2013-02-22 22:53:57 -
Calgary, Alberta CANADA, February 22, 2013 /FSC/ - Western Plains Petroleum Ltd. (WPP - TSX Venture), ("Western Plains" or the "Company") announces that the Board has authorized the Corporation to enter into shares for debt agreements with various oil field service providers and management consultants for the settlement of accounts payable up to the maximum amount of $350,000, through the issuance of up to 7,000,000 common shares in the capital of the Company ("Common Shares") at a deemed price of $0.05 per share (the "Transaction").
The Common Shares proposed to be issued under the Transaction will be subject to a four month hold period from the date of issuance in accordance with applicable securities laws. The issuance of Common Shares
as contemplated in the Transaction is subject to the prior approval of the TSX Venture Exchange (the "Exchange").
Hytop Well Servicing Ltd. ("Hytop"), a private well service company of which David Forrest, President and Chief Executive Officer of Western Plains, owns or controls 50% of the shares, is proposed to receive 552,510 Common Shares to retire $27,625.51 (inclusive of GST) of payables incurred by the Company for oilfield service work. Mr. Steve Glover, Vice-President, Finance, and Chief Financial Officer of the Company, is to accept a total of 472,500 Common Shares to settle $23,625 (inclusive of GST) of management consulting fees owed by the Company for management services provided by Mr. Glover.
To the knowledge of the Company, Mr. Forrest currently holds, directly or indirectly, 17,544,319 Common Shares representing approximately 29.8% of the issued and outstanding Common Shares of Western Plains, while Mr. Glover holds, directly or indirectly, 550,294 Common Shares representing <1% of the issued and outstanding Common Shares of the Company. Assuming the issuance of the maximum 7,000,000 Common Shares on completion of the Transaction, Mr. Forrest will own or control, directly or indirectly, 17,820,574 Common Shares or approximately 27.1% of the Company's outstanding Common Shares, and Mr. Glover will hold 1,022,794 Common Shares, or approximately 1.6% of the Company's issued and outstanding Common Shares.
The proposed issuances of Common Shares to Hytop and Mr. Glover pursuant to the Transaction will each be considered a "related party transaction" as defined in Multilateral Instrument 61-101 - Protection of Minority Security holders in Special Transactions ("MI 61-101"), which is incorporated into Policy 5.9 of the Exchange, as Hytop and Mr. Glover are each considered to be related parties of the Company ("Related Parties"). However, the Transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Transaction, insofar as each involve the Related Parties, will exceed 25% of the Company's market capitalization, as described in sections 5.5 and 5.7 of MI 61-101. It is possible that a material change report in respect of this Transaction may not be filed at least 21 days in advance of the anticipated date closing of the issuance of Common Shares to the Related Parties. The Company believes a shorter period between this disclosure and the issuance of Common Shares is reasonable, in light of its need to satisfy its outstanding debts in a timely manner and the relatively small size of the related party transactions.
The Transaction is one of a series of steps of the Company has been carrying out since April 2012 to reduce its net debt, including the sale of certain petroleum and natural gas assets, suspension of the capital program, careful control over operating, and general and administrative expenses. In addition, the Company continues to work with Sayer Energy Advisors, its exclusive financial advisor, to provide advice on certain proposals received in respect of Western Plains' strategic alternatives process, under which the bid deadline was February 7, 2013.
Previously Announced Private Placement
The Company further confirms it will not proceed with its previously announced proposed non-brokered private placement of Common Shares, at $0.05 per share, and "flow-through" Common Shares, at $0.06 per share, for aggregate gross proceeds of up to $500,000.
About Western Plains Petroleum Ltd.
Western Plains is a Lloydminster, Alberta, based junior heavy oil producer with interests located in the Lloydminster area in both Saskatchewan and Alberta. The Common Shares of Western Plains trade on the TSX Venture Exchange under the symbol WPP.
For more information, please contact:
President and Chief Executive Officer
Telephone: (780) 205- 4468
VP Finance and Chief Financial Officer
Telephone: (403) 990 - 3876
Western Plains Petroleum Ltd.
#202, 5004 - 18 Street
Lloydminster, AB T9V 1V4
Telephone: (780) 871-0725
Fax :(780) 808 - 8038
Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the Policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains forward-looking statements, which are subject to risks and uncertainties and other factors that may cause the Company's results to differ materially from expectations. Specifically, this news release contains forward-looking information regarding the Transaction and the proposed terms thereof, and the approval of Transaction, including the issuance of the Common Shares, by the TSX Venture Exchange. Accordingly, readers are cautioned not to place undue reliance on this forward-looking information. The Company does not assume any obligation to revise or update this forward-looking information after the date of this news release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
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