Welcome!

News Feed Item

Passport Energy and Amarok Energy Propose Merger

CALGARY, ALBERTA -- (Marketwired) -- 03/21/14 -- Passport Energy Ltd. ("Passport") (TSX VENTURE: PPO) and Amarok Energy Inc. ("Amarok") (TSX VENTURE: AMR) are pleased to announce that they have entered into a non-binding letter of intent (the "LOI") to complete a merger between the two companies (the "Proposed Transaction"). It is currently anticipated that the Proposed Transaction will proceed by way of a court approved plan of arrangement (the "Plan") under the Business Corporations Act (Alberta). The Proposed Transaction will be an arm's length transaction under the policies of the TSX Venture Exchange (the "Exchange").

Passport and Amarok expect to complete their respective due diligence by no later than March 27, 2014 and anticipate entering into an arrangement agreement (the "Arrangement Agreement") on or before March 28, 2014 or such other date as mutually agreed by the parties. As the terms and conditions of the Plan as set out in the LOI impact the minimum CDN$20 million and maximum CDN$30 million private placement offering of Passport (the "Original Private Placement Offering") as previously announced by Passport on January 10, 2014, the parties have agreed to jointly announce the execution of the LOI in order to, among other things, permit Passport to update Passport's shareholders on the status of the Original Private Placement Offering.

Summary of Proposed Transaction

Under the Proposed Transaction, Passport intends to complete a brokered private placement of subscription receipts of Passport for a minimum of CDN$13,000,000 and up to a maximum of CDN$23,000,000 at a price of CDN$0.18 per subscription receipt following which Passport proposes to complete a consolidation of its common shares on a 6 for 1 basis. Each subscription receipt issued pursuant to the private placement offering shall entitle the holder thereof to acquire one post-consolidation common share of Passport. Following the consolidation, and the conversion of the subscription receipts, Passport and Amarok propose to complete a three-cornered amalgamation whereby each post-consolidated Passport common share will be exchanged for one Amarok common share at a deemed price of CDN$0.18 per Amarok common share. Immediately following the amalgamation, it is proposed that Amarok will consolidate its common shares on a 5 for 1 basis and change its name from "Amarok Energy Inc." to "Powder Mountain Energy Ltd." (the "Resulting Issuer"). Assuming that the maximum amount of subscription receipts are subscribed for under the private placement and completion of each of the above steps, the Resulting Issuer will have approximately 48,000,000 common shares issued and outstanding at a price of approximately CDN$0.90 per Amarok common share, following the completion of the Proposed Transaction.

If the Proposed Transaction proceeds in the manner described above, it is anticipated that the current Passport shareholders, the subscribers to the private placement (assuming the maximum amount), and the Amarok shareholders will hold approximately 8%, 53% and 39% respectively, of the issued and outstanding common shares of the Resulting Issuer. On completion of the Proposed Transaction, it is anticipated that the Resulting Issuer will have approximately CDN$38,000,000 in cash and approximately CDN$5,700,000 of assets in Southeast Saskatchewan, Alberta, Montana and Wyoming.

32 Degrees (as defined below) proposes to subscribe for CDN$13,000,000 of the private placement offering, which would result in 32 Degrees owning 30% of the Resulting Issuer if the maximum private placement offering is completed (39% if the minimum private placement offering is completed). As a result, if the Proposed Transaction is completed, 32 Degrees will become a "control person" (as such term is defined under the policies of the Exchange) of the Resulting Issuer.

Details of each of the steps of the Proposed Transaction are described in further detail below.

