Northern Lights Acquisition Corp.
TSX VENTURE : NLC.P

January 06, 2011 10:13 ET

Northern Lights Acquisition Corp. Announces Proposed Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Jan. 6, 2011) - Northern Lights Acquisition Corp. (TSX VENTURE:NLC.P) ("Northern Lights" or the "Corporation") today announced details concerning its proposed qualifying transaction involving a business combination with Iona Energy Company Limited. ("Iona"). Iona is a private Canadian company formed to acquire, develop and explore for oil and natural gas assets in the United Kingdom's North Sea.

Northern Lights has entered into a letter agreement with Iona dated December 13, 2010 (the "Letter Agreement"), pursuant to which Northern Lights and Iona intend to complete a business combination (the "Transaction"). The Transaction is presently contemplated to be the Qualifying Transaction for Northern pursuant to TSXV Policy 2.4 (the "Policy"), and will be effected by way of an amalgamation pursuant to the Business Corporations Act (Alberta) (the "Amalgamation"), whereby: (i) Northern Lights and Iona would amalgamate under the name "Iona Energy Inc." ("Amalco" or "Iona Energy"); (ii) the holders of the Northern Lights Common Shares (the "Northern Shares") will receive common shares of Amalco (the "Amalco Shares") in such amount as determined by the number of Northern Shares held by such person multiplied by the Northern Exchange Ratio (as defined below); (iii) the holders of Iona Shares will receive one Amalco Share for each one Iona Share held; (iv) the holders of Iona warrants will receive one replacement warrant of Amalco (the "Amalco Iona Replacement Warrants") for each one Iona warrant held, each such Amalco Iona Replacement Warrant entitling the holder thereof to purchase one Amalco Share at an exercise price of $0.22 per Amalco Share and having an expiry date of August 13, 2013; (v) the holders of Northern Lights stock Options will receive replacement stock options of Amalco (the "Amalco Northern Replacement Options") with the number and exercise price thereof adjusted to reflect the Northern Exchange Ratio; (vi) the holders of Northern Lights broker warrants will receive replacement warrants of Amalco (the "Amalco Northern Replacement Warrants") with the number and exercise price thereof adjusted to reflect the Northern Exchange Ratio. For greater certainty, the Amalco Northern Replacement Options and the Amalco Northern Replacement Broker Warrants shall expire on the earlier of: (A) the expiry date set out in the agreements creating such securities; or (B) the date that is one year from the closing date of the Transaction. For the purposes of this Agreement, the "Northern Exchange Ratio" shall mean the ratio obtained by dividing: (i) the deemed value of Northern being $1,250,000 divided by the Offering Price (as defined below); by (ii) the 6,075,000 Northern Shares which are currently outstanding (on a fully-diluted basis). For illustrative purposes only, if the Offering Price (as defined below) is $1.20, the Northern Exchange Ratio would be 0.17147.

The Transaction is subject to the policies of TSX Venture relating to qualifying transactions, as well as shareholder approval of Northern Lights and Iona. Upon completion of the Transaction, Iona Energy Inc. will be a company focused on acquisition and development of proven undeveloped oil and natural gas offshore properties in the UK North Sea.

About Iona and the Iona Properties

Iona was co-founded by Neill A. Carson, Brad G. Gunn, Donald B. Copeland, and Jay M. Zammit to pursue oil and natural gas development opportunities in the United Kingdom's sector of the North Sea. To date, Iona has successfully negotiated Letters of Agreement giving it exclusive rights to negotiate Sale and Purchase Agreements on three North Sea fields. The first acquisition is a proposed 20% working interest in two producing Southern North Sea natural gas fields known as "Trent" and "Tyne" with an option to increase Iona's working interest to 37.5% in the fields. Combined, these two fields have recently been producing, on average, 18 MMscf/day gross, or 650 boepd net to Iona's proposed working interest. Iona has proposed an effective date of September 1, 2010 for this transaction thus representing an immediate production opportunity for Iona, and ownership of this key infrastructure with access to existing and further potential third party tariff revenues.

