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CALGARY, Oct. 4, 2017 /CNW/ - Ironhorse Oil
& Gas Inc. (TSX-V:IOG) ("Ironhorse") announces that it
has entered into an amalgamation agreement (the "Amalgamation
Agreement") with privately-held Pond Technologies Inc.
("Pond") and a wholly-owned subsidiary of Ironhorse
providing for the acquisition (the "Acquisition") by Pond of
Ironhorse by way of a three-cornered amalgamation. All of the
directors and officers of Pond and Ironhorse have entered into
support agreements pursuant to which they have agreed to vote their
outstanding common shares of Pond ("Pond Shares") or
Ironhorse ("Ironhorse Shares"), as applicable, in favor of
the Acquisition and related matters. Under the terms of the
Amalgamation Agreement, Pond will amalgamate with the wholly-owned
subsidiary of Ironhorse (the "Amalgamation") and, following
the completion of the proposed transaction, the resulting
amalgamated entity ("Amalco") will be a wholly-owned
subsidiary of Ironhorse, which is expected to continue trading on
the TSX Venture Exchange (the "TSXV").
Particulars of the Transaction
Pursuant to the Amalgamation, all of the issued and outstanding
Pond Shares will be cancelled and holders of Pond Shares (except
for dissenting shareholders) shall receive one Ironhorse Share (on
a post-Consolidation basis) for each Pond Share.
Following completion of the Amalgamation, Ironhorse
will carry on, through Amalco, the business presently carried on by
Pond.
In connection with the Acquisition, all of the outstanding stock
options and warrants of Pond will be cancelled and exchanged for
equivalent stock options and warrants of Ironhorse.
The Amalgamation Agreement also provides for: (i) a name change
of Ironhorse to "Pond Technologies Holdings Inc." or such other
name as Pond may determine in its sole discretion (the "Name
Change"); (ii) the consolidation of all of the issued and
outstanding Ironhorse Shares on the basis of 6.9 pre-consolidation
Ironhorse Shares for each one post-consolidation Ironhorse Share
(the "Consolidation"); (iii) the appointment of a new
management team (the "New Management Team"); and (iv) the
reconstitution of the board of directors of Ironhorse (the "New
Board") (collectively with the Acquisition and the
Amalgamation, the "Transaction").
As a condition of the Transaction, Pond will complete a brokered
private placement of subscription receipts, at a price of not less
than $2.00 per subscription receipt,
on a commercially reasonable efforts agency basis for minimum
aggregate gross proceeds of $6,500,000 and maximum aggregate gross proceeds
of $15,000,000 (the
"Financing"). Net proceeds are expected to be used to
fund Amalco's program to commercialize its technology following
completion of the Transaction and for general corporate
purposes.
It is anticipated that immediately following the closing of the
Transaction (without giving effect to the Financing, and assuming
there are no changes resulting from the conversion of the existing
convertible securities of Pond or to the outstanding common shares
of Ironhorse other than pursuant to the Consolidation), an
aggregate of approximately 15,772,668 post-Consolidation Ironhorse
Shares will be issued and outstanding, of which it is anticipated
that 11,731,245 post-Consolidation Ironhorse Shares will be held by
former shareholders of Pond (representing approximately 74% of the
post-Consolidation Ironhorse Shares), and approximately 4,041,423
post-Consolidation Ironhorse Shares will be held by existing
shareholders of Ironhorse (representing approximately 26% of the
post-Consolidation Ironhorse Shares). Without giving effect to the
Financing, it is further anticipated that no post-Consolidation
Ironhorse Shares will be reserved for issuance pursuant to
outstanding convertible securities upon the closing of the
Transaction, other than up to 1,601,340 post-Consolidation
Ironhorse Shares issuable upon exercise of outstanding share
purchase warrants, and up to 1,097,500 post-Consolidation Ironhorse
Shares issuable upon exercise of outstanding stock options.
The Transaction values the Ironhorse Shares at $2.00 per Ironhorse Share (on a
post-Consolidation basis) for aggregate consideration issuable to
Pond shareholders of approximately $23.5
million (excluding any Pond Shares issued pursuant to the
Financing).
The New Management Team will be led by Steven Martin as Chief Executive Officer and
Chief Technology Officer, and will include Thomas Masney as Chief Financial Officer and
Corporate Secretary, Peter Howard as
Vice President, Corporate Sustainability, and Emidio Di Pietro as Vice President, Engineering.
