Strachan Announces Proposed Amalgamation
SYMBOL – SCN.P
VANCOUVER, July 31, 2014 /CNW/ - Strachan Resources Ltd. ("Strachan" or the "Company"), announces that it has agreed with Lotus Ventures Inc. ("Lotus"), a BC corporation, subject to certain conditions including regulatory approval, to amalgamate under the BC Business Corporations Act, pursuant to that Amalgamation Agreement dated as of July 30, 2014. Lotus holds an option to acquire a BC medical marijuana production facility and is in the process of applying for a production licence under the new federal regulations. The resulting amalgamated corporation ("Amalco") is to be known as Lotus Ventures Inc.
The Amalgamation Agreement provides that on the completion of the amalgamation, the shares of Strachan shall be exchanged into common shares of Amalco on the basis of one common share of Strachan for one common share of Amalco. The shares of Lotus shall also be exchanged into common shares of Amalco on the basis of one common share of Lotus for one common share of Amalco.
The Amalgamation is subject to certain conditions precedent including (i) approval by the shareholders of the Company by a special majority of the arm's length parties and parties not related to the Amalgamation; (ii) the surrender and cancellation of the remaining 1,500,000 shares of the Company in escrow: (iii) the Company delisting from the TSX Venture Exchange (TSXV); (iv) on completion of the Amalgamation, the issuance to the Company founders of 2,500,000 shares of Amalco at a price of $0.005 per share, such shares to be escrowed; and (v) acceptance of the Canadian Securities Exchange (CSE) to the listing of the Amalco Shares on the CSE.
Upon completion of the Amalgamation, Amalco will have the rights, currently held by Lotus, under that Option Agreement among Carl Busby, 0998918 B.C. Ltd.(the "Optionor") and Carl Correia dated April 16, 2014 (the "Option Agreement") to acquire a BC production facility and operating assets, to be operated under the Marijuana for Medical Purposes Regulations (MMPR) upon obtaining a new production license. The facility currently produces medical marijuana pursuant to four licenses under the Medical Marijuana Access Regulations (MMAR).
To exercise the option, Amalco must (a) invest $250,000 in the production facility and the process of applying for a license under the MMPR to produce medical marijuana, in stages over a period of time; and (b) issue to the Optionor 2,000,000 common shares of Amalco as follows: (i) forthwith after the Option Agreement has been transferred to Amalco, 1,000,000 shares subject to a four month hold period. 100,000 shares will be delivered to the Optionor and 900,000 held by Amalco until it obtains a new license or the legal and regulatory regime changes so that it is legally able to produce and sell marijuana; and (ii) at such time as either Amalco obtains a new license or the legal and regulatory regime changes so that it is legally able to produce and sell marijuana, a further 1,000,000 shares which will be held by Amalco, to be released to the Optionor for every $1 of net cash flow from operations as calculated by Amalco's accountant annually. The Optionor is to also receive a 10% to 25% net income interest subject to certain conditions.
Lotus shall offer a non-brokered private placement of a minimum of 1,200,000 Amalco Shares at $0.25 per share which is expected to close immediately following the Transaction. The gross proceeds of the financing will be a minimum of $300,000 and is a condition of completion of the Amalgamation. The gross proceeds may be up to $600,000. Amalco may pay finder's fees of up to 10 percent of the investment payable either in cash or in Amalco Shares at a deemed price of $0.25 per share.
The proposed directors and officers of Amalco are as follows.
Dale McClanaghan President, CEO and Director - Mr. McClanaghan has had a varied career in banking (Bank of Montreal trade finance), real estate development (privately and as CEO of Van City Real Estate Company) and leading companies in mineral exploration (Adrian Resources Ltd. later called Petaquilla Resources Ltd). As well he has had active social roles as director of non-profit (Treasurer of Vancouver Heritage Foundation, Katherine Sanford Housing, VanCity Place for Youth), educational (Chair of Administration and Finance Committee of Langara College) and civic agencies (President of the NPA Association, Chair of City of Vancouver Planning Commission).
Steve Mathiesen, Director- Mr. Mathiesen has been a business consultant since January 2012, providing consulting and management services to several companies. Prior to that, he was a lawyer and partner with McMillan LLP (formerly Lang Michener LLP) of Vancouver from 2000 to June 2012. He has been a director and officer of several TSXV listed companies.
Carl Busby, Director- Mr. Busby has been for more than 40 years a broker with various brokerage firms in Vancouver, British Columbia, including as vice president of Nesbitt Burns, responsible for its operations in British Columbia and Alberta. Since retiring in 2002, Mr. Busby has been a private investor, investing in both private and public equity and debt instruments.
Gary Mathiesen, CFO- Mr. Mathiesen is a chartered accountant and is the President and principal of Quay Property Management Corp., and related companies. Quay Property Management Corp. is a real estate management company which currently operates several public markets and previously a number of other real estate projects and businesses in Canada and elsewhere. Mr. Mathiesen has served as an officer and director of several TSXV listed companies.
Carl Correia, COO- Mr. Correia is the principal of Lightning Contracting, an electrical contracting company. His company, the Optionor under the Option Agreement, began producing as a designated medical marijuana grower under the MMAR regulations in 2010, and produces under four MMAR licences.
At the request of the Company, trading in the shares of the Company on the NEX has been halted pending completion of the Amamlgamation and related transactions described above.
Statements in this news release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as terms and completion of the proposed transactions. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.
Completion of the transactions are subject to a number of conditions, including but not limited to regulatory approval and majority of the minority shareholder approval. There can be no assurance that the transactions will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the prospectus and management information circular to be prepared in connection with the transactions, any information released or received with respect to the transactios may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.
ON BEHALF OF THE BOARD
STRACHAN RESOURCES LTD.
/s/ Steve Mathiesen
Steve Mathiesen, President
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE Strachan Resources Ltd.For further information: Steve Mathiesen, President, Strachan Resources Ltd., (604) 687-1550