The second acquisition is a previously drilled oil discovery called "Orlando" in UK Block 3/3 in the Northern North Sea with a plan for development in progress to a nearby platform. Iona proposes to acquire a 42.5% working interest in the Orlando field and exploration portfolio. Iona has successfully negotiated a sale and purchase agreement for Orlando dated December 17, 2010.

Subject to financing and drilling rig availability, Iona expects to drill both properties in 2011. Iona is also evaluating oil and gas acquisition opportunities in the North Sea and will attempt to execute those that meet financial and operational thresholds and are complementary to its existing properties.

Financial Information of Iona

As Iona has not yet conducted operations, other than to raise capital and seek asset acquisitions, no initial financial information is available at this time.

Financial information regarding Iona will be included in a subsequent press release.

Iona Corporate History and Structure

Iona Energy Company Limited was incorporated under the Business Corporations Act (Alberta) on January 16, 2008. The registered office and head office of Iona are both located in Calgary, Alberta.

Iona has 22,575,065 Iona Shares and 264,500 warrants issued and outstanding. Iona has no stock options or other rights to purchase Iona Shares issued or outstanding.

The principal shareholders of Iona are Neill A. Carson of Aberdeen, Scotland, Jay M. Zammit of Calgary, Alberta, Robin M. Baxter of Aberdeen, Scotland, Donald B. Copeland of Calgary, Alberta, Brad G. Gunn of Calgary, Alberta, and J. Roger Laing of Cochrane, Alberta who own or control, directly or indirectly, a collective total of 46% of the outstanding Iona Common Shares.

Summary of the Proposed Qualifying Transaction

Northern Lights has entered into the arm's length Letter Agreement, pursuant to which Northern Lights and Iona have agreed to complete the Transaction.

Iona has engaged lead investment dealer Wellington West Capital Markets Inc. and a syndicate of investment dealers to act as agent (the "Agents") on a "commercially reasonable efforts" basis for a private placement (the "Brokered Private Placement") of up to $60.0 million of common shares of Iona at a price to be determined (the "Offering Price"). Iona intends to use the net proceeds of the Brokered Private Placement to complete its two transactions including paying its share of the cost of drilling two wells in Iona's two core operating areas, Orlando, the greater Tyne area, and for general corporate purposes. Further information concerning details of the Brokered Private Placement will be included in a subsequent press release.

Directors and Officers

After completion of the Transaction, the Board of Directors of Northern Lights will consist of six (6) directors, all of whom are nominees of Iona, namely Neill A. Carson, Roger Laing, Donald B. Copeland, Brad G. Gunn, Rod Maxwell, and Jay Zammit, provided the TSX Venture does not object to such nominations and such persons are eligible to act as directors pursuant to the requirements of the Business Corporations Act (Alberta). Contemporaneous with the completion of the Transaction, the officers of Iona Energy Company Limited will be appointed by the Board of Directors of Iona Energy and will include Neill A. Carson as Chief Executive Officer, Brad G. Gunn as Chief Financial Officer, and Adrian Harvey as Corporate Secretary. The biographies of each of the proposed directors and officers of Iona Energy upon completion of the Transaction are detailed below.

Neill A. Carson (50), Chief Executive Officer and Director

Mr. Carson has accumulated 28 years of management and international project experience in the oil & gas industry. On completion of his Bachelors and Master degrees in the geosciences from British universities, Ulster University and Birmingham University respectively, he joined Amoco in 1981. During different periods over 14 years with Amoco he was based in London, United Kingdom and was responsible for numerous exploration and production projects within the UK Continental shelf. His international career widened through exploration management positions for BP Amoco in the Netherlands, Bolivia, and Pakistan.