The following is a brief biography of the New Management Team:
Steven Martin
Mr. Martin is Pond's Chief Executive Officer and is a past
director of the Jeffrey Skoll MBA program offered through the
Rotman School of Management at the University
of Toronto and is a former director of the Professional
Development Centre in the Faculty of Applied Science and
Engineering at the University of
Toronto. He has also held the position of director of the
Centre for Advanced Microelectronics and was the founding director
of the Centre for Advanced Engineering Technologies at George
Brown College. Mr. Martin holds an
H.B.Sc. in Chemical Physics and a B.A.Sc. in Mechanical
Engineering, both from the University of
Toronto.
Thomas Masney
Mr. Thomas is Pond's Chief Financial Officer and has global
experience spanning North America,
Europe and Asia. He has
worked with Goldman Sachs and General Electric in venture capital,
mergers and acquisitions, and for both Ernst & Young and
PricewaterhouseCoopers in audit and corporate recovery. Mr. Masney
brings with him a strong understanding of the mining, construction,
manufacturing, technology, and e-commerce industries.
Emidio Di Pietro
Mr. Di Pietro Emidio is Pond's
Vice President, Engineering and was former manufacturing manager
with a Tesma division of Magna. He has extensive experience
in areas of program management, from receipt of order to steady
state production including design, validation, production launch,
and in-house/customer production process validation. He
brings a wealth of experience from many different aspects of
engineering that is critical in the development and deployment of
Pond's technology.
Peter Howard
Mr. Howard previously worked as a management consultant, holding
the position of Manager, Climate Change and Sustainability in
PricewaterhouseCoopers' sustainable business practice. He also
worked as Business Development Director for Zerofootprint Carbon, a
carbon consulting and offsetting company and as a Senior Policy
Advisor on climate change with the Ontario Ministry of the
Environment and Climate Change, where he helped develop
Ontario's greenhouse gas emission
policies and programs for transitioning to a low carbon economy.
Mr. Howard received his Masters of Environmental Studies degree
from York University, and a BSc (Hons)
in Marine Biology and Contemporary Studies from the University of Kings College in Halifax, Nova Scotia.
The New Board as well as the board of Amalco will be comprised
of Steven Martin, Geraldine Kenney-Wallace, Bill Asselstine, Rob
McLeese and Gerry Quinn. In
addition to Mr. Martin's biography provided above, the following is
a brief biography of each of the other proposed directors:
Dr. Geraldine Kenney-
Wallace
Dr. Kenney-Wallace is a past President and Vice-Chancellor of
McMaster University and has extensive
board experience, serving as a former director of the Bank of
Montreal, Dofasco Inc., DMR Inc.,
General Motors (Canada) and
Northern Telecom Ltd. In addition, she acted as former
managing director of Baesystems and has been a director of
Pharmacia & Upjohn Company LLC since 1993.
J. William Asselstine
Mr. Asselstine is Vice President, Sustainability and Cement
Sales Canada at St. Marys Cement Inc., where he has worked for over
three decades in various capacities, He oversees procedures
and programs to minimize environmental risks and to ensure
regulatory compliance. He directs the management of all of
St. Marys' properties and is also
responsible for Canadian cement sales.
Rob McLeese
Mr. McLeese is a director of Export Development Canada's Board
of Directors and is the founder and President of Access Capital
Corp., a financial advisory firm specializing in the independent
power industry. Mr. McLeese is also the Chairman and President of
ACI Energy, Inc., which owns and operates two waste coal fueled
power plants in the United States,
and is the recipient of the 2011 Probyn Prize for innovation in
sustainable energy finance and the 2012 Queen Elizabeth II Diamond
Jubilee Medal.
Gerry Quinn
Mr. Quinn is a current member of Ironhorse's board of directors,
having served in such capacity since 2004, and is the President of
The Erin Mills Investment Corporation, a private venture capital
company.
After giving effect to the Transaction, it is anticipated that
St. Marys Cement Inc. ("St.
Marys"), an existing shareholder of Pond, will also be
an insider of Ironhorse, with Mr. Asselstine acting as St. Marys' nominee on the New Board.
St. Marys is an Ontario incorporated wholly-owned subsidiary
of Votorantim Cement North America Inc., which forms a part of the
global operations of Votorantim Cimentos S.A., Brazil's largest cement company.
Concurrent with the closing of the Transaction, Ironhorse will
transfer its interest in the Kotcho property, the Dawson property
and the Balsam property (assuming with respect to Balsam that it
has not been disposed of prior to closing of the Transaction) to
Grizzly Resources Limited ("GRL") for nominal consideration,
and GRL will assume abandonment and reclamation obligations for
these properties in consideration for the payment by Ironhorse to
GRL of the abandonment and reclamation costs of such properties
actually incurred by GRL plus 15%, to a maximum aggregate amount of
not more than $457,183.
