WorldStar Energy, Corp.
OTC Bulletin Board : WSTR

November 03, 2005 13:43 ET

WorldStar Amends Merger Arrangements and Updates Share Exchange

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 3, 2005) - WorldStar Energy, Corp. (OTCBB:WSTR) ("the Company") announces that further to the Company's news releases of March 23 and May 2, 2005, the arrangements for the Company to acquire by share exchange, 100% of WorldStar Energy Corp. ("WEC"), the private corporation, has been delayed. WEC shareholders are assured that all WEC share certificates already tendered for the share exchange are in safe-keeping with the Company pending completion of the merger with the Company and can be returned at anytime on request. The share exchange has been delayed as a result of a determination that a revised structure will be necessary to facilitate the share exchange for tax and corporate law reasons. The Company and WEC, have agreed to amend the share exchange in two principal respects:

a) The share exchange is expected to occur under US laws and therefore it is required that WEC become a United States domestic company. WEC will be mailing materials to its shareholders for a meeting in late 2005 to seek shareholder approval for the move of WEC to the US jurisdiction to complete the share exchange;

b) The share exchange will be further amended so that only cash-paid shares in WEC as well as 2 million management incentive shares will be exchanged for shares in the Company until certain fundraising and other agreed conditions and requirements have been met. A further 30 million WEC shares have been conditionally allotted to persons for certain fund-raising and business acquisitions commitments and upon completion of the merger, the Company will assume the obligations to issue these shares if the conditions are met within a 180 day period from completion of the share exchange.

Upon the share exchange being completed, approximately 2.6 million shares of the Company will be initially issued. The exchange arrangements contemplate a market value adjustment exchange formula whereby so long as WSTR trades at $5 or less, one WSTR share will be issued for each two shares of WEC shares which were sold at US$ 2.50 each, and one WSTR share will be issued for each WEC share which was originally sold at US$5.00. In the event certain contemplated potential fund raising and asset acquisition activities occur prior to completion of the share exchange and the market price of WSTR increases, the number of WSTR shares will be proportionately reduced should the WSTR market price rise above $5 (to a maximum of $10). Therefore the minimum share exchange ratio would occur at $10 per WSTR share, in which case one WSTR share will be exchanged for each two $5 WEC shares, and one WSTR share for each four $2.50 WEC shares Downward price protection applies to as low as US$3 so that if WSTR is trading at $3 at completion of the exchange, holders of $5 WEC shares will receive a maximum 1.67 WSTR shares and holders of $2.50 WEC shares will receive a maximum .83 WSTR shares.

Further details will be included in the information circular to be mailed to WEC shareholders which are expected to be included in the Company's public filings during November, 2005.

Forward-Looking Statements:

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made on behalf of the Company. All such forward-looking statements are, by necessity, only statements of intentions or desired outcomes. Actual events and results achieved by the Company may differ materially from these statements due to a number of factors. Statements made in this document that are not purely historical are forward-looking statements. Risk factors that may cause results to differ from expectations include the inability of the Company to secure funding on acceptable terms or any terms at all, the inability to complete the acquisition of WEC as a consequence of WEC shareholders' approval or other legal requirements, the inability to secure processing assets or sources of natural gas, and the loss of key executives. The Company assumes no obligations to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements.

Contact Information

  • WorldStar Energy, Corp.
    Michael Kinley
    (604) 434-5256
    (604) 434-5488 (FAX)