Transborder Capital Inc.

October 04, 2005 18:28 ET

Transborder Capital Inc. Updates Qualifying Transaction and Loan

CALGARY, ALBERTA--(CCNMatthews - Oct. 4, 2005) - Transborder Capital Inc. ("Transborder" or the "Corporation") is pleased to announce that substantial progress toward the completion of its previously announced Qualifying Transaction (see press release of June l7, 2005) with Eagle Rock Exploration Ltd. (formerly l154234 Alberta Ltd.) ("Eagle Rock") has been made and, subject to conditional approval of the TSX Venture Exchange (the "Exchange"), expects to close the Qualifying Transaction by or near the end of October 2005.

Eagle Rock is a private Alberta based oil and gas company with assets which consist of approximately 48 barrels of oil equivalent per day of oil and natural gas production, from an undivided 20% working interest in petroleum and natural gas rights for properties located in the Coutts area of south-eastern Alberta (the "Coutts Area"). Eagle Rock has entered into a joint venture management agreement with an Alberta based private oil and gas company ("Privateco"), that provides Eagle Rock with the right to participate in certain petroleum and natural gas asset acquisition opportunities generated by Privateco. Under the terms of such agreement, Privateco manages the interest of Eagle Rock in any such assets acquired thereunder for a management fee of 5% of Eagle Rock's share of net revenues. Eagle Rock commenced operations in March 2005 with its acquisition of a 9% working interest in the Coutts Area from Privateco.

Under the terms of the Qualifying Transaction, Transborder has agreed to acquire all of the issued and outstanding shares of Eagle Rock through the issuance of 2,940,000 common shares of Transborder ("Transborder Shares") at a deemed price of $0.20 per share, for aggregate consideration of $588,000 (the "Proposed Transaction"). In addition, Transborder is reserving up to 590,000 common shares at a price of $0.25 for issuance under its stock option plan to directors, officers, employees and consultants of Transborder and Eagle Rock upon completion of the Proposed Transaction. Upon completion of the Proposed Transaction, Eagle Rock will be a wholly owned subsidiary of Transborder. The Proposed Transaction is expected to constitute Transborder's Qualifying Transaction as it is defined in Policy 2.4 of the Exchange and is subject to a number of conditions, including obtaining conditional listing approval of the Exchange and the entering into by the parties of a definitive agreement.

The Proposed Transaction is an arm's length transaction and will not be subject to shareholder approval. Shortly following completion of the Proposed Transaction, Transborder intends, subject to shareholder approval, to change its name to "Eagle Rock Exploration Ltd." or a similar name acceptable to the regulatory authorities. In addition, shareholder approval of Transborder will be sought to adopt a stock option plan for the Corporation.

Following the completion of the Proposed Transaction, Transborder will have approximately 5,940,000 Transborder Shares outstanding.

Loan

Transborder has agreed, subject to the conditional approval of the Exchange, to loan $220,000 to Eagle Rock prior to the completion of the Proposed Transaction. The loan proceeds will be used by Eagle Rock to pay the outstanding balance of the purchase price for oil and gas assets and Crown lease commitments.

Concurrent Financing

Concurrent with the Proposed Acquisition, the Corporation intends to complete a private placement financing (the "Financing") of flow through common shares at a subscription price of $0.35 per share and common shares at a subscription price of $0.25 per share issued on a private placement basis for aggregate proceeds of $2,000,000. The net proceeds of the Financing will be used to fund development of the Eagle Rock properties and incur and renounce qualifying expenditures to subscribers of flow through shares.

Completion of the Proposed Acquisition is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Proposed Acquisition cannot close until the required shareholder approval is obtained. In addition, other conditions include all other necessary regulatory, court and third party approvals and authorizations, the completion of a definitive agreement setting forth the terms and conditions set forth in the Letter of Intent and the completion of due diligence. There can be no assurance that the Proposed Acquisition will be completed as proposed or at all.

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

In accordance with Exchange policy, the Corporation's shares are currently halted from trading.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.

Contact Information

  • Transborder Capital Inc.
    Raymond P. Mack
    President and a Director
    (403) 233-7750
    Email: rmack@kmss.ca
    or
    Eagle Rock Exploration Ltd.
    Jim Silye
    President and a Director
    (403) 620-2665
    Email: jimsilye@shaw.ca