White Rock Energy Inc.

August 04, 2009 16:48 ET

White Rock Energy Inc. Announces Proposed Acquisition for Qualifying Transaction

WHITE ROCK, BRITISH COLUMBIA--(Marketwire - Aug. 4, 2009) - White Rock Energy Inc. ("White Rock" or the "Corporation"), a capital pool company, is pleased to announce that its common shares will be listed on the TSX Venture Exchange (the "TSXV"), effective August 7, 2009.

White Rock is also pleased to announce that it has entered into a letter agreement dated July 20, 2009 (the "Letter Agreement") with Darford Industries Ltd. ("Darford"), a private British Columbia company, and Darcy E. Bomford, a British Columbia resident, (the "Vendor") to acquire all the outstanding shares of Darford in exchange for common shares of White Rock.

The proposed transaction is a sale of 100% of the issued and outstanding shares of Darford (the "Darford Shares") to White Rock for a purchase price to be determined by an independent business valuation and negotiation between the parties. The proposed transaction is expected to constitute White Rock's Qualifying Transaction in accordance with the policies of the TSXV (the "Proposed QT"). The Proposed QT will be an arm's length reverse take-over transaction and will result in the Corporation becoming an industrial issuer. Upon completion of an independent business valuation and a determination as to the purchase price as negotiated between the parties, the Corporation will issue a further news release in that regard.

The Letter Agreement provides that White Rock will acquire all the Darford Shares in exchange for the issuance of common shares of White Rock at a deemed price of $0.25 per share. Prior to the Proposed QT, White Rock has issued and outstanding 2,400,000 common shares, 240,000 stock options and 120,000 agent's options.

The Letter Agreement also contemplates that the Vendor shall enter into an agreement with the founding shareholders of the Corporation to purchase 1,200,000 escrowed common shares of White Rock for a purchase price of $0.175 per share (the "Escrowed Shares"). The Escrowed Shares are subject to an Escrow Agreement dated April 24, 2009 between the Corporation's founding shareholders and Olympia Trust Company. The transfer of the Escrowed Shares to the Vendor is subject to obtaining regulatory consent.

The Letter Agreement also contemplates that the directors of the Corporation will agree to cancel their respective stock options to purchase common shares of White Rock in exchange for a pro-rata share of $12,000 paid by the Vendor.

It is anticipated that Darford will complete a non-brokered private placement of common shares of Darford at a price of $0.25 per share to raise gross proceeds of up to $1,000,000 (the "Darford Private Placement"). The common shares issued under the Darford Private Placement will become Darford Shares and shall be acquired by the Corporation in consideration of such number of common shares of White Rock as determined upon establishing a purchase price for Darford.

At this time it is not anticipated by management that the Darford private placement is necessary to meet TSXV minimum listing requirements for the Proposed QT. Any capital raised under the Darford Private Placement will be used primarily for the development of the business of Darford in accordance with its business plan.

The Proposed QT is conditional upon, among other things, satisfactory due diligence, all necessary regulatory and shareholder approvals, and the granting of 240,000 stock options to purchase common shares of White Rock to the Vendor at $0.25 per share for a five year term all in accordance with the policies of the TSXV.

About Darford Industries Inc.

Darford is a private industrial company, incorporated in British Columbia in May 1995. Darford's head office is located at #102 - 1710 Kosmina Road Vernon, BC V1T 8T2. Darford has 12 common shares issued and outstanding and has not issued any stock options or other convertible securities to date. The sole shareholder of Darford is the Vendor, Darcy E. Bomford of Vernon, British Columbia. Mr. Bomford is the sole director and President of Darford.

Darford is not a reporting issuer and its shares are not listed on any stock exchange.

Darford markets and manufactures baked pet "treats" for the pet food industry. Darford produces products under the Darford® brand and contract manufactures products for well known North American brands.

Darford's current manufacturing facility and corporate offices are located in Vernon, British Columbia. Darford's existing manufacturing facility is operating at 80% of design capacity. In Darford management's view, organic growth from existing customers together with increasing interest from new regions, particularly in the United States, provides an opportunity to expand production capacity. Darford has recently secured a manufacturing facility in Ohio to meet the demand.

The pet food industry has experienced rapid growth particularly in the higher quality and organic products. An opportunity exists for Darford to leverage the existing distribution and brand recognition, and to expand the breadth of products into the pet "food" segment of the industry. Plans are underway to have a dog "food" product line launched North American wide by the spring/summer of 2010.

Darford has built a successful business over the past twenty years based on high quality products and service. Management has a strategic growth plan in place that will capitalize on the company's strengths to compete and grow with the rapidly expanding pet food industry.

The long-term vision is for Darford to leverage the current success and sell through of Darford's product line and to build a global brand with solid distribution worldwide.



Selected Audited Financial Information of Darford

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For the ten months ended For the year ended
March 31, 2009 May 31, 2008
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Total Revenue $4,005,494 $3,609,003
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EBITDA(i) 710,688 249,349
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Net Income 412,682 58,773
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Current Assets 1,153,541 895,295
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Total Assets 2,375,214 1,860,483
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Current Liabilities 1,243,454 1,162,218
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Due to Shareholder Nil 38,135
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Long Term Liabilities 258,518 260,170
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Working Capital (Deficit) (ii) (89,913) (266,923)
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Dividends Nil Nil
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Retained Earnings 746,118 333,436
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(i) EBITDA is defined as earnings before interest, income taxes,
depreciation and amortization. EBITDA is a non-GAAP measure.

