SNV rollback
Sonoro Energy arranges rollback, $2.6-million placement
2013-10-15 18:27 ET - News Release
Mr. Richard Wadsworth reports
SONORO ANNOUNCES PROPOSED $2.6 MILLION PRIVATE PLACEMENT, PROPOSED SHARE CONSOLIDATION AND SPECIAL MEETING
Sonoro Energy Ltd. has arranged a proposed non-brokered private placement of up to 32.55 million postconsolidation shares (as defined below) at a price of eight cents per postconsolidation share for gross proceeds of up to $2,604,000, subject to shareholder and TSX Venture Exchange approval.
As of the date hereof, Sonoro has entered into an agreement (the "Subscription Agreement") with Geopetrol International Holding Inc. ("Geopetrol") whereby Geopetrol has agreed to subscribe for 26,300,000 Post-Consolidation Shares under the Private Placement pursuant to the terms and conditions of the Subscription Agreement, subject to shareholder and TSXV approval of the Private Placement and Consolidation (as defined below) and completion of the Consolidation. The proposed Private Placement would (i) result in Geopetrol, an insider currently holding approximately 17.4 % of the issued and outstanding common shares of the Company, becoming a control person, within the meaning of TSXV Policy 1.1; and (ii) constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions, andwill be put before shareholders at a special meeting (the "Meeting") of shareholders of the Company which is expected to be held in early to mid-December, 2013.
In conjunction with the Private Placement, Sonoro proposes to consolidate its issued and outstanding common shares on the basis of one (1) new common share of the Company (a "Post-Consolidation Share") for every ten (10) existing common shares (the "Consolidation"), subject to shareholder and TSXV approval. The proposed amendment to the articles of the Company to allow for the Consolidation will be put before shareholders at the Meeting.
Both management and the Board of Directors believe that it is in the best interests of Sonoro to reduce the number of outstanding common shares by way of a consolidation. The Consolidation, if approved, will enable Sonoro to offer securities of the Company under the Private Placement in accordance with the minimum pricing rules of the TSXV. Additional potential benefits of the Consolidation include a higher post-Consolidation share price resulting in greater interest in Sonoro and lower transaction costs.
As of October 15, 2013, there were 264,518,053 common shares of Sonoro issued and outstanding and, if the proposed Consolidation is approved, there will be approximately 26,451,805 Post-Consolidation Shares. The implementation of the Consolidation would not affect the total shareholders' equity of Sonoro or any components of shareholders' equity as reflected on Sonoro's financial statements except: (i) to change the number of issued and outstanding common shares; and (ii) to change the stated capital of the common shares to reflect the Consolidation.
The Company is continuing discussions with the appropriate government officials, including through direct meetings and discussions, with a view to receiving formal confirmation of its License at both the Federal and Provincial level. The Company expects that discussions may continue for some time before final confirmations and approvals are received.
Mr. Richard Wadsworth, Chairman and CEO of Sonoro, commented "Geopetrol has proven to be a strong financial and technical partner. Their participation in this financing provides support to Sonoro's continued efforts to obtain approvals from the necessary authorities in Iraq. "
Geopetrol commented "We are pleased to have the opportunity to further invest in Sonoro, and we look forward to working closely with Sonoro to realise the potential of the Asphalt License we have signed with the Salah ad Din Province in Iraq. Geopetrol remains committed to the current process and, ultimately, operations in Iraq."
At June 30, 2013, Sonoro had cash of $1,360,532 and positive working capital of $1,447,747 (inclusive of cash). Since that time, the Company has continued to incur costs related to its ongoing operations. Accordingly, the Company believes that Private Placement is necessary in order to provide additional cash to finance ongoing activities related to confirming the Company's rights and then carrying out operating activities in relation to those rightsand for general working capital requirements. Full details regarding the proposed Private Placement and Consolidation will be mailed to Sonoro's securityholders in connection with the Meeting.
We seek Safe Harbor.