Mr. Carson, as Performance Unit Leader for BP Pakistan, was responsible for the delivery and growth of approximately 12,000 BOE/day and capital budgets in excess of US$50 million. Through his career Mr. Carson, with BP Amoco, has executed growth plans through successful oil and gas discoveries, and the development and management of commercial portfolios. He contributed as a select member of a targeted team to BP's world-wide new venture screening initiative in 2003. From 2003 to 2004 Mr. Carson operated his own consultancy, Carson Resources Ltd. within which he and his staff advised companies on delivery assurance in tough international, commercial and operational environments.

In late 2003, Mr. Carson co-founded Ithaca Energy Inc. where he served as its President and a Director from April 2004 and acted as Chief Operating Officer until late 2007 when he formed Iona in early 2008. While at Ithaca, Mr. Carson was responsible for asset acquisitions, all aspects of operations, including safety, general corporate strategy, and the drilling of four successful oil wells. Mr. Carson lives in the heart of the UK's oil and gas region, Aberdeen, Scotland.

Bradley Gerald Gunn (41), Chief Financial Officer and Director

Mr. Gunn has more than 17 years of management experience in financial markets and technology development. He began his career as an Equities and Options Trading Specialist for two of the largest banks in Canada. From 1996 to 2001, Mr. Gunn founded and served as Chief Executive Officer of Freerealtime.com, a Web-based provider of real-time financial market information services and analytic tools.

While serving at Freerealtime.com, Mr. Gunn presided over revenue growth from $0.5 million to over US$16 million a year, raised over US$17 million in equity funding, including the principal backing of two U.S. investment banks, completed two acquisitions and took the company public in September 1998 with a market capitalization of US$90 million. In 2000, the company completed a US$24 million acquisition and spun off its advertising sales division, PerfectCircle Media, to Interep for US$3 million. Mr. Gunn served on the Freerealtime.com's Board of Directors from Nov. 1995 to Dec. 2000 and was instrumental in extending the company's reach through extensive partnership and affiliate arrangements.

In early 2004, Mr. Gunn co-founded Ithaca Energy Inc. and served as its Chief Financial Officer and a Director from April 2004 through to January 2008. While at Ithaca, Mr. Gunn was responsible for structuring, negotiating and raising more than $300 million in equity capital and over $50 million in senior debt. Mr. Gunn holds a Bachelors Degree in Economics with a minor in management from the University of Calgary and co-founded Iona Energy in January 2008.

Donald B. Copeland, (65), Director

Mr. Copeland has more than 41 years of experience in the oil and gas exploration and production industry. He has been involved in a senior management capacity with a number of companies and has been a co-founder of several exploration and production companies active in western Canada, South America and the U.K. sector of the North Sea.

Since 1977, Mr. Copeland held various executive positions with both independent resource management companies and majors, including Texaco and Dome Petroleum. In 1986, Mr. Copeland became Senior Vice President of Trilogy Resource Corporation in charge of land, exploration and gas marketing. Trilogy grew to become a $200 million company.

Mr. Copeland has served as President of Pangman Resource International Ltd., a private investment and consulting company, since 1992. He has also held served on the board of directors of several oil and gas companies including: non-executive Chairman of the Board of Oilexco, a TSX listed company focused in the North Sea, Orca Petroleum, and Vision 2000 Exploration

Roger Laing, (53), Director

Mr. Laing is a Business Unit Leader with RLG International, an international performance consulting firm. Roger has been with RLG since 1988 working in a variety of industries across Canada, the United States and Europe including, Oil and Gas, Health care, Transportation, Printing, Publishing and the Public Sector. Within RLG, Mr. Laing has lead the firms businesses in both the United States and the United Kingdom. Currently Mr. Laing serves as part of the RLG Strategic Executive Team.

Mr. Laing is also a director of Technical Limit Services Ltd., a performance coaching organization specializing in offshore drilling operations. Additionally, Mr. Laing serves on the board of Directors for the Bethany Care Society where he chairs the strategic and long range planning committee.