(ii) Includes $456,863 of the current portion of the long term debt for ten
months ended March 31, 2009 and $419,057 of the current portion of the
long term debt for the year ended dated May 31, 2008.


Proposed Directors and Officers of the Resulting Issuer

The current directors and officers of White Rock, except David L. Wood, intend to resign effective at the date of the special meeting of shareholders to approve certain matters relating to the Proposed QT. It is expected that a new board of directors will be nominated at the special meeting consisting of David L. Wood of White Rock and new directors Darcy E. Bomford, Allen L. Szeliga, Gary A. Pearson and John Ayres. The background of each of the proposed directors and senior officers of the resulting issuer are as follows:

Darcy Bomford, Director and Chief Executive Officer - Vernon, BC. - Mr. Bomford is the President and Chief Executive Officer of Darford. He has been actively involved in the pet food industry since the mid 1980's when he founded Darford in 1994. He presently oversees all operational aspects of the company. His other areas of focus include maintaining and building relationships with new and existing customers, new product development, and working closely with the CFO on future growth plans.

Allen A. Szeliga, Director and Chief Financial Officer - Vernon, BC. - Mr. Szeliga is the Chief Financial Officer of Darford. He received his designation as a Certified General Accountant (CGA) in 1998 in British Columbia. He has been acting in a consulting capacity as Chief Financial Officer for Darford for the past fifteen years. Over the past 20 years he has held various senior financial positions and been actively involved in mergers and acquisitions with two major integrated forest products companies.

David L. Wood, Director - White Rock, BC - is the President, CEO and CFO of White Rock. He has his Accredited Appraiser Canadian Institute (AACI) designation and is President of Zenith Appraisal & Land Consulting Ltd., where he has been employed since March 1978. Mr. Wood is also a director, Chairman of the Board of Iplayco Corporation Ltd., a playground equipment designing and manufacturing company listed on the TSXV. In 1997, Mr. Wood co-founded Black Bull Resources Inc., an integrated miner, processor and marketer of industrial minerals, and has acted as a Director of the corporation since its establishment. Black Bull Resources Inc. trades on the TSXV. Mr. Wood also acts as President and director of Lander Energy Corporation, a public company listed on the TSXV.

Gary A. Pearson, CA Director - Mr. Pearson was most recently the Chief Financial Officer and Vice President, Finance for Sun-Rype Products Ltd., a Canadian fruit-based beverage and food manufacturer and marketer that trades on the TSX. Prior to that time, Mr. Pearson was the Treasurer and held several other senior finance positions at Tolko Industries Ltd. and its predecessor, Riverside Forest Products Limited, where he had responsibility for financial reporting, cash management, financing, credit and risk management. He brings with him over twenty years of experience in financial reporting, treasury, risk management, and information systems. Mr. Pearson is a graduate of the University of British Columbia where he obtained a Bachelor of Commerce degree in Accounting and Management Information Systems. He was accepted into the Canadian Institute of Chartered Accountants in 1984.

John Ayres, Director - Mr. Ayers is owner and partner of Freedom Pet Supplies located in Cambridge, Ontario and has over 25 years of experience in the pet industry. Mr. Ayres started as a territory sales representative for Kane Vet Supplies in Edmonton, Alberta. In 2001, John and his wife, started Freedom Pet Supplies ("Freedom") in Cambridge, Ontario as exclusive distributors for the Wellness® brand of pet food and Old Mother Hubbard® line of dog biscuits. The efforts of Freedom were instrumental in the successful development of the Wellness® brand in Ontario and Freedom quickly became one of the most successful continent-wide distributors. Freedom is recognized as one of the largest pet food and pet accessory distributors in Canada and covers a territory from Thunder bay, Ontario to Halifax, Nova Scotia. They presently have over 40 staff occupying a new 80,000 square foot distribution facility.

Regulatory and Other Matters

The Proposed QT is proposed as White Rock's "Qualifying Transaction" within the meaning of Policy 2.4 of the Exchange (the "Policy"). White Rock's shareholders will be asked to vote upon, among other things, the Proposed QT, election of the directors and the change of name of White Rock to Darford Industries Ltd. or such other name acceptable to Darford and TSXV. The mailing of an information circular providing the particulars for the shareholder meeting will be forthcoming. Upon completion of the Proposed QT, White Rock will be an industrial company under the policies of the TSXV.

A general policy of the TSXV requires that a sponsor be retained to prepare a sponsor report in compliance with TSXV Policy 2.2. The common shares of White Rock will remain halted subject to the receipt of further documentation by the Exchange. One of the conditions for reinstating the trading of White Rock's shares will be the engagement of a sponsor. White Rock is currently in discussions for a sponsor for this transaction.

Caution Concerning Forward-Looking Statements

Some statements in this press release contain forward-looking information within the meaning of applicable Canadian securities legislation. These statements include, but are not limited to, statements with respect to the entering into of agreements, the closing of transactions and the expenditure of funds. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others, the timing of transactions, the ability to fulfill certain conditions, the ability to raise funds, general business, economic, competitive and political uncertainties and the timing and amount of expenditures. Neither the Corporation, nor Darford undertakes to update any forward-looking information, except in accordance with applicable securities laws.

READER ADVISORY

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV 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 information circular to be prepared in connection with the proposed 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. The TSXV has in no way passed upon the merits of the Proposed QT.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this news release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • White Rock Energy Inc.
    Mr. David L. Wood
    Chief Executive Officer and Chief Financial Officer
    (604) 541-8370
    Email: dlwood@shaw.ca