The Passport Private Placement

The LOI contemplates a Plan proceeding by way of a three cornered amalgamation (the "Amalgamation") whereby Amarok will, indirectly through its wholly owned subsidiary ("AcquisitionCo"), acquire all of the issued and outstanding shares of Passport from shareholders of Passport in exchange for shares of Amarok. Prior to the Amalgamation, Passport shall complete a brokered private placement (the "Private Placement") of subscription receipts ("Subscription Receipts") issued at CDN$0.18 per Subscription Receipt on a post-Consolidated (as hereinafter defined) basis for minimum gross proceeds of CDN$13,000,000 (the "Minimum Private Placement Offering") and maximum gross proceeds of up to CDN$23,000,000 (the "Maximum Private Placement Offering" and together with the Minimum Private Placement Offering, the "Private Placement Offering"). Each Subscription Receipt will be convertible into common shares of Passport ("Passport Shares") on a 1 for 1 basis on a post-Consolidated basis without any additional consideration from the holders of such Subscription Receipts. Passport has engaged Integral Capital Markets, a division of Integral Wealth Securities Limited ("Integral") as its exclusive agent to solicit subscriptions for the sale of the Subscription Receipts on a "reasonable best efforts" basis. In consideration for the engagement by Passport, Integral will be paid a cash amount equal to CDN$200,000 on the 32 Degrees Subscription (as hereinafter defined) and 6% of the gross proceeds raised from the issuance of the Subscription Receipts from all other subscribers other than the 32 Degrees Subscription and certain subscribers as agreed between Integral and Passport.

The Private Placement Offering will replace the terms of the Original Private Placement Offering.

In order to facilitate a price of CDN$0.18 per Subscription Receipt under the Private Placement Offering, Passport shall, subject to shareholder approval and regulatory approval, complete a consolidation (the "Consolidation") of all of the issued and outstanding Passport Shares immediately prior to the closing of the Private Placement on the basis of six (6) Passport Shares for every one (1) post-Consolidation Passport Share. Each Subscription Receipt will entitle the holder thereof to acquire one (1) post-Consolidation Passport Share for each Subscription Receipt held, without any additional consideration.

The LOI contemplates that CDN$13,000,000 of the Private Placement Offering (the "32 Degrees Subscription") will be subscribed for by 32 Degrees Diversified Energy Fund II (Canadian) L.P. and 32 Degrees Diversified Energy Fund II (US) L.P. (collectively referred to as "32 Degrees"). A portion of the subscription price (the "Subscription Portion") payable by 32 Degrees under the 32 Degrees Subscription will be paid by the transfer and conveyance of approximately 24 1/4 contiguous sections in the Hardy area of Southeast Saskatchewan (the "Hardy Lands") owned by a wholly-owned subsidiary of 32 Degrees ("32 Degrees HoldCo"). The estimated value of the Subscription Portion as of the date of this press release is approximately CDN$702,000. 32 Degrees HoldCo may, in its discretion, acquire additional lands adjacent to, or in close proximity to the Hardy Lands (the "Additional Lands"), prior to the closing of the Private Placement Offering. Additional Lands may, subject to applicable regulatory approval, also be included and form a part of the Subscription Portion. The Subscription Portion amount will equal the aggregate of approximately CDN$702,000 plus the amount paid for Additional Lands by 32 Degrees HoldCo ( if any), the aggregate amount expended or contributed by 32 Degrees HoldCo with respect to the Hardy Lands, and the acquisition price paid by the 32 Degrees HoldCo for the Additional Lands (if any) prior to the completion of the Private Placement Offering (the "Expenditure Amount"), and interest equal to 12% per annum, calculated daily in respect of each contribution or expenditure comprising the Expenditure Amount.

Subject to regulatory approval, the 32 Degrees Subscription will also provide that following the closing of the Private Placement Offering and until the Subscriber Group (as that term is defined below) holds directly or indirectly less than 10% of the shares of the Resulting Issuer, together with: (a) any joint investment fund or limited partnership which is managed by the manager of 32 Degrees or an affiliate of the manager of 32 Degrees; and (b) any limited partner of 32 Degrees or of any joint investment fund or limited partnership which is managed by the manager of 32 Degrees or an affiliate of the manager of 32 Degrees (collectively, the "Subscriber Group") subject to certain limitations, shall have a pre-emptive right to participate in any future issuance of securities in the capital of the Resulting Issuer (or securities convertible into, or exercisable or exchangeable for, such securities) at the same price as the other participants in such financing up to its pro rata interest determined at the time of such proposed issuance of securities.

