MCW Energy Group Limited
TSX VENTURE : MCW
OTCQX : MCWEF

MCW Energy Group Limited

November 05, 2014 22:46 ET

MCW Energy Group Announces Convertible Note Financing, Details of Agreement to Acquire Second Property in Utah, and Management Share Compensation Issuance

TORONTO, ONTARIO--(Marketwired - Nov. 5, 2014) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

MCW Energy Group Limited ("MCW") (TSX VENTURE:MCW)(OTCQX:MCWEF), a Canadian holding company involved in fuel distribution and the creation of oil sands extraction technology, provides the following update to shareholders:

Convertible Note Financing

MCW has issued today a convertible secured note (the "Notes") to an institutional arm's length lender (the "Lender") for an aggregate principal amount of US$555,556 in accordance with the terms of a securities purchase agreement (the "Agreement") pursuant to which the Lender has agreed to loan up to US$1,111,112. The Note bears interest at a rate of 5% per annum, is payable quarterly and matures on May 5, 2016. At the option of the Lender, principal under the Note is convertible into units (the "Units") of MCW at a conversion price of CDN$0.90 per Unit. Each Unit would consist of one common share in the capital of MCW (a "Common Share") and one common share purchase warrant (a "Warrant") of MCW. Each Warrant would entitle the Lender to acquire one Common Share at an exercise price of CDN$0.945 per Common Share until November 5, 2019. MCW has granted a security interest to the holder under a general security agreement covering all of the assets of MCW. All securities issued pursuant to the financing will be subject to a four-month hold period. The proceeds will be used by MCW on capital expenditures on its oil sands plant facility in Asphalt Ridge, Utah, as well as for working capital. The financing is subject to final approval of the TSX Venture Exchange (the "Exchange").

Agreement to Acquire Second Property in Utah

MCW also announces that it has entered into an asset purchase and sale agreement (the "Agreement") with TMC Capital, LLC, for the acquisition of the lease (the "Lease") and assets related to an oil sands project (the "Temple Mountain Project") in the Asphalt Ridge area in Utah. The primary purpose of the acquisition is: (i) to acquire the bituminous sands/oil sands deposits (the "Mineral") located at the property for processing in MCW's existing oil sands extraction plant at its first field in Asphalt Ridge, Utah, and (ii) for a location for MCW's planned second, much larger, oil sands extraction plant to be built at the acquired property.

The Temple Mountain Project is comprised of approximately 2,230 acres located in Uintah County, Utah, United States, which is located southwest of the town of Vernal, Utah and northeast of Provo, Utah. There are extensive oil and gas operations in the area. The total bitumen initially in place for the Temple Mountain Project has been determined to be 139,541,000 STB, which represents the total discovered bitumen initially in place. The total mineable bitumen in place has been determined to be 119,640,000 STB. The above figures were determined by the independent Resource Evaluation of Minable Bitumen Property for the Temple Mountain Project as of June 30, 2014 prepared by Chapman Petroleum Engineering in accordance with COGEH standards.

Pursuant to the terms of the Agreement, MCW shall invest no less than US$1,000,000 per year for each of the three years immediately following closing in the development, mining and production of the Mineral from the lands associated with the Lease.

The consideration for the acquisition of the Lease is US$10,000,000 payable as follows: (i) on July 15, 2013 MCW loaned TMC US$1,000,000 pursuant to a 5.25% per annum two year loan with principal and accrued interest due on maturity, (ii) upon completion of MCW's due diligence, MCW shall have an option to convert the loan into a first non-refundable good faith deposit, (iii) within 60 days of completion of due diligence, MCW shall pay TMC an additional deposit of US$1,000,000 as a second non-refundable good faith deposit, (iv) on closing, MCW shall pay TMC US$8,000,000, and (v) on closing, MCW would assume TMC's obligation to a 1.6% gross royalty held by the owner of the property. MCW has until January 5, 2015 to complete its due diligence. In addition, on closing, MCW shall issue 10,000,000 Common Shares to TMC, which, as at the date hereof, would result in TMC holding approximately 16.7% of the issued and outstanding Common Shares thereby making TMC an "insider" of MCW.

Closing of the acquisition contemplated in the Agreement is conditional upon all necessary director, shareholder and regulatory approvals, including the approval of the Exchange, and other conditions which are typical for a transaction of this type.

Management Share Compensation Issuance

Pursuant to an independent contractor agreement, MCW has agreed to issue its new Chief Financial Officer, Mark Korb, up to 100,000 Common Shares (40,000 of which have been issued). The proposed share issuance is part of Mr. Korb's compensation package. The Common Shares vested 25,000 immediately and 7,500 per month for ten months.

About MCW Energy Group:

MCW Energy Group Limited is focused on value creation as (i) a distributor of gasoline and diesel fuels to service stations in Southern California for 75 years, having revenue in the fiscal year ending August 31 st, 2011 of US$241.5 million, revenue of US$363.3 million for the fiscal year ending August 31st, 2012, and revenue of US$431.9 million for the fiscal year ending August 31st, 2013, and (ii) as a developer of proprietary technology for the extraction of oil from oil sands at its first field in Asphalt Ridge, Utah, USA. MCW's management team is comprised of individuals who have extensive knowledge in both conventional and unconventional oil and gas projects and production, as well as refinery and fuel distribution experience.

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Forward-looking statements in this news release, include, but are not limited to the use of proceeds of the financing, regulatory approval of the transactions, commercial viability of the technology and the extraction plant, economic performance and future plans and objectives of MCW. Any number of important factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although MCW believes that the expectations reflected in forward looking statements are reasonable, they can give no assurances that the expectations of any forward looking statements will prove to be correct. Except as required by law, MCW disclaims any intention and assumes no obligation to update or revise any forward looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release does not constitute and the subject matter hereof is not, an offer for sale or a solicitation of an offer to buy, in the United States or to any "U.S Person" (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as a mended (the "1933 Act")) of any equity or other securities of MCW. The securities of MCW have not been registered under the 1933 Act and may not be offered or sold in the United States (or to a U.S. Person) absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act.

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