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CALGARY, May 21, 2020 /CNW/ - Pulse Oil Corp.
(TSX-V:PUL) (the "Company" or "Pulse") is pleased to
announce that it intends to complete a brokered private placement
(the "Private Placement"), whereby the Company and a wholly
owned subsidiary of the Company, Pulse Oil Operating Corp
("OpCo") will issue an aggregate number of units (the
"Private Placement Units") comprised of securities issued by
the Company and OpCo for gross proceeds of up to $30,900,000. Each Private Placement Unit
will be priced at $25.75 and will
consist of one (1) preferred share (a "Preferred Share") in
the capital of OpCo, and twenty-five (25) common shares ("Common
Shares") in the capital of the Company. The Private
Placement will be conducted on a commercial efforts basis for the
issuance of up to: (i) 1,200,000 Preferred Shares of OpCo, at a
price of $25.00 per Preferred Share;
and (ii) 30,000,000 Common Shares, at a price of $0.03 per Common Share.
Holders of the Preferred Shares will, among others terms, be
entitled to receive a dividend payment equal to 100% of the free
cash flow of OpCo, calculated in accordance with the rights and
restrictions attaching to the Preferred Shares, on a pro-rata
basis, until the Preferred Shares have realized an internal rate of
return ("IRR") equal to 25%. Thereafter, holders of
Preferred Shares will be entitled to a dividend payment equal to
50% of the free cash flow of OpCo, until the Preferred Shares have
realized an IRR equal to 100%, and a dividend payment equal to 25%
of free cash flow of OpCo. OpCo may (but is under no
obligation to), commencing on the date that is five (5) years and
one day from the date of issuance, and on every one (1)-year
anniversary thereafter, redeem all or any part (on a pro-rata basis
by shareholder) of the then outstanding Preferred Shares at a cost
of $25.00 per Preferred Share.
The Preferred Shares will be non-voting shares of OpCo,
provided that the holders of Preferred Shares will be entitled to
certain customary consent rights with respect to certain
fundamental matters with respect to OpCo and its business pursuant
to the terms of a shareholder agreement to be entered into among
OpCo, Pulse and the holders of Preferred Shares at closing of the
Private Placement.
The Private Placement will be conducted by Raymond James Ltd.
(the "Agent"), as sole agent and sole bookrunner. INFOR
Financial Inc. is acting as exclusive financial advisor to the
Company.
Drew Cadenhead, Pulse President
and COO commented, "This funding will allow us to accelerate our
Enhanced Oil Recovery ("EOR") project at Bigoray at a time
when our largest expense associated with the project, the NGL
injection solvent, is at historically low prices. With peak EOR
sweet light crude oil production rates forecasted 12-18 months
after initiation of solvent injection, we believe it makes sense to
advance the project in the current low oil price environment.
Accelerating the program now improves the economic forecasts of the
project with the goal of creating value for all of our
shareholders."
Pulse CEO, Garth Johnson
commented, "Gaining access to a new investor base in these
challenging times where raising capital is extremely difficult
would allow Pulse to expedite our EOR project. Bigoray is our main
priority at Pulse and being able to access funding will speak to
the quality of the project at Bigoray. We feel the potential upside
in Bigoray would be exciting for all shareholders that have stuck
by us over these difficult times and of course for the new
shareholders that invest in us now to get the Bigoray project up
and running."
The net proceeds received by OpCo in the Private Placement
attributable to the Preferred Shares are intended to be used by
OpCo for:
- capital and operational expenditures at its 100% owned Bigoray
oil and gas operations in Alberta;
- up to $500,000 per annum of
general working capital in respect of Pulse that can be paid to
Pulse via intercompany loan or management fee; and
- the repayment of certain third party debt of Pulse/OpCo related
to the Bigoray oil and gas operations.
In order to ensure proceeds received by OpCo pursuant to the
Private Placement will be utilised solely for the development of
the Bigoray assets and for other allowable costs and expenses (as
described above), OpCo will distribute all of the oil and natural
gas assets of OpCo, including all petroleum & natural gas
rights, miscellaneous interests and tangibles associated therewith,
other than the Bigoray assets currently owned by OpCo, to a newly
formed subsidiary of Pulse.