Assuming the Transaction is completed, 32 Degrees Subscription will result in 32 Degrees becoming a "control person" (as such term is defined under the policies of the Exchange) of the Resulting Issuer, holding 39% of the issued and outstanding shares of the Resulting Issuer in the event the minimum private placement offering is completed and 30% of the issued and outstanding shares of the Resulting Issuer in the event the Maximum Private Placement Offering is completed.

The Amalgamation

Passport currently has 111,548,781 Passport Shares issued and outstanding, 10,250,000 stock options ("Passport Options") issued and outstanding, 815,221 Common Share purchase warrants ("Passport Warrants") and no other securities of any class issued or outstanding. It is anticipated that upon completion of the Consolidation and assuming the Maximum Private Placement Offering is fully subscribed, there will be approximately 146,369,241 Passport Shares, 1,708,333 Passport Options and 135,870 Passport Warrants issued and outstanding. Amarok currently has 93,215,292 Common Shares issued and outstanding and 8,137,534 stock options ("Amarok Options") and no other securities of any class issued or outstanding.

As part of the Amalgamation, it is proposed that each one (1) post-Consolidated Passport Share (which shall include the post-Consolidated Passport Shares issued pursuant to the Subscription Receipts) shall be tendered to the AcquisitionCo in exchange for one (1) Amarok common share ("Amarok Share"). Assuming the Maximum Private Placement Offering is fully subscribed, it is anticipated that the shareholders of Passport and Subscription Receipt holders will, upon completion of the Amalgamation, hold in aggregate 61.1% of issued and outstanding Amarok Shares with Amarok having approximately 239,584,533 Amarok Shares issued and outstanding. Pursuant to the LOI, it is anticipated that all unexercised Passport Options, Passport Warrants and Amarok Options will be cancelled or terminated.

The LOI anticipates that as at the closing of the Proposed Transaction Amarok shall have not less than: (i) CDN$15 million in cash and cash equivalents; and (ii) oil and gas assets located in Wyoming and Montana (the "U.S. Assets") of not less than CDN$2.0M in value (or such other value as mutually agreed by the parties acting reasonably). The LOI provides that the U.S. Assets may be sold (or an agreement entered into to sell the U.S. Assets) by Amarok prior to the completion of the Plan with the prior written consent of Passport. Amarok also owns oil and gas assets located at Stolbert, Alberta producing approximately 5 barrels of oil per day.

The Amarok Consolidation and Name Change

The LOI contemplates that Amarok will seek regulatory and shareholder approval to: (i) consolidate its shares on a five (5) to one (1) basis (the "Amarok Consolidation") immediately following the Amalgamation so that the approximately 239,584,533 Amarok Shares issued and outstanding will be consolidated to approximately 47,916,907 Amarok Shares; and (ii) change its name from "Amarok Energy Inc." to "Powder Mountain Energy Ltd." (the "Name Change") or such other name as the parties may mutually agree.

Following the Amalgamation, it is anticipated that the directors of Amarok will be:

(i)    Massimo Geremia;
(ii)   Bruce Murray;
(iii)  Gregg Smith;
(iv)   Larry Evans;
(v)    Mitch Putnam;
(vi)   Trent Baker; and
(vii)  Samuel Ingram.

Messrs. Massimo Geremia and Samuel Ingram are currently directors of Amarok. Messrs. Gregg Smith and Bruce Murray are currently directors of Passport. Messrs. Larry Evans, Mitch Putnam and Trent Baker are director nominees of 32 Degrees.

