CALGARY,
April 4, 2013 /CNW/ - RIA Resources
Corp. (TSXV: RIA) ("RIA") is pleased to announced it has
entered into an arm's length arrangement agreement (the
"Arrangement Agreement") dated effective April 3, 2013 with Qwest Diversified Capital
Corp. ("QDCC") pursuant to which QDCC will acquire all of
the common shares of RIA ("RIA Shares") by way of a plan of
arrangement (the "Arrangement"). The Arrangement
Agreement supersedes the non-binding letter of intent dated
February 1, 2013 between RIA and
Qwest Investment Management Corp., the terms and conditions of
which were announced by RIA on February 5,
2013. It is anticipated that the effective date of the
Arrangement will be on or before June 15,
2013 (the "Effective Date").
Under the terms of the Arrangement Agreement,
RIA shareholders will receive 0.014 (the "Exchange Ratio")
of a series 1 preferred share of QDCC ("QDCC Preferred
Shares") for each RIA Share held. The QDCC Preferred
Shares will be issued from QDCC's treasury at a deemed price of
$10.00 per QDCC Preferred
Share. Accordingly, the Exchange Ratio implies a value of
$0.14 per RIA Share, representing a
211% premium to the closing price of RIA's Shares on the TSX
Venture Exchange on April 3, 2013,
the last day of trading prior to this announcement. The
Exchange Ratio was derived from the net asset value of RIA's oil
and gas assets set forth in an independently prepared engineering
report.
Holders of QDCC Preferred Shares have the right
to redeem their shares at a price per share equivalent to net asset
value of QDCC divided by the number of QDCC Preferred Shares issued
and outstanding at a date at least five years and one day from the
date of issue of the QDCC Preferred Shares to RIA shareholders, all
as more fully described in the articles of incorporation and
unanimous shareholders agreement of QDCC. The QDCC Preferred Shares
are non-voting shares, and are eligible for discretionary dividends
to be determined by the Board of Directors of QDCC from time to
time. Although the payment and the amount of dividends
declared will be subject to the discretion of the Board of
Directors it is the Board of Directors intention to exercise its
discretion in favour of paying dividends on the QDCC Preferred
Shares, subject to commodity prices and the overall financial
performance of QDCC, on a quarterly basis.
QDCC intends to, but is not obligated to,
complete an offering of QDCC Preferred Shares under an offering
memorandum, of up to $700,000 at
$10.00 per QDCC Preferred Share (the
"QDCC Preferred Shares Offering") prior to the
Arrangement. The Arrangement is not conditional on the
completion of the QDCC Preferred Shares Offering. QDCC
does not intend to list the QDCC Preferred Shares on the TSX
Venture Exchange or any other exchange in the near future.
As at the date hereof there are 23,684,045 RIA Shares issued and
outstanding; 880,000 options to purchase RIA Shares ("RIA
Options"); 1,300,000 common share purchase warrants
("Warrants"); and a debenture convertible into 1,704,348 RIA
Shares ("Convertible Debenture"), all as more fully detailed
within RIA's October 31, 2012
Financial Statements. RIA covenanted in the Arrangement Agreement
to cause the holders of outstanding, unexercised RIA Options to
enter into agreements (prior to the Effective Date) to convert RIA
Options with an exercise price of less than $0.14 into 0.004 of a QDCC Preferred Share up to
a maximum of 3,550 QDCC Preferred Shares immediately following the
completion of the Arrangement, and to cause the holder of the
outstanding, unexercised Warrants to enter into an agreement (prior
to the Effective Date) for the cancellation of the Warrants for
nominal consideration immediately following the completion of the
Arrangement. QDCC has agreed to enter into an agreement with
the holder of the Convertible Debenture (prior to the Effective
Date) providing that QDCC undertakes and agrees in QDCC's capacity
as the sole shareholder of RIA post-Arrangement to cause RIA to
payout all amounts owing under the Convertible Debenture on or
before June 30, 2013.
Subject to approval by the TSX Venture Exchange, Chinook
Financial Ltd., which is a non-arm's length creditor of RIA,
intends to convert a principal amount of $380,000 of RIA debt owed to it into 3,800,000
RIA Shares prior to the Effective Date.
A special meeting of RIA Shareholders to approve the Arrangement
is to be held on or before May 31,
2013. After considering strategic alternatives for
RIA, RIA's board of directors has determined that the Arrangement
is in the best interests of holders of RIA Shares, offers fair
consideration to holders of RIA Shares and recommends that holders
of RIA shares vote in favor of the Arrangement. RIA's board
of directors has unanimously approved the Arrangement and the
Arrangement Agreement.
About QDCC
QDCC is a wholly-owned subsidiary of Qwest Development Holdings
Corp., a corporation controlled by Qwest Investment Management
Corp. QDCC's objectives are to invest in and acquire junior oil and
gas companies and other oil and gas assets. The proposed
acquisition of RIA will be the first acquisition by QDCC.
About RIA
RIA is a company listed and trading on the TSX Venture Exchange,
symbol: RIA. RIA's principal business is the exploration,
development and production of oil, natural gas and associated
liquids in Western Canada,
principally in the Province of Alberta.
Forward Looking Statements
Certain statements contained in this news
release constitute forward-looking statements. These statements
relate to future events contemplated under the Arrangement
Agreement and the objectives and intentions of QDCC following the
Arrangement. All statements other than statements of historical
fact are forward-looking statements. The use of any of the words
''anticipate'', ''plan'', ''contemplate'', ''continue'',
''estimate'', ''expect'', ''intend'', ''propose'', ''might'',
''may'', ''will'', ''shall'', ''project'', ''should'', ''could'',
''would'', ''believe'', ''predict'', ''forecast'', ''pursue'',
''potential'' and ''capable'' and similar expressions are
intended to identify forward-looking statements. These statements
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward-looking statements. Although RIA
believes these statements to be reasonable, no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not
be unduly relied upon. Such statements include the closing of the
proposed Arrangement on the terms and conditions set out above, the
anticipated timing for stated events, and QDCC's intentions to
complete the QDCC Preferred Shares Offering, to not list the QDCC
Preferred Shares on the TSX Venture Exchange or any other exchange
and the plan to pay dividends. Actual results could differ
materially from those anticipated in these forward-looking
statements as a result of the proposed Arrangement not closing when
planned, not closing on the terms and conditions set out above, or
if a closing occurs at all; the failure of RIA to obtain the
necessary regulatory, shareholder and other third party approvals
required in order to proceed with the proposed Arrangement;
regulatory decisions, competitive factors in the industries in
which RIA and QDCC operate, prevailing economic conditions, the
impact of general economic conditions; volatility in market prices
for oil and natural gas; industry conditions; volatility of
commodity prices; currency fluctuation; imprecision of reserve
estimates; liabilities inherent in crude oil and natural gas
operations; environmental risks; incorrect assessments of the value
of acquisitions and exploration and development programs;
competition from other producers; the lack of availability of
qualified personnel or management; changes in income tax laws or
changes in tax laws and incentive programs relating to the oil and
gas industry; hazards such as fire, explosion, blowouts, cratering,
and spills, each of which could result in substantial damage to
wells, production facilities, other property and the environment or
in personal injury; ability to access sufficient capital from
internal and external sources; and other factors, many of which are
beyond the control of RIA and QDCC. The forward-looking statements
contained in this news release represent RIA's expectations as of
the date hereof, and are subject to change after such date.
RIA disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise, except as may be required by applicable
securities regulations.
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 release.
SOURCE Ria Resources Corp.