CALGARY, Aug. 17, 2018 /CNW/ - Crimson Energy Ltd. ("Crimson") reports that it has filed an early warning report in accordance with the requirements of applicable securities laws in respect of its shareholdings of Pulse Oil Corp. (TSX Venture Exchange: PUL) ("Pulse").
Crimson is a corporation existing under the Business Corporations Act (Alberta). Crimson's head office is located at Suite 800, 2424 – 4th Street SW, Calgary, Alberta, T2S 2T4. Crimson is a producer of light oil, natural gas, and natural gas liquids in Alberta.
Pursuant to the terms of a Purchase and Sale Agreement made as of October 20, 2017 (the "Agreement"), Pulse acquired Crimson's interest in certain Bigoray assets for a total aggregate purchase price of $4,101,525.00 (the "Purchase Price"). The Purchase Price was satisfied by, among other things, the issuance by Pulse to Crimson of an aggregate of 14,118,037 common shares in the capital of Pulse (the "Pulse Shares" and each a "Pulse Share") at a deemed price of $0.14 per Pulse Share (the "Issuance"). The Pulse Shares issued to Crimson were subject to regulatory hold periods as well as contractual hold periods which provided that one-third of the total Pulse Shares issued (being 4,706,012 Pulse Shares) would be released for trading at the expiry of the required regulatory hold period and the balance of the Pulse Shares (9,412,495 Pulse Shares) would be released from the contractual hold periods in one-third (3,137,185 Pulse Shares) increments every six months, commencing after the expiry of the regulatory hold periods.
As a result of the Issuance, on October 31, 2017 Crimson had ownership and control over an aggregate of 14,118,037 Pulse Shares, representing approximately 15.95% (undiluted) or 11.07% (fully diluted) of the issued and outstanding Pulse Shares.
Prior to the Issuance, Crimson did not own any Pulse Shares.
Following the expiry of the regulatory hold periods provided for on the Issuance, through a series of open market dispositions on the TSX-V between March 2, 2018 and May 17, 2018 (the "Dispositions"), Crimson disposed of an aggregate of 4,706,012 Pulse Shares (representing approximately 5.32% (undiluted) or 3.69% (fully diluted) of the issued and outstanding Pulse Shares) at an average price of approximately $0.1782 per Pulse Share.
Following the Dispositions and as at the date hereof, Crimson is the registered owner of an aggregate of 9,412,025 Pulse Shares, representing approximately 10.64% (undiluted) or 7.38% (fully diluted) of the issued and outstanding Pulse Shares.
The Pulse Shares issued to Crimson, were issued pursuant to the Agreement whereby Crimson sold certain Bigoray assets to Pulse in consideration for the Purchase Price, of which the Pulse Shares formed a part. On October 16, 2017 Pulse issued a press release and filed a corresponding material change report wherein it announced that it had agreed to terms of two transactions to consolidate its interests in the Bigoray assets. Pulse reported that the assets acquired from Crimson included the Nisku-D pool and the Nisku-E pool acreage, were concentrated in the light-oil prone West Pembina area of central Alberta and included approximately 7,000 acres of hydrocarbon rights, proven producing and proven non-producing reserves in four separate formation, as well as valuable existing infrastructure associated with the Bigoray assets.
Payment of the Purchase Price was structured so that $500,000 cash was payable at closing, subject to standard closing adjustments, 14,118,037 Pulse Shares were issued at a deemed issue price of $0.14 per Pulse Share, equal to an aggregate deemed value of $1,976,525 and subject to required regulatory hold periods and Pulse agreed to make the following cash installment payments to Crimson: (a) $8,125.00 per month effective November 1, 2017 until June 1, 2018 (total $65,000); (b) $62,500 per quarter beginning July 1, 2018 for four quarters (total $250,000); and (c) $125,000 per quarter beginning for 11 quarters (total $1,375,000).
Crimson undertook the Dispositions for the purpose of funding its own working capital and for other general corporate purposes.
At this time, Crimson is subject to the terms of an interim order of the Court of Queen's Bench of Alberta which provides, among other things, that Crimson may not trade or distribute the Pulse Shares held by Crimson, other than to distribute such Pulse Shares to Crimson's own shareholders (provided such would not be a violation of applicable law). The terms of the interim order provide, among other things, that it will remain in effect until such time as certain disputes between Crimson and Pulse relating to the Agreement are finally determined or settled. The interim order does not restrict Crimson's voting or other shareholder rights respecting the Pulse Shares.
All shareholding percentages set out herein are based on the number of Pulse Shares reported outstanding by Pulse in its management's discussion and analysis dated May 30, 2018 for the three months ending March 31, 2018, being 88,494,385 Pulse Shares (undiluted) and 127,538,869 Pulse Shares (fully diluted).
Further information respecting the Issuance and Dispositions is included in an Early Warning Report filed by Crimson dated as of the date hereof under Pulse's profile on SEDAR (www.sedar.com).
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Pulse Oil Corp.
For further information: Crimson Energy Ltd., James (Jim) O'Byrne, Chairman, Ph: (403) 265-9962, Fax: (403) 218-2366, [email protected]