Noravena Capital Corporation
TSX VENTURE : NRV.P

August 29, 2011 10:15 ET

Noravena Capital Corporation Announces LOI for Proposed Qualifying Transaction

TORONTO, ONTARIO--(Marketwire - Aug. 29, 2011) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR THROUGH UNITED STATES WIRE SERVICES.

Noravena Capital Corporation ("Noravena") (TSX VENTURE:NRV.P) a capital pool company, announces it has entered into a letter of intent (the "LOI") dated August 26, 2011 with respect to a proposed business combination with Seawall Energy Management Corp. ("3MV") in conjunction with a best-efforts private placement of a minimum gross proceeds of approximately $10,000,000 (the "Private Placement") into 3MV, which together upon completion are intended to constitute Noravena's qualifying transaction (the "Transaction"), subject to regulatory approval, completion of financing and other conditions. The resulting company will be renamed "3MV Energy Inc."

The Transaction

All of the issued and outstanding shares of 3MV will be acquired on the basis of 18.9 common shares of Noravena for each one (1) common share of 3MV. There are currently 4,591,685 common shares of 3MV outstanding. 3MV will issue additional common shares, also to be acquired by Noravena upon the same terms, in connection with financings of approximately $10,000,000 (which may include up to $2,800,000 of flow-through financing) as part of the qualifying transaction as follows:

  1. A private placement financing by 3MV of not less than $2,500,000 in equity of 3MV by way of the issuance of common shares of 3MV at an issue price of $3.75 per common share to close prior to September 26, 2011. Shareholders of Noravena shall be entitled to participate in the financing;

  2. A private placement financing by 3MV of approximately $2,500,000 in equity by way of issuance of common shares of 3MV at an issue price of $3.75 per common share, and/or flow-through common shares of 3MV at an issue price of $4.00 per common share; and

  3. A financing by way of subscription receipts exchangeable into shares of 3MV or similar finance mechanism of approximately $5,000,000. The subscription receipts will be issued at a price of $3.75 and will be automatically converted into common shares without payment of additional consideration. Flow-through common shares may also be issued at a price of $4.00 per flow-through common share.

About 3MV – Reserves and Assets

3MV is a private junior E&P company focused on low-risk light oil resource plays in the Kindersley area of West Central Saskatchewan. 3MV targets drilling of the Lower Cretaceous Albian age Viking sandstone. The Viking formation has an aerial extent encompassing much of Saskatchewan and Alberta. Production from vertical wells in the Viking first occurred in the late 1950's. The 3MV management team is the same group that advanced the Viking as a resource play by drilling the first horizontal multi-stage technology in the Kindersley area and continue to further drilling technology to capture more hydrocarbon from the tight sandstone of the Viking.

The estimated working interest reserves for the combined assets of 3MV and its subsequently acquired subsidiary 3 Martini Ventures Inc. as of January 31, 2011 were 888 Mboe Proved and 1479 Mboe Proved Plus Probable, respectively, as evaluated by Sproule Associates Ltd. in their NI 51-101 compliant reports dated as of January 31, 2011 (the "Reserve Reports"). Since the effective date of the Reserve Reports, 3MV has swapped some assets with another oil and gas producing company and continued paced development of their Viking play in the greater Dodsland area using horizontal multi-stage fracture stimulated wells.

Officer and Directors

Upon completion of the Transaction, the Board of Directors of Noravena will consist of seven (7) directors, and will include five (5) nominees of 3MV, being the current directors of 3MV and two (2) nominees of Noravena, initially proposed to be Noravena directors Rod Wilmer and Jim Boyle.

Upon completion of the Transaction, the directors will be as follows:

Douglas McKinnon
Alberta
President and Chief Executive Officer, 3MV;
29 years earth science and management experience in oil and gas industry, COO Reece Energy Exploration Corp. 2002-2007
Dallas Duce
Saskatchewan
Director, Renegade Petroleum Ltd. ("Renegade");
President Duce Oil Ltd until January 2010 acquisition by Renegade
Don Fairholm
British Columbia
Chartered Accountant;
Director, Sino Western Petroleum Inc.
Ron Baba
Alberta
Lawyer, Partner, Niblock & Co. LLP;
Co-Founder, 3 Martini Ventures Inc.
George Sereggela
Saskatchewan
Partner, Cathedral Insurance Brokers;
Lawyer, Associate, Cundall Baumgartner & Co.
Roderick W. Wilmer
Ontario
Managing Director and CEO, Canada Newedge Canada Inc.;
Director ExAlta Energy Inc. until January, 2008 acquisition by Galleon Energy Inc.
James P. Boyle
Ontario
Lawyer, Partner, Boyle & Co. LLP (securities law firm)

Upon completion of the Transaction, the officers will be as follows:

President and Chief Executive Officer Douglas McKinnon
V.P., Finance and Chief Financial Officer Billy Abbey

Conditions

In addition to customary conditions respecting sponsorship, regulatory and shareholder approvals and due diligence, the transactions are subject to and conditional upon:

  1. Completion of a financing for not less than $2,500,000 on or before September 26, 2011;

  2. Completion of a private placement for not less than $2,500,000 prior to completion of the Transaction; and

  3. Completion of a further concurrent financing for not less than $5,000,000 prior to completion of the Transaction.

Definitive Agreement

Noravena and 3MV will negotiate a formal definitive agreement in good faith (the "Definitive Agreement"). The formal Definitive Agreement will contain covenants, representations, warranties, conditions, indemnities and provisions customary for transactions of the nature of the qualifying transaction.

Sponsorship

In seeking approval of the Exchange for the Transaction Noravena will request the Exchange's waiver of any requirement for sponsorship or if waiver is not available, a sponsor for the qualifying transaction will be retained to conduct due diligence and file with the Exchange a sponsorship report satisfactory to the Exchange.

Board of Directors' Recommendation

The Board of Directors of 3MV have approved the Transaction and recommends that 3MV's shareholders approve the Transaction. The Board of Directors of Noravena have approved the Transaction.

Financial Advisor

Stonecap Securities is acting as sole financial advisor to 3MV in respect of the Transaction. Cornerstone Capital acted as sole financial advisor to Noravena in respect of the Transaction.

Stonecap Securities and Cornerstone Capital are co-Lead Agents for the private placement.

About Noravena Capital Corporation

Noravena is a capital pool company governed by Exchange policies. Noravena's principal business is the identification and evaluation of assets or businesses with a view to completing a qualifying transaction within the meaning of Exchange policies.

Completion of the proposed transaction is subject to a number of conditions, including but not limited to Exchange acceptance and if applicable pursuant to the Exchange requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or 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 a capital pool company should be considered highly speculative.

Forward Looking Statements

Certain information in this press release may constitute forward-looking information. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. Neither Noravena nor 3MV assumes any obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements, unless and until required by applicable securities laws. Additional information identifying risks and uncertainties is contained in Noravena's filings with the Canadian securities regulators, which filings are available at www.sedar.com.

Measurements

BOEs derived by converting gas to oil at a ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf: 1 bbl). BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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

Contact Information

  • Seawall Energy Management Corp.
    Douglas McKinnon
    President and Chief Executive Officer
    403-234-8998

    Seawall Energy Management Corp.
    Brian Radiff
    Communications Officer
    403-234-8998

    Noravena Capital Corporation
    James P. Boyle
    Chief Executive Officer and Director
    416-867-8800