Management of Post-Amalgamation Amarok

The LOI contemplates that on closing of the Proposed Transaction, the Chief Executive Officer of Amarok shall be Bruce Murray, the Chief Operating Officer shall be Daniel Tiberio, and the Exploration Manager of Amarok shall be Jessica Gordon-Metez each of whom are presently on the management team of Passport.

Interim Period

The LOI provides that until the earlier of the termination of the LOI and the closing date of the Proposed Transaction, Passport and Amarok shall not approve or undertake any of the following activities in their respective businesses without the prior written consent of the other party, not to be unreasonably withheld: (i) any material change in operating strategy; (ii) any sale, transfer, pledge or other disposition of any assets, business or operation; (iii) any acquisition of any assets, shares, business or operations; (iv) declaration of a payment of a dividend; and (v) any other material transaction or expenditure.

Break Fee

The LOI provides that the Arrangement Agreement will include a reciprocal break fee equal to CDN$300,000 payable by one party to the other in circumstances customary with industry practice.

Arrangement Agreement

The LOI is non-binding with respect to commercial terms, but includes binding obligations typical in the circumstances, including those relating to a period of exclusive dealing and confidentiality. The LOI contemplates that the parties shall enter into an Arrangement Agreement that will substantially reflect the terms of the LOI and will contain representations, warranties, conditions and covenants typical for a transaction of this nature and magnitude.

The Proposed Transaction is subject to a number of terms and conditions, including the entering into by the parties of the Arrangement Agreement with respect to the Proposed Transaction on or prior to March 28, 2014 or such other date mutually agreed by the parties, the completion of the Private Placement, the completion of satisfactory due diligence investigations, the approval of the directors of each of Passport and Amarok, the approval of the shareholders of Passport, the approval of the shareholders of Amarok and the approval of the Exchange and other applicable regulatory authorities. The obligation of the parties to complete the Proposed Transaction will be further subject to each of the parties receiving their respective Board of Directors' approval.

Passport and Amarok intend to provide a further update on the Proposed Transaction, including any substantive changes to the proposed structure or any of the terms and conditions set out herein, if and when an Arrangement Agreement is entered into.

The Amarok Shares have been voluntarily halted pending receipt and review of the Proposed Transaction by the Exchange. Trading of the Passport Shares were halted when the Original Private Placement was announced and have remained halted. Passport anticipates that subject to regulatory approval, if the parties enter into an Arrangement Agreement, the Passport Shares will remain halted until the Amalgamation is completed.

The Proposed Transaction, including Private Placement Offering, the Consolidation, the Plan, the Amarok Consolidation, the Name Change and all the securities transactions associated therewith or arising therefrom shall be subject to all applicable rules, policies and regulations of securities regulatory authorities (including applicable stock exchange and shareholder approvals) and securities and corporate laws.

General

The 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.

Neither the Exchange nor its Regulation Service Provider (as that term is defined in policies of the Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events. All statements other than statements of historical fact are forward-looking statements. The use of the words "may", "expected", "believes" and other words of a similar nature are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although Passport and Amarok believe these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Such statements include statements with respect to the anticipated entering into of the Arrangement Agreement, the Private Placement Offering, the Consolidation, the Amarok Consolidation and Name Change and the timing thereof. There is no assurance that the parties will carry out the terms of the LOI, that the parties will enter into the Arrangement Agreement, or that the Arrangement Agreement, if entered into, will reflect the terms of the LOI. Actual results could differ materially from those anticipated in these forward-looking statements as a result of prevailing economic conditions, receipt of requisite regulatory approvals, and other factors, many of which are beyond the control of Passport and Amarok. There is no assurance that all terms and conditions set forth in the LOI or any of the contemplated transactions set out therein will be undertaken or met in a timely manner. The forward-looking statements contained in this news release represent Passport and Amarok's expectations as of the date hereof, and are subject to change after such date. Passport and Amarok each disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable securities regulations.

