Paleo Resources, Inc. (“Paleo” or the “Corporation”) (TSX-V: PRE,
OTCQB: PRIEF) announced today that the holders of the Corporation’s
outstanding 2019 debentures in the aggregate principal amount of
CDN$2,682,799 (the “
Debentures”) have provided
notice to require the Corporation to repurchase all amounts
outstanding under the Debentures, in accordance with the terms of
such Debentures. The Debentures provide the holders with the right,
upon at least 30 days written notice prior to the date that is two
(2) years following the original issuance date of such Debentures
(the “
Repurchase Date”), to require the
Corporation to repurchase all amounts outstanding under the
Debentures on such Repurchase Date, at a repurchase price equal to
115% of the outstanding principal amount of the Debentures,
together with payment of the interest on the principal amount
accrued and unpaid to the Repurchase Date. For further information
regarding the Debentures, please refer to the Corporation’s news
releases dated May 13, 2019, June 5, 2019 and July 25, 2019.
The total principal amount of the indebtedness
due as a result of the repurchase notifications is CDN$3,085,218.75
(the “Repurchase Indebtedness”) of which
CDN$2,341,681.75 is due on June 5, 2021 and CDN$743,537 is due on
July 25, 2021. The Corporation intends to pay in cash all interest
due and owing on the Debentures on the respective Repurchase
Dates.
Paleo also announced that it intends to settle a
total of CDN$2,675,169.10 of the Repurchase Indebtedness through
the issuance of an aggregate of 89,172,303 common shares of the
Corporation at a deemed price of CDN$0.03 per share (the
“Debt Settlement”), subject to approval of the TSX
Venture Exchange. The common shares issued in connection with the
Debt Settlement will be subject to a hold period of four months
from the date of closing.
Roger S. Braugh, Jr.
(“Braugh”), a director and officer of Paleo, is
the holder of CDN$371,769 of the Repurchase Indebtedness and Chris
Pettit & Associates PC, controlled by Christopher J. Pettit, a
director of Paleo, as trustee of a Trust (the
“Trust”), is the holder of CDN$371,769 of the
Repurchase Indebtedness, which would be settled through the
issuance of 12,392,285 Common Shares to each at a deemed price of
CDN$0.03 per share.
The remaining portion of Repurchase Indebtedness
not settled pursuant to the proposed Debt Settlement in the
aggregate amount of CDN$410,049.65 is owed to a third party, who
has each to extend the due date for payment of the remaining
outstanding Repurchase Indebtedness to the original maturity date
of the Debenture, being June 5, 2022.
As a result of the Debt Settlement, Braugh will
hold a total of 147,370,423 common shares and the Trust will hold a
total of 133,855,423 common shares, representing 27.55% and 25.03%,
respectively, of the total issued and outstanding common shares of
the Corporation.
As noted above, Roger S. Braugh, Jr. is a
director and officer of Paleo and Christopher J. Pettit, is a
director of Paleo and, accordingly, a portion of the Debt
Settlement is a related party transaction for the purposes of TSX
Venture Exchange Policy 5.9 and Multilateral Instrument 61-101 (the
“Related Party Policies”). Paleo has determined that exemptions
from the various requirements of the Related Party Policies are
available in connection with the Debt Settlement (Formal Valuation
- Issuer Not Listed on Specified Markets; Minority Approval -
Financial Hardship.).
Neither
the
TSX
Venture
Exchange
nor
its
Regulation
Services
Provider
(as the
term
is
defined
in
the
policies
of the
TSX
Venture
Exchange)
accepts
responsibility
for the
adequacy
or accuracy
of
this
release.
Paleo Resources, Inc. is an oil and natural gas
exploration company with executive offices in San Antonio, Texas.
The Corporation's common shares are listed on the TSX Venture
Exchange under the trading symbol "PRE" and on the OTCQB as
"PRIEF".
For further information please contact:
Roger S. Braugh, Jr.Interim Chief Executive Officer and Chairman
of the BoardEmail: rbraugh@paleooil.com
Paleo Resources, Inc.716 S. Frio St. Suite 201San Antonio, Texas
78207Telephone: 254-699-0975
Forward Looking Statements
This news release contains "forward-looking
information" within the meaning of applicable Canadian securities
legislation. All statements, other than statements of historical
fact, included herein are forward-looking information. Generally,
forward-looking information may be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "proposed", "is expected", "budgets", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and
phrases, or by the use of words or phrases which state that certain
actions, events or results may, could, would, or might occur or be
achieved. In particular, this news release contains forward-looking
information regarding the assignment of the loan, the Debt
Settlement, and the business of Paleo. There can be no assurance
that such forward-looking information will prove to be accurate,
and actual results and future events could differ materially from
those anticipated in such forward-looking information. This
forward-looking information reflects Paleo's current beliefs and is
based on information currently available to Paleo and on
assumptions Paleo believes are reasonable. These assumptions
include, but are not limited to: the underlying value of Paleo’s
common shares, TSX Venture Exchange approval of the assignment of
the loan and the Debt Settlement, Paleo's current and initial
understanding and analysis of its projects and the exploration
required for such projects; the costs of exploration and drilling
on Paleo's projects; Paleo's general and administrative costs
remaining constant; and the market acceptance of Paleo's business
strategy.
Forward-looking information is subject to known
and unknown risks, uncertainties and other factors that may cause
the actual results, level of activity, performance or achievements
of Paleo to be materially different from those expressed or implied
by such forward-looking information. Such risks and other factors
may include, but are not limited to: volatility in market prices
for oil and natural gas; constraints on sour gas production; the
availability of commodity markets and third party equipment,
infrastructure and services; liabilities inherent in oil and
natural gas operations; uncertainties associated with estimating
oil and natural gas reserves; geological, technical, drilling and
processing availability, upsets or problems; general business,
economic, competitive, political and social uncertainties; general
capital market conditions and market prices for securities; delay
or failure to receive board or regulatory approvals; the actual
results of future operations; competition; changes in legislation,
including environmental legislation, affecting Paleo; the timing
and availability of external financing on acceptable terms; and
lack of qualified, skilled labour or loss of key individuals. A
description of additional assumptions used to develop such
forward-looking information and a description of additional risk
factors that may cause actual results to differ materially from
forward-looking information can be found in Paleo's disclosure
documents on the SEDAR website at www.sedar.com. Although Paleo has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. Readers
are cautioned that the foregoing list of factors is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking information as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Forward-looking information contained in this news release
is expressly qualified by this cautionary statement. The
forward-looking information contained in this news release
represents the expectations of Paleo as of the date of this news
release and, accordingly, is subject to change after such date.
However, Paleo expressly disclaims any intention or obligation to
update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable securities law.
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