VGS Seismic Canada Inc.
NEX BOARD : VGS.H

VGS Seismic Canada Inc.

November 24, 2006 13:27 ET

VGS Seismic Signs Amalgamation Agreement

CALGARY, ALBERTA--(CCNMatthews - Nov. 24, 2006) -

This release is intended for distribution in Canada only and is not intended for distribution to United States newswire services or for dissemination in the United States.

VGS Seismic Canada Inc. (the "Corporation") (NEX BOARD:VGS.H) announced today that it has signed an amalgamation agreement dated November 20, 2006 (the "Agreement") with 1273151 Alberta Ltd. ("Newco"), a wholly owned subsidiary of the Corporation, VGS Database International Inc. ("VGS Database") and VGS Capital Ltd. ("VGS Capital") whereby Newco, VGS Database and VGS Capital will amalgamate (the "Amalgamation"), following which the amalgamated entity will amalgamate with the Corporation.

Pursuant to the Agreement, each holder of Class A common shares of VGS Capital will receive a Class A common share of the Corporation in exchange for their shares in VGS Capital. Each Class A common share of VGS Database will be exchanged for 0.75 of a Class A common share of the Corporation and 0.25 of a Class B non-voting share of the Corporation. Each Class D non-voting share of VGS Database will be exchanged for a class B non-voting share of the Corporation. The Amalgamation is conditional, among other things, upon the approval of the TSX Venture Exchange, the written consent of holders of greater than 50% of the voting shares of the Corporation and the approval of shareholders of each of VGS Database and VGS Capital representing at least 662/3% of the voting shares of such corporations, such approval to obtained at shareholders meetings to be held on December 15, 2006 in the case of VGS Database and VGS Capital. The Amalgamation is also subject to the consent of the lenders of VGS Database.

Joint management information circulars have been mailed to the shareholders of each of VGS Database and VGS Capital. It is expected that the joint management information circular will be filed on SEDAR as a filing statement of the Corporation.

The Corporation currently has 2,575,000 Class A common shares issued and outstanding. On a post-transaction capitalization basis, it is expected that 25,915,649 Class A common shares and 4,238,785 Class B non-voting shares of the Corporation will be outstanding. In addition, it is expected that on a post-transaction capitalization basis, there will be 600,000 options to purchase Class A common shares of the Corporation and 3,237,601 warrants to purchase Class A common shares of the Corporation outstanding.

The Corporation carries on the business of pursuing opportunities in the creation, acquisition and marketing of seismic data for use in the oil and natural gas industry. The Class A common shares of the Corporation are currently listed on NEX and are halted pending this transaction.

VGS Database

VGS Database commenced operations in September 2005. Since that time, its operations have consisted primarily of operating seismic surveys whereby it contracts with oil and gas exploration companies to jointly pay the cost to create seismic data to be owned by VGS Database, subject to a long term license granted to the exploration company. The licenses provide the exploration company with exclusive use of the seismic data for a limited period of time, after which VGS Database may license the data to others. VGS Database currently has 16,658,053 Class A common shares and 74,272 Class D non-voting shares outstanding. In addition, VGS Database currently has outstanding warrants to purchase 2,861,550 class A common shares, options to purchase 500,000 Class A common shares and options to purchase 800,000 Class D non-voting shares, with the latter options expiring upon the Amalgamation if not exercised.

VGS Capital

VGS Capital has not carried on any active operations to date. The principal business of VGS Capital has been to identify and evaluate opportunities for the acquisition of an interest in assets or businesses in the seismic industry. VGS Capital currently has 10,847,108 Class A common shares outstanding, warrants to purchase 376,051 Class A common shares outstanding and options to purchase 100,000 Class A common shares outstanding. VGS Capital has made loans of an aggregate of $11,996,000 to VGS Database secured by subordinated security of VGS Database.

Significant Financial Information

The following is a summary of selected pro forma financial information for the Corporation following the completion of the Amalgamation, for the period indicated.



Pro Forma Year Ended
June 30, 2006
------------------------
($000s)

Cash and cash equivalents 10,532

Total assets 67,706

Total liabilities 45,418

Share capital 22,379


Management of the Resulting Issuer

It is not expected that any changes will be made to the board of directors or the management of the Corporation immediately following the Amalgamation

Sponsorship of Transaction

Westwind Partners Inc., subject to completion of satisfactory due diligence, has agreed to act as a sponsor to the Corporation in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

TSX Venture Exchange

The Exchange has conditionally accepted notice of the additional listing of Class A common shares pursuant to the Amalgamation.

Completion of the transaction is subject to a number of conditions, including Exchange acceptance and the consent of holders of greater than 50% of the Class A common shares of the Corporation. The transaction cannot close until the required shareholder consent 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 being prepared in connection with the transaction, any information released or received with respect to the Amalgamation may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

Forward-Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release are forward-looking statements. Forward-looking statements are based on the estimates and opinions of the Corporation's management at the time the statements were made. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. Forward-looking statements are subject to various risks, uncertainties and assumptions. Although the Corporation believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Some of the risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include, but are not limited to: the impact of general economic conditions, industry conditions, governmental regulation, volatility of commodity prices, currency fluctuations, environmental risks, the inability to meet listing standards, the inability to obtain required consents, permits or approvals, competition from other industry participants, the lack of availability of qualified personnel or management, failure to realize the anticipated benefits of the Amalgamation, stock market volatility and the inability to access sufficient capital from internal and external sources, and the risk that actual results will vary from the results forecasted and such variations may be material. Readers are cautioned that the foregoing list is not exhaustive.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and the Corporation undertakes no obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

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

Contact Information

  • VGS Seismic Canada Inc.
    Scott Milroy
    Chief Financial Officer
    (403) 263-6050