Rod Maxwell, (47), Director

Mr. Maxwell is Managing Director of StoneBridge Merchant Capital Corp. and has over 25 years of experience in the investment and financial advisory services industries. Prior to co- founding StoneBridge Merchant Capital Corp. in 1996, Mr. Maxwell was a Partner with KPMG in the Corporate Finance/Business Valuations practice.

Mr. Maxwell holds a Bachelor of Commerce degree from the University of Calgary. He is a Chartered Accountant and is a member of both the Alberta and Canadian Institute of Chartered Accountants. In addition Mr. Maxwell is a Chartered Business Valuator and is a member of the Canadian Institute of Chartered Business Valuators. Mr. Maxwell is also a Director with TSX listed Cathedral Energy Services Ltd. and TSX-V listed Hyperion Exploration Corp.

Jay Zammit, (51), Director

Mr. Zammit practices in the areas of corporate finance and securities, advising on public and private financing matters as well as reorganizations, takeovers, mergers, shareholder disputes, acquisitions, dispositions and strategic relationships. Mr. Zammit serves on the board of several public and private companies as well as several non-profit organizations.

Mr. Zammit attended the University of Manitoba and received a Bachelor of Commerce (Finance) in 1982, following which he served as a consultant to the International Air Transport Association. He obtained a Bachelor of Laws in 1987 from the University of Manitoba and was admitted to the Alberta Bar in 1988. In 1989 Mr. Zammit was seconded to the Alberta Securities Commission.

Conditions for Completion of Transaction

The completion of the Transaction is subject to the approval of TSX Venture and all other necessary regulatory approvals. The completion of the Transaction is also subject to additional conditions precedent, including shareholder approval of Northern Lights and Iona, satisfactory completion of due diligence reviews by the parties, board of directors approval of Northern Lights and Iona, and completion of the Brokered Private Placement, and certain other usual conditions.

Other Matters

The Transaction will be an arm's length transaction as none of the directors, officers or insiders of Northern Lights own any interest in Iona.

The Corporation will make an application to TSX Venture for an exemption from the sponsorship requirements of TSX Venture, but there is no assurance that such an exemption will be available.

Trading of the Northern Shares will not resume until TSX Venture has reviewed a reserve report regarding the Iona properties and all other documents required by TSX Venture have been filed.

Northern Lights will issue a further news release when TSX Venture has received the necessary documentation and trading of the Common Shares is to resume.

As indicated above, completion of the Transaction is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. 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 Information Circular or Filing Statement, as applicable, of the Corporation 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 the Corporation should be considered highly speculative.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither Iona nor Northern Lights will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Northern Lights and Iona.

The securities of Northern Lights being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

This news release contains certain forward-looking information and statements, including without limitation, statements pertaining to: (i) completion of the Transaction, including the Corporation's ability to obtain necessary approvals from the TSXV and from Iona's shareholders; (ii) the proposed corporate name change, including the Corporation's ability to obtain necessary approvals from the TSXV and the Alberta corporate registry, (iii) the Brokered Private Placement, and (iv) the future business plans of Iona. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events c\uld differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in Northern Lights' disclosure documents on the SEDAR website at www.sedar.com, as well as in the documents filed from time to time with the Canadian securities regulatory authorities by Northern Lights and Iona. Actual results may differ materially. Neither Iona nor Northern Lights will update these forward-looking statements to reflect events or circumstances except as required by applicable law.

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

Contact Information

  • Northern Lights Acquisition Corp.
    James Bell
    President and Chief Executive Officer
    (403) 668-8365
    or
    Iona Energy Company Limited
    Neill A. Carson
    Chief Executive Officer
    +011 (44) 1224 865 645
    or
    Iona Energy Company Limited
    Brad G. Gunn
    Chief Financial Officer
    (403) 775-7442