A full summary of all terms associated with the Preferred Shares
will be available on www.sedar.com upon the closing of the Private
Placement.
The net proceeds, estimated to be up to $828,000, received by the Company in the Private
Placement attributable to the Common Shares are expected to be used
to fund the following expenses:
Costs routinely
required to maintain
continuous disclosure
obligations for an
exchange Issuer as
required
|
$350,000
|
|
|
Capital and operating
expenditures
associated with
Pulse's non-Bigoray assets
|
$478,000
|
The proceeds will not be used to pay any related parties of
Pulse.
The Private Placement is being made pursuant to the "accredited
investor" prospectus exemption under NI 45-106 and other applicable
exemptions pursuant to local securities laws.
The Common Shares issued pursuant to the Private Placement will
be subject to a hold period under applicable securities laws, which
in Canada expire four months and
one day from the date of issue. In addition to the foregoing,
without prior written approval of TSX Venture Exchange
("TSXV") and compliance with all applicable securities
legislation, the Common Shares may not be sold, transferred,
hypothecated or otherwise traded on or through the facilities of
TSX or otherwise in Canada or to
or for the benefit of a Canadian resident until the date that is 4
months and a day from the date of issuance of the Common
Shares.
The Private Placement is scheduled to close in June, and is
subject to certain conditions including, but not limited to, the
receipt of all necessary regulatory approvals including the
approval of the listing of the Common Shares on the TSXV.
About Pulse Oil Corp.
Pulse is a debt-free, Canadian company incorporated under the
Business Corporations Act (Alberta) that is focused on a 100% Working
Interest Enhanced Oil Project Located in West Central Alberta,
Canada. The project includes two established Nisku pinnacle reef reservoirs that have been
producing sweet light crude oil for over 40 years. The Company
plans to institute a proven recovery methodology (NGL solvent
injection) to further enhance the ultimate oil recovery from these
two proven pools. With under 10 million barrels of oil recovered to
date, and representing just 35% recovery factor from the pools,
Pulse is moving forward to execute the EOR project and unlock
significant value for shareholders.
To register to receive interesting updates and/or press releases
from Pulse Oil, please sign-up at:
http://www.pulseoilcorp.com/contact.
Neither the TSX Venture Exchange, Inc. nor its Regulation
Service Provider (as that term is defined under the policies of the
TSX Venture Exchange) has neither approved nor disapproved of the
contents of this press release.
Reader Advisory
This press release contains forward‐looking statements and
forward‐looking information within the meaning of Canadian,
United States and other applicable
securities laws. The words "will,"
"believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would,"
"could" or other similar expressions are intended to identify
forward‐looking statements, which are generally not historical in
nature. Such statements include, without
limitation, statements pertaining to the Private Placement, the
anticipated timing thereof and use of proceeds therefrom, the
actual internal rate of return of the Preferred Shares, as well
as the planned operations and anticipated results related
to the Bigoray assets.
The forward‐looking statements are based on management's current
expectations and beliefs concerning future developments and their
potential effect on the Company based on information currently
available to management. While management believes that these
forward‐looking statements are reasonable as and when made, there
can be no assurance that future developments affecting Pulse will
be those anticipated. Forward‐looking information involves known
and unknown risks, uncertainties, assumptions and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward‐looking information. Important
factors that could cause actual results to differ materially from
those in the forward looking statements include, but are not
limited to: the completion of the Private Placement, and the timing
thereof, the volatility of commodity prices, access to and cost of
capital, and general economic conditions and other financial,
operational and legal risks and uncertainties. The
forward‐looking statements contained in this press release are made
as of the date hereof and the Company undertakes no obligations to
update publicly or revise any forward‐looking statements or
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTION
IN WHICH ANY SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL.
THE SECURITIES TO BE OFFERED UNDER THE OFFERING HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT") OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS (AS THAT TERM IS DEFINED IN
REGULATION S UNDER THE 1933 ACT) EXCEPT IN TRANSACTIONS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND APPLICABLE STATE
SECURITIES LAWS.
SOURCE Pulse Oil Corp.