Donnybrook Energy Inc. ("Donnybrook" or the "Company") (TSX
VENTURE: DEI) reports that it intends to complete a proposed
reorganization of its business components into two separately
listed public corporations by the spin-out of certain non-core oil
and gas assets to a new corporation, Donnycreek Energy Inc.
("Newco"), by means of a plan of arrangement pursuant to the
Business Corporations Act (Alberta) (the "Arrangement"). The
objective of the Arrangement is to maximize shareholder value of
the retained oil and gas assets and the oil and gas assets of the
Company being transferred to Newco.
Newco will hold the following key assets (the "Assets"):
-- 4,864 gross (4,864 net) hectares of petroleum and natural gas rights
prospective for Montney, Wilrich, Bluesky and Falher liquid rich natural
gas resource development in the Deep Basin area of west central Alberta,
consisting of Donnybrook's interests in the Prairie Creek, Gold Creek,
Ansell Creek, Grand Prairie, Valhalla Creek and Leland Creek areas of
Alberta;
-- 1,920 gross (465 net) hectares of Mannville petroleum and natural gas
rights in the Delia-Michichi area of eastern Alberta, including an
interest in 2 gross (0.82 net) producing natural gas wells and 2 gross
(0.32 net) non-producing wells in this area; and
-- $300,000 in cash.
The remaining assets, including Donnybrook's interests in its
core areas of Simonette, Resthaven and Bigstone in the Deep Basin
area of west central Alberta will remain in Donnybrook along with
the remaining cash to fund Donnybrook's ongoing exploration and
development program.
Transaction Terms
Under the proposed Arrangement, it is intended that the Company
will transfer the Assets to Newco in return for common shares of
Newco ("Newco Shares") and the issuance by Newco to Donnybrook of a
promissory note in the principal amount of approximately $2.19
million (the "Promissory Note"). Pursuant to the Arrangement,
shareholders of Donnybrook will be entitled to receive 0.025 of a
Newco Share for each common share of the Company outstanding as of
the effective date of the Arrangement. It is currently contemplated
that the plan of arrangement will be structured as a return of
capital for Donnybrook shareholders.
Upon closing of the Arrangement, the directors of Newco are
expected to be the current directors of the Company namely: Malcolm
Todd, Murray Scalf, Randy Kwasnicia, David Patterson, Ken
Stephenson and Colin Watt. Additionally, it is currently expected
that the officers of Newco are expected to be the current officers
of the Company, namely: Malcolm Todd as the President and Chief
Executive Officer of Newco, Robert Todd as the Chief Financial
Officer of Newco and Murray Scalf as the Vice President of Business
Development of Newco.
It is anticipated that the Arrangement will be completed in mid
October, 2011. The implementation of the Arrangement is subject to,
among other things: further board of directors approval by each of
the Company and Newco of the final structure and terms and the
arrangement agreement to be entered into between the Company and
Newco, shareholder, court and regulatory approvals, including TSX
Venture Exchange acceptance of the Arrangement, the continued
listing of the Company's common shares on the TSX Venture Exchange
and conditional listing approval of Newco Shares. No application
for listing has been made and there is no assurance that if made
that approval will be granted. The TSX Venture Exchange has not
approved or disapproved the Arrangement and there is no assurance
that the TSX Venture Exchange will approve the Arrangement.
The Company will hold a special meeting of shareholders to
approve the Arrangement. Further particulars, including the record
and meeting dates, will be announced in due course and a complete
description of the Arrangement will be set forth in a management
information circular to be sent to shareholders of the Company in
connection with the special meeting to approve the Arrangement.
In connection with the Arrangement, it is expected that certain
directors and officers of the Company will be among the
participants in a private placement for Newco Shares at a purchase
price per share equivalent to the deemed issue price per Newco
Share issued pursuant to the Arrangement, for aggregate gross
proceeds of approximately $2.4 million (the "Private Placement").
The proceeds of the Private Placement will be used to repay the
Promissory Note and to provide Newco with additional working
capital. The Arrangement will be conditional upon the completion of
the Private Placement.
Assuming no convertible securities of the Company are exercised
prior to the Arrangement, on completion of the Arrangement,
including the Private Placement, it is anticipated that Newco will
have approximately 10.8 million Newco Shares outstanding.
Further information relating to the Company is also available on
its website at www.donnybrookenergy.ca.
ON BEHALF OF THE BOARD OF DONNYBROOK ENERGY INC.
Malcolm F.W. Todd, Chief Executive Officer
FORWARD-LOOKING STATEMENTS
Certain information set forth in this news release contains
forward-looking statements or information ("forward-looking
statements"), including statements regarding the timing and
completion of the Arrangement, the timing and completion of the
Private Placement, the transfer of the Assets to Newco, the receipt
of any shareholder and regulatory approvals for the Arrangement and
the Private Placement, the development potential of the Company's
properties and the number of Newco Shares outstanding upon
completion of the Arrangement. By their nature, forward-looking
statements are subject to numerous risks and uncertainties, some of
which are beyond Donnybrook's control, including the risks of the
Company not obtaining the required approvals to proceed with the
Arrangement or the Private Placement, tax consequences of the
Arrangement, the impact of general economic conditions, industry
conditions, volatility of commodity prices, currency fluctuations,
imprecision of reserve estimates, environmental risks, operational
risks in exploration and development, competition from other
industry participants, the lack of availability of qualified
personnel or management, stock market volatility and the ability to
access sufficient capital from internal and external sources.
Although Donnybrook believes that the expectations in our
forward-looking statements are reasonable, our forward-looking
statements have been based on factors and assumptions concerning
future events which may prove to be inaccurate. Those factors and
assumptions are based upon currently available information. Such
statements are subject to known and unknown risks, uncertainties
and other factors that could influence actual results or events and
cause actual results or events to differ materially from those
stated, anticipated or implied in the forward looking information.
As such, readers are cautioned not to place undue reliance on the
forward looking information, as no assurance can be provided as to
future results, levels of activity or achievements. The risks,
uncertainties, material assumptions and other factors that could
affect actual results are discussed in our management's discussion
and analysis and other documents available at www.sedar.com.
Furthermore, the forward-looking statements contained in this
document are made as of the date of this document and, except as
required by applicable law, Donnybrook does not undertake any
obligation to publicly update or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise. The forward-looking statements
contained in this document are expressly qualified by this
cautionary statement.
Neither the 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 news release.
Contacts: Donnybrook Energy Inc. Malcolm Todd President and
Chief Executive Officer (604) 684-2356 (604) 684-4265 (FAX)
info@donnybrookenergy.ca www.donnybrookenergy.ca
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