Contacts:
Amarok Energy Inc.
Massimo Geremia
Director
(403) 984-1751
[email protected]
www.amarokenergy.com

Passport Energy Ltd.
Bruce Murray
President & CEO
403-930-4061
[email protected]

Passport Energy Ltd.
Daniel Tiberio
COO
403-930-4070
[email protected]
www.passportenergy.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and G...
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
"DevOps is set to be one of the most profound disruptions to hit IT in decades," said Andi Mann. "It is a natural extension of cloud computing, and I have seen both firsthand and in independent research the fantastic results DevOps delivers. So I am excited to help the great team at @DevOpsSUMMIT and CloudEXPO tell the world how they can leverage this emerging disruptive trend."
You want to start your DevOps journey but where do you begin? Do you say DevOps loudly 5 times while looking in the mirror and it suddenly appears? Do you hire someone? Do you upskill your existing team? Here are some tips to help support your DevOps transformation. Conor Delanbanque has been involved with building & scaling teams in the DevOps space globally. He is the Head of DevOps Practice at MThree Consulting, a global technology consultancy. Conor founded the Future of DevOps Thought Leade...
DXWorldEXPO LLC announced today that ICC-USA, a computer systems integrator and server manufacturing company focused on developing products and product appliances, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City. ICC is a computer systems integrator and server manufacturing company focused on developing products and product appliances to meet a wide range of ...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
In his session at 20th Cloud Expo, Mike Johnston, an infrastructure engineer at Supergiant.io, discussed how to use Kubernetes to set up a SaaS infrastructure for your business. Mike Johnston is an infrastructure engineer at Supergiant.io with over 12 years of experience designing, deploying, and maintaining server and workstation infrastructure at all scales. He has experience with brick and mortar data centers as well as cloud providers like Digital Ocean, Amazon Web Services, and Rackspace. H...
DXWorldEXPO | CloudEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
Everyone wants the rainbow - reduced IT costs, scalability, continuity, flexibility, manageability, and innovation. But in order to get to that collaboration rainbow, you need the cloud! In this presentation, we'll cover three areas: First - the rainbow of benefits from cloud collaboration. There are many different reasons why more and more companies and institutions are moving to the cloud. Benefits include: cost savings (reducing on-prem infrastructure, reducing data center foot print, redu...
Founded in 2000, Chetu Inc. is a global provider of customized software development solutions and IT staff augmentation services for software technology providers. By providing clients with unparalleled niche technology expertise and industry experience, Chetu has become the premiere long-term, back-end software development partner for start-ups, SMBs, and Fortune 500 companies. Chetu is headquartered in Plantation, Florida, with thirteen offices throughout the U.S. and abroad.
DevOpsSummit New York 2018, colocated with CloudEXPO | DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City. Digital Transformation (DX) is a major focus with the introduction of DXWorldEXPO within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term.
The technologies behind big data and cloud computing are converging quickly, offering businesses new capabilities for fast, easy, wide-ranging access to data. However, to capitalize on the cost-efficiencies and time-to-value opportunities of analytics in the cloud, big data and cloud technologies must be integrated and managed properly. Pythian's Director of Big Data and Data Science, Danil Zburivsky will explore: The main technology components and best practices being deployed to take advantage...
Most DevOps journeys involve several phases of maturity. Research shows that the inflection point where organizations begin to see maximum value is when they implement tight integration deploying their code to their infrastructure. Success at this level is the last barrier to at-will deployment. Storage, for instance, is more capable than where we read and write data. In his session at @DevOpsSummit at 20th Cloud Expo, Josh Atwell, a Developer Advocate for NetApp, will discuss the role and value...
CloudEXPO New York 2018, colocated with DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
SYS-CON Events announced today that DatacenterDynamics has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY. DatacenterDynamics is a brand of DCD Group, a global B2B media and publishing company that develops products to help senior professionals in the world's most ICT dependent organizations make risk-based infrastructure and capacity decisions.