Trinity Valley Energy Corp.
TSX VENTURE : TE

Trinity Valley Energy Corp.

June 09, 2015 15:13 ET

Trinity Valley Energy Corp. Announces Non-Brokered Private Placement for US$2,250,000

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 3, 2015) - Trinity Valley Energy Corp. (TSX VENTURE:TE) (the "Company") announces that is has entered into a binding letter of intent with Texas General Oil & Gas, LP ("Texas Oil") pursuant to which Texas Oil has agreed to invest for US$2,250,000 ("Investment Amount") in the Company by way of a private placement (the "Private Placement") subscription of 34,765,160 common shares (the "Common Shares") of the Company at a price of CDN$0.043 per share for gross proceeds of US$1,250,000 and 100 preferred shares of the Company with no par value at a price of $10,000 per preferred share (the "Preferred Shares") for gross proceeds of US$1,000,000 (the "Redemption Price"), subject to TSX Venture Exchange ("Exchange") approval and shareholder approval.

The Preferred Shares will have the following rights and restrictions:

  • non-voting, non-convertible into common shares;
  • annual dividend of fifteen percent (15%) of the Redemption Price. No dividends shall be paid on any common shares unless dividends are paid according to the terms herein on all of the Preferred Shares;
  • maximum total return: accumulated total return to a maximum of two hundred percent (200%) of the Redemption Price less the amount of any dividends paid on the Preferred Shares from the date of issuance, relative to the other equity shareholders of the Company, which will be paid out on the Automatic Redemption Date (defined below), subject to the Company's ability to make such payment in accordance with applicable laws;
  • nonsubordinable to the issuance of any additional shares, common shares or preferred, debt or any other issuance whatsoever by the Company. The Preferred Shares cannot be diluted under any circumstances without the prior written consent of Texas Oil;
  • preference in the event of liquidation or winding up of the Company (entitled to receive-in preference to the holders of common shares-the Redemption Price plus any accrued but unpaid dividends as of the date of the winding up or liquidation or the guaranteed minimum return, whichever is greater. The remaining balance of the proceeds from the liquidation will then be allocated to the common shareholders on an as-converted basis. At the option of the holders of the Preferred Shares, a merger, sale of all or substantially all of the assets of the Company, reorganization or other transaction in which majority control of the Company is transferred may be treated as a liquidation, dissolution or winding up for purposes of the liquidation preference. Notwithstanding anything to the contrary herein, it is specifically understood that Texas Oil's acquisition of fifty percent (50%) of the Company's common stock will not be treated as a liquidation, dissolution or winding up for purposes of the liquidation preference;
  • the Company will redeem the Preferred Shares from Texas Oil on the earlier of: (i) the seventh (7th) anniversary after the original date of issuance of the Preferred Shares; or (ii) sixty (60) days from the date the Company achieves proved developed reserves of one million (1,000,000) barrels of oil (the "Automatic Redemption Date"); and
  • transferable without restriction or consent of Company or other subsequent investors, to any third party and for any reason whatsoever, including but not limited to, pledging the Preferred Shares as collateral, subjecting the Preferred Shares to a lien, or selling all or a portion of the Preferred Shares to a closely-held entity.

The Common Shares and Preferred Shares will be subject to a four-month hold period from the date of issuance. The Preferred Shares will not be non-tradable and will not be listed on the Exchange.

As the Private Placement will result in Texas Oil holding 50% of the issued and outstanding common shares of the Company (on a non-diluted basis) and becoming a "Control Person" (as that term is defined in the Exchange's policies), the Company will seek disinterested shareholder approval of the creation of the Control Person at its annual general and special meeting ("AGSM") scheduled for July 16, 2015. Shareholders of the Company will also be asked to approve an amendment (the "Amendment") to the Company's Notice of Articles and Articles to create the Preferred Shares. In the event the Company receives shareholder approval for the Amendment, the Company will issue Texas Oil 100 Preferred Shares which will be held in escrow by Brooks Law, LLP as escrow agent (the "Escrow Agent").

All of the Common Shares, Preferred Shares and Investment Amount will be held in escrow by the Escrow Agent and released in accordance with the Company's and Texas Oil's joint instructions on the completion of certain business milestones, which will be set out in an escrow agreement (the "Escrow Agreement") to be entered into by the Company, Texas Oil and the Escrow Agent. The details of the Escrow Agreement will be disclosed in the Company's Information Circular for the AGSM. In the event shareholder approval of the creation of a Control Person is not received, the Investment Amount will be returned to Texas Oil and the Common Shares will be returned to treasury.

In the event shareholder approval of the Amendment is not received, the Company will not issue the Preferred Shares.

Any Investment Amount released from escrow, will be used by the Company for ongoing Farm-in expenditures on the Days Chapel Project and to increase the Company's working interest in the Days Chapel EOR Project (as defined in the Farm-in and Joint Operating Agreement between the Company and Anderson County Land Company), located in Anderson County, East Texas (in which the Company has a 33.33% working interest) and for general working capital.

The Private Placement is being conducted in accordance with the Exchange bulletin dated April 7, 2014, discretionary waivers of five-cent minimum pricing requirement.

ON BEHALF OF THE BOARD

Michael Dake, President

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.

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