Ironhorse will also assign all of its rights and
interests in all claims made by Ironhorse in the existing
litigation (the "Sinopec Litigation") with Sinopec Daylight
Energy Ltd. ("Sinopec") to GRL or a third party acceptable
to Pond, and GRL or the third party, as applicable, will assume and
indemnify Ironhorse from and against all of Ironhorse's liabilities
in respect of the claims made by Sinopec in the Sinopec Litigation
and all future costs associated therewith.
Conditions and Approvals Related to the Transaction
Completion of the Transaction is subject to a number of
conditions and approvals including, but not limited to, TSXV
acceptance and the approval of shareholders of each of Ironhorse
and Pond. The Name Change and the Consolidation will require
the approval of at least 66⅔% of the Ironhorse shareholders at the
annual general and special meeting of the Ironhorse shareholders
anticipated to be held prior to the end of 2017 (the "Ironhorse
Meeting"). The Amalgamation Agreement and the
Amalgamation, among other things, will need to be approved by a
simple majority of Ironhorse shareholders at the Ironhorse
meeting. A management information circular is expected to be
mailed to shareholders of Ironhorse in connection with the
Ironhorse Meeting. Additional information regarding the details of
the Transaction will be included in such management information
circular. Ironhorse expects to mail the management
information circular around mid-November
2017.
The Amalgamation Agreement and the Amalgamation will require the
approval of at least 66⅔% of the Pond shareholders at a special
meeting of the Pond shareholders anticipated to be held prior to
the end of 2017 (the "Pond Meeting").
It is also a condition to the completion of the Transaction for
Ironhorse to enter into an amended management agreement with GRL in
relation to the management of the Pembina property.
No finder's fee is payable in connection with the
Transaction.
The Amalgamation Agreement provides for a reciprocal break fee
of $250,000 payable in certain
circumstances.
The Amalgamation Agreement contains customary terms and
conditions for a transaction of this nature, including covenants
applicable to Ironhorse and Pond until the closing of the
Transaction regarding their respective businesses and
affairs. A copy of the Amalgamation Agreement will be
available under Ironhorse's issuer profile on SEDAR at
www.sedar.com.
Recommendation of the Board of Directors and Support
Agreements
The board of directors of Ironhorse has unanimously: (a)
determined that the Transaction is in the best interests of
Ironhorse; (b) determined to recommend that Ironhorse shareholders
vote in favour of the resolutions to approve the Transaction; and
(c) authorized the entering into of the Amalgamation Agreement and
the performance of Ironhorse's obligations thereunder.
The board of directors and officers of Ironhorse who, in
aggregate, own or control approximately 13 % of the Ironhorse
Shares, have entered into support agreements pursuant to which they
have agreed, among other things, to vote in favour of the
Transaction.
About Ironhorse and Pond
Ironhorse is a Calgary-based
junior oil and natural gas production company trading on the TSXV
under the symbol "IOG". Ironhorse owns a working interest in
a producing oil and gas property in Alberta.
Located in Markham, Ontario,
and continued under the laws of the province of Ontario, Pond is a private company that has
developed a proprietary system to transform carbon dioxide into
bio-products. Pond works with the cement, steel, oil and gas
and power generation industries to reduce greenhouse gas
emissions. Pond has three pilot installations in Ontario and has granted and pending patents in
the USA, Europe, China
and Taiwan and patents pending in
other jurisdictions including Canada.
Pond's platform technology also includes algae superfoods for
the nutraceutical and food additive markets. Pond's
productive system can grow many species of algae, including strains
that produce anti-oxidants, omega-3 fatty acids, and protein for
human and animal consumption.
Financial Information regarding Ironhorse and Pond
For further details concerning Ironhorse, including its property
interests and financial information, please refer to the annual
audited financial statements of Ironhorse for the fiscal year ended
December 31, 2016 and the interim
financial statements of Ironhorse for the six month period ended
June 30, 2017, together with the
accompanying management's discussion and analysis for each such
period, and the additional public filings of Ironhorse, including
Ironhorse's annual oil and gas disclosure filings effective
December 31, 2016, all available
under Ironhorse's issuer profile on SEDAR at
www.sedar.com.
The following table presents certain selected financial data of
Pond for the years ended December 31,
2016, 2015 and 2014 and the six months ended June 30, 2017. The selected financial information
has been derived from Pond's audited financial statements for the
years ended December 31, 2016, 2015
and 2014 and from Pond's unaudited interim financial statements for
the six months ended June 30, 2017.
