. Zuber has over 19 years of experience in the finance and energy sector including a start up royalty corporation that funded a $100 million private placement. In addition, Ms. Zuber has mergers and acquisitions experience at Pengrowth Energy Trust and energy banking experience with senior syndicated facilities and junior oil and gas companies at the Royal Bank of Canada and ATB Financial.

Grant Henschel, Calgary, Alberta - Proposed Executive Vice President, Business Development

Mr. Henschel has over 25 years of experience in the oil and gas industry at Schlumberger, Texaco, ICG Resources and was formerly a Senior Partner at Sproule Associates Limited. Mr. Henschel was formerly the Vice President, Acquisitions & Divestments at Pengrowth Energy Trust.

Murray Swanson, Calgary, Alberta - Proposed Director

Mr. Swanson is the former President and Chief Executive Officer of Reliable Energy, which recently sold for $115 million. Mr. Swanson has over 30 years of experience in exploration & production operations. He Previously worked for Shell, Chevron, and has developed several private companies including Enermax Resources Corp., Rockwood Resources Ltd., and service companies including Central Treating, SRK Oilfield Rentals and Northern Petro Services Ltd.

W.C. (Mike) Seth, Calgary, Alberta - Proposed Director

Mr. Seth has over 35 years of experience in the energy sector. He currently serves as President of Seth Consultants, a private oil and gas consulting firm, and has served as Chairman, President, and Managing Director of McDaniel & Associates since 1989. Mr. Seth serves on the Board of Enerplus Resources Fund, and several other public and private junior oil and gas companies. Mr. Seth was a member of the Council of APEGGA and served on the Practice Standards Committee.

Robert B. Hodgins, Calgary, Alberta - Proposed Director

Mr. Hodgins has been an independent businessman since November 2004. He served as the Chief Financial Officer of Pengrowth Energy Trust from 2002 to 2004. He was Vice President and Treasurer of Canadian Pacific from 1998 to 2002 and was Chief Financial Officer of TransCanada Pipelines Limited from 1993 to 1998. Mr. Hodgins currently serves on the board of numerous publicly traded Oil and Gas companies. Mr. Hodgins received a Bachelor of Arts in Business at the University of Western Ontario in 1975. Was a member of the Institute of Chartered Accountants of Ontario in 1977 and Alberta in 1991.

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.

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.

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