CALGARY, Alberta, March 22, 2018 (GLOBE NEWSWIRE) --
NOT FOR DISTRIBUTION TO THE U.S.A. NEWS WIRE SERVICES OR FOR DISSEMINATION TO THE U.S.A.
Groundstar Resources Limited (TSXV:GSA) (the “Company”) is providing an update to its press
release dated February 27, 2018 wherein it announced that it was conducting a non-brokered private placement of a maximum of
$70,000 aggregate principle amount of convertible debenture units (the “Convertible Debenture Units” or
“CDUs”) at a price of CAD$1,000 per Convertible Debenture Unit. The Company is announcing that it has amended the
terms of the CDUs with respect to the conversion price of same (subject to regulatory approval) and, as a result, the number of
warrants issued as part of each CDU, as well as slight delays with respect to the closings of the different offerings described
therein. The result is that each CDU will now consist of a debenture in the principal amount of CAD$1,000 (the “Convertible
Debenture”) and bear interest at 12% and include warrants (the “Warrants”) exercisable into 50,000 common
shares in the capital of the Company (the “Offering”). Each Warrant will be exercisable to acquire one common
share in the capital of the Company (each, a “Warrant Share”) at an exercise price of $0.05 per Warrant Share for
a period of two years following the Closing Date (as hereinafter defined).
The Convertible Debentures will bear interest from the Closing Date at 12.0% per annum, payable semi- annually on June 30 and
December 31 of each year and will expire on the date that is two years from the closing date (the “Maturity
Date”), will be secured by the assets of the Company and be subordinate to any existing secured parties of the Company.
The Convertible Debentures are convertible into common shares in the capital of the Company (“Debenture Shares”)
at the option of the holder at any time prior to the close of business on the earlier of: (i) the last business day immediately
preceding the Maturity Date; and (ii) the date when the Common Shares are consolidated as set forth below, at a conversion price of
$0.02 per Common Share (the “Conversion Price”), subject to adjustment in certain events. The Company intends to
effect a share consolidation of its common shares at a ratio to be determined in order to ensure that the conversion pricing meets
the policies of the TSX Venture Exchange (“TSXV”). All share prices in this press release are pre-consolidation
amounts and will be adjusted in accordance with whatever exchange ratio is ultimately approved by the shareholders of the Company
at its next annual meeting of shareholders and any such post-consolidation share price will be compliant with the pricing
parameters set forth in the policies of the TSXV. Further, the transactions described herein are subject to all necessary approvals
of the TSXV.
Subsequent to the issuance of the Convertible Debenture Units, the Company proposes to proceed with an
additional financing (the “Second Financing”) of up to 20 million units in the capital of the Company (the
“Common Units”) at a price of $0.01 per unit, each unit consisting of a common share in the capital of the Company
(“Common Share”) and a common share purchase warrant (a “Warrant”) for gross proceeds of up to
CAD$200,000. Each Warrant will permit the holder to acquire one additional Common Share at a price of $0.05 in the first year from
closing and at $0.075 in the second year from closing.
Closing the Second Financing is contingent on completion of a proposal to renegotiate the debt due to the Company’s major creditors
into long-term obligations. Changes in Management and the Board may also occur upon closing.
Notwithstanding the foregoing, in the event that demand for the Offering or the Second Financing is greater than anticipated, the
Board of Directors of the Company may increase the size of the Offering or the Second Financing to such amount as they may
determine in their sole discretion, subject to approval of the TSXV regarding same. In addition, while the Company intends to seek
an exemption for the anticipated pricing of the Offering and the Second Financing, the granting of such exemption is subject to
approval of the TSXV. The aforementioned financings will be completed in two tranches over the next month, with the Offering
expected to close in the near future, possibly in multiple tranches, and the Second Financing expected to close on or about April
15, 2018 (each, a “Closing Date”).
The Company will utilize the net proceeds from the Offering and the Second Financing (collectively, the
“Financings”) for general corporate purposes and to seek different corporate opportunities, which may involve
drilling new wells, seeking a farm-in opportunity or acquiring producing assets.
The Convertible Debenture Units and Common Units will be issued on a private placement basis in the Provinces of Alberta, British
Columbia, Ontario and such other jurisdictions as the Company may determine in its sole discretion and will be subject to a
statutory hold period of four months and a day from the applicable closing date of each tranche of the Financings. Closing of the
Financings and the applicable pricing thereof are subject to approval of the TSXV.
The Financings are open to all existing shareholders of the Company and such other individuals or entities as the Company may
determine in its sole discretion. It is currently anticipated that insiders of the Company will subscribe for a significant amount
of the Offering.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the
securities in the United States. The securities have not been and will not be registered under the United States Securities Act of
1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within
the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.
About Groundstar Resources Limited
Incorporated in 1968, Groundstar Resources Limited is a publicly traded oil and gas company actively growing a
portfolio targeting producing oil and gas assets with development opportunities and exploration upside. The Company’s current
portfolio of resource assets provides both near term and longer-term potential. Groundstar is quoted and trades under the ticker
symbol “GSA” on the TSX Venture Exchange.
Contact Information:
Groundstar Resources Limited, Suite 430, 440 - 2nd Avenue SW, Calgary, Alberta T2P 5E9
www.groundstarresources.com
Stephen Hughes
587.580.9344
shughes@groundstarresources.com
This press release contains forward-looking statements within the meaning of applicable securities laws,
including expectations regarding the anticipated closing of the Financings and the timing thereof, the gross proceeds expected to
be received in connection therewith, the price at which the securities are being issued and the anticipated use of proceeds from
the Financings. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct. These statements are subject to certain risks and
uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or
implied in the forward-looking statements. These risks include, but are not limited to: the risks associated with the oil and gas
industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of estimates
and projections relating to production, costs and expenses and health, safety and environmental risks), commodity price and
exchange rate fluctuation, uncertainties resulting from potential delays or changes in plans with respect to exploration or
development projects or capital expenditures and uncertainties regarding whether regulatory approval for the Financings will be
received and if received, on the timelines expected and at the anticipated pricing, as well as the intended use of the net proceeds
of the Financings. The Company’s forward-looking statements are expressly qualified in their entirety by this cautionary statement.
The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no
obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information,
future events or otherwise, unless so required by applicable securities laws.
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 press
release.