Red Rock Energy to settle debt, roll back, raise $2.5MAmbitious plans
2017-01-25 15:16 ET - News Release
Mr. Sandy Loutitt reports
RED ROCK ANNOUNCES REORGANIZATION PLAN
Red Rock Energy Inc. has arranged a reorganization plan comprising a number of steps, including the issuance of shares for debt, two non-brokered private placements to raise gross proceeds of up to $2.5-million, reactivation of the company onto the TSX Venture Exchange and related matters.
In general terms, the reorganization contemplates the following steps.
1. Shares-for-debt transaction
The company proposes to issue up to 18 million common shares at five cents per preconsolidation common share to satisfy up to $900,000 of existing indebtedness, including indebtedness to related parties.
2. The consolidation
It is currently proposed that the company will consolidate its issued and outstanding preconsolidation common shares on the basis of 15 common shares for one postconsolidation share, such that, postconsolidation and inclusive of the shares issued under the shares-for-debt transaction, there will be 4.5 million postconsolidation shares issued and outstanding. Shareholders of the company will be asked to approve a resolution approving the consolidation at a special meeting of shareholders, to be held on Feb. 14, 2017.
3. First tranche private placement
The company will issue, through a non-brokered private placement, up to 10 million units at five cents per unit for gross proceeds of $500,000 to a new investor group. Each unit shall comprise one postconsolidation common share and one warrant, with each warrant entitling the holder thereof to purchase one additional postconsolidation common share at a price of 10 cents for a period of 12 months from date of issuance of the warrants. It is anticipated that the individuals in the new investor group, including Jose Francisco Arata, Marino Ostos, William Mauco and Krishna Vathyam, will each subscribe for 2.5 million units, thereby becoming new control persons (as defined in TSX-V Policy 4.1) in respect of Red Rock. The new investor group will bring a broad range of experience and expertise in assisting the company with its reactivation efforts.
Shareholders of the company will be asked to approve a resolution authorizing the creation of such new control persons at the meeting. Additional details regarding these individuals and the share issuance will be disclosed in the management information circular prepared in connection with the meeting.
4. Reactivation
The company also intends to explore various strategic options to seek relisting of the company on the TSX-V, which options may include the commissioning of a new work program on one of the company's existing properties or other opportunities that may present themselves to the company.
5. Second tranche private placement
Concurrent with the closing of the reactivation and the relisting of the company on the TSX-V, the company intends to complete a non-brokered private placement of an additional 20 million postconsolidation shares at 10 cents per share for gross proceeds to Red Rock of $2-million. Proceeds of the financings will be used as required for the reactivation, to continue the company's projects and for general working capital.
It is also anticipated that the company will pay finders' fees of up to $50,000 through the issuance of up to 500,000 postconsolidation shares to arm's-length finders in connection with the financings.
Completion of the reorganization is conditional upon satisfaction of a number of conditions precedent, including completion of the financings, execution of formal documentation, and the receipt of all necessary corporate, shareholder and regulatory approvals, including approval of the TSX-V.