Pond's financial statements were prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board.
(CDN$
000's)
|
Six Months
Ended June 30,
2017
(unaudited)
|
Year Ended
December
31, 2016
(audited)
|
Year Ended
December
31, 2015
(audited)
|
Year Ended
December
31, 2014
(audited)
|
Revenue
|
9
|
162
|
452
|
717
|
Net income
(loss)
|
(1,166)
|
(2,737)
|
(1,475)
|
(2,629)
|
Cash (used in)
operations
|
(978)
|
(1,441)
|
(1,060)
|
(2,014)
|
|
|
|
|
|
(CDN$
000's)
|
Six Months
Ended June 30,
2017
(unaudited)
|
Year Ended
December
31, 2016
(audited)
|
Year Ended
December
31, 2015
(audited)
|
Year Ended
December
31, 2014
(audited)
|
Total
assets
|
3,369
|
3,723
|
3,620
|
4,453
|
Total long term
financial obligations
|
3,852
|
5,171
|
967
|
395
|
Total
liabilities
|
6,285
|
6,389
|
1,859
|
1,229
|
Cash dividend
declared
|
Nil
|
Nil
|
Nil
|
Nil
|
Accumulated
deficit
|
(15,921)
|
(14,756)
|
(12,018)
|
(10,544)
|
Sponsorship
Pond intends to make an application to the Exchange for an
exemption from the sponsorship requirement as the Financing will be
a brokered financing of at least $500,000. There can be no assurance that
the exemption will be granted. In any event, an agreement to
sponsor should not be construed as any assurance with respect to
the merits of the Transaction or the likelihood of its
completion.
Reader Advisory
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSXV acceptance and if
applicable, disinterested shareholder approval. Where
applicable, the Transaction cannot close until the required
shareholder approval is obtained. There can be no assurance
that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in any
management information circular to be prepared in connection with
the Transaction, any information released or received with respect
to the proposed Transaction may not be accurate or complete and
should not be relied upon. Trading in the securities of Ironhorse
should be considered highly speculative.
The TSXV has in no way passed upon the merits of the proposed
Transaction and neither has approved nor disapproved the contents
of this press release.
Forward-Looking Statements
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends"
and similar expressions are intended to identify forward-looking
information or statements. More particularly and without
limitation, this press release contains forward looking statements
and information concerning the Transaction, the expected business
of Ironhorse and Amalco, the anticipated benefits of the
Transaction to the shareholders of Ironhorse, the timing and
receipt of shareholder, TSXV and other regulatory approvals for the
Transaction, the timing and ability of Ironhorse and Pond to
satisfy the other conditions to the completion of the Transaction
and the closing of the Transaction
The forward-looking statements and information are based on
certain key expectations and assumptions made by Ironhorse,
including expectations and assumptions concerning Ironhorse, Pond,
Amalco, the Transaction, the timely receipt of all required
shareholder, TSXV and other regulatory approvals and the
satisfaction of other closing conditions to the completion of the
Transaction in accordance with the terms of the Amalgamation
Agreement. Although Ironhorse believes that the expectations and
assumptions on which such forward-looking statements and
information are based are reasonable, undue reliance should not be
placed on the forward looking statements and information because
Ironhorse can give no assurance that they will prove to be correct.
By its nature, such forward-looking information is subject to
various risks and uncertainties, which could cause the actual
results and expectations to differ materially from the anticipated
results or expectations expressed. These risks and uncertainties,
include, but are not limited to, risks that the Transaction may not
be completed as currently proposed or at all; satisfaction or
waiver of all applicable conditions to closing of the Transaction
(including receipt of all necessary shareholder, TSXV and
regulatory approvals, and the absence of material changes with
respect to the parties and their respective businesses, all as more
particularly set forth in the Amalgamation Agreement); the
anticipated benefits expected from the Transaction not being
realized; delays in the timing of the Transaction; fluctuations in
general macroeconomic conditions; fluctuations in securities
markets and the market price of Ironhorse Shares; fluctuations in
currency markets (such as the Canadian dollar to United States dollar exchange rate); change in
national and local government, legislation, taxation, controls,
regulations and political or economic developments; and
availability of financing. Readers are cautioned not to place
undue reliance on this forward-looking information, which is given
as of the date hereof, and to not use such forward-looking
information for anything other than its intended purpose. Ironhorse
undertakes no obligation to update publicly or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
law.
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this release. No stock exchange,
securities commission or other regulatory authority has approved or
disapproved of the information contained herein.
SOURCE Ironhorse Oil & Gas Inc.