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Primeline Completes Acquisition of Primeline Petroleum Corporation

Source: www.gulfoilandgas.com 8/14/2015, Location: Asia

Primeline Energy Holdings Inc. announced that, following receipt of disinterested shareholder approval at its Extraordinary General Meeting held on July 30, 2015, it has now completed the acquisition of the share in and loan to Primeline Petroleum Corporation (“PPC”) held by Primeline International (Holdings) Inc. (“PIHI”), a private company wholly-owned by Mr. Victor Hwang, Primeline’s Chairman, President and majority shareholder (the “Acquisition”). The Acquisition was previously announced by Primeline on May 11 and June 29, 2015. Completion of the Acquisition leaves Primeline with a 49% interest in the Petroleum Contract for the producing Block 25/34, and a 100% interest in the Petroleum Contract for Block 33/07.

As consideration for the Acquisition, Primeline issued to PIHI 44,669,851 ordinary shares of Primeline (“Shares”). The closing price of the Shares on the TSX-V on August 12, 2015, the last trading day prior to the issuance to PIHI, was CAD$0.42. Following the completion of the Acquisition, Mr. Hwang now has ownership and control of 125,213,470 Shares representing approximately 70.08% of the issued and outstanding Shares on a non-diluted basis, and 125,913,470 Shares representing approximately 70.19% of the issued and outstanding Shares on a partially diluted basis assuming the exercise of 700,000 options held by Mr. Hwang.

In the future, Mr. Hwang may or may not purchase or sell securities of Primeline on the open market or in private transactions, depending on market conditions and other factors material to his investment decisions.

The Shares issued in connection with the Acquisition were distributed pursuant to the exemption from the prospectus requirement of applicable securities legislation provided for at section 2.3 of National Instrument 45-106 - Prospectus Exemptions (“NI 45-106”) and are subject to a statutory hold period of four months plus a day expiring on December 14, 2015 in accordance with applicable securities laws. A copy of Mr. Hwang’s Early Warning Report is available on SEDAR.

Following completion of the Acquisition, on August 14, 2015 the subscription agreement dated June 5, 2015 between Primeline and GRF Prime Limited (“GRF”), a resources fund managed by GEMS Investment Limited, became unconditional and Primeline completed the first tranche of its private placement (the “Offering”) of unsecured convertible bonds in the aggregate principal amount of US$20,000,000 (the “Bonds”) announced by Primeline on May 11 and June 5, 2015. Primeline has issued US$10,000,000 principal amount Tranche A Convertible Bonds (the “Tranche A Bonds”) to GRF.

The term of the Tranche A Bonds is three years extendable for two one-year periods. Interest is payable quarterly at 7% per annum, of which 4.5% will be paid in cash and 2.5% in ordinary shares of Primeline (“Shares”) issued at a deemed price per Share equal to the volume-weighted average trading price of the Shares on the TSX-V for the 15 days preceding the interest payment date. The Tranche A Bonds will be convertible, at the option of GRF, at any time during the period commencing four months and a day following the date of issuance of the Tranche A Bonds up to the date that is 10 days prior to the date of maturity of the Tranche A Bonds, into Shares at a conversion price of CAD$0.70 per Share.

The subscription agreement with GRF having become unconditional has enabled Primeline to enter into the turnkey drilling contract with COSL announced on July 23, 2015. Primeline will now proceed to spud the first of two wells planned for Block 33/07 in September. The site survey of the drilling location commenced on the 4th of August following the signing of the letter of intent with COSL on the 22nd of July. An update on the drilling operation will be announced soon.

A structuring fee of 3.76% of the principal amount of the Bonds is payable by Primeline to GRF in connection with the Offering. Half of the fee was paid in cash to GRF upon drawdown of the Tranche A Bonds and the other half will be paid six months after drawdown of the Tranche A Bonds in Shares at a deemed price per Share equal to the volume-weighted average trading price of the Shares on the TSX-V for the 15 days preceding the payment date.

Primeline has appointed Mr. Timothy Baldwin, a nominee of GRF, to serve on the Board of Directors of Primeline.

The Bonds were distributed pursuant to the exemption from the prospectus requirement of applicable securities legislation provided for at section 2.10 of NI 45-106. The Bonds, and any Shares issued as interest or upon conversion, are subject to a statutory hold period of four months plus a day expiring on December 14, 2015 accordance with applicable securities laws.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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