02:48:41 EST Fri 22 Feb 2019
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Primeline Energy Holdings Inc
Symbol C : PEH
Shares Issued 197,387,761
Close 2019-01-07 C$ 0.04
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Primeline issues $9.3M (U.S.) in bonds, 2.43 MM shares

2019-01-07 18:48 ET - News Release

Dr. Ming Wang reports

PRIMELINE ENERGY ISSUES BONDS AND SHARES TO VICTOR HWANG

Primeline Energy Holdings Inc. has issued $9.3-million (U.S.) principal amount of bonds to Primeline International (Holdings) Inc. (PIHI), a company wholly owned by Victor Hwang, Primeline's president, chairman and majority shareholder, and pursuant to payment of interest on the new bonds referred to below, and it will issue 2,435,427 new ordinary shares of Primeline to PIHI.

As previously announced, on Nov. 12, 2018, Mr. Hwang loaned Primeline the sum of $9,301,000 (U.S.) ($12,282,901 (Canadian) at the Bank of Canada daily exchange rate for U.S. dollars of 1.3206 as of Nov. 9, 2018) to finance repayment by Primeline of $8-million (U.S.) principal amount tranche B bonds issued to GRF Prime Ltd. (GRF prime) in 2015, which matured on Nov. 12, 2018. The loan was to be secured by the issuance of the new B bonds having the same terms as the tranche B bonds with a deemed issue date of Nov. 12, 2018, subject to receipt of acceptance of the issuance of the new B bonds from the TSX Venture Exchange.

TSX Venture Exchange acceptance has been obtained, and Primeline issued the new B bonds on Jan. 3, 2019, with a deemed issue date of Nov. 12, 2018. The new B bonds are for an initial term of one year, extendable for a further year at the option of the holder. Interest is payable on the new B bonds quarterly on Sept. 15, Dec. 15, March 15 and June 15 of each year of the term at 7 per cent per annum, of which 4.5 per cent is payable in cash and 2.5 per cent in shares issued at a deemed price per share equal to the higher of: (i) the closing price of the shares on the TSX-V on the day before; and (ii) the volume-weighted average trading price of the shares on the TSX-V for the 10 days preceding the interest payment date. On maturity, the new B bonds must be redeemed for their principal amount, together with a premium, which will result in the bondholder receiving interest equal to 10 per cent per annum, less cash interest paid and 50 per cent of the lower of: (a) the aggregate of all share interest paid and (b) the product of: (A) the number of shares actually issued in satisfaction of share interest on or prior to the redemption date; and (B) the arithmetic mean of the volume-weighted average price for one share for the 10 consecutive trading days ending on the trading day immediately prior to the redemption date. The new B bonds are convertible, at the option of the bondholder, at any time during the period commencing four months and a day following the date of issuance up to the date that is 10 days prior to the date of maturity of the new B bonds, into shares at a conversion price of 85 cents per share.

The 2,435,427 shares will be issued to PIHI in payment of the Dec. 15, 2018, instalment of share interest on $11.3-million (U.S.) principal amount 2018 convertible bonds issued on Oct. 3, 2018, and the new B bonds at a deemed price of 4.9 cents per share, the volume-weighted average TSX-V trading price of the shares for the 10 days preceding the interest payment date.

Prior to the issuance of the new B bonds and the interest shares, Mr. Hwang had ownership, directly and indirectly through PIHI, of 67.04 per cent of the issued and outstanding common shares assuming conversion of the new bonds. At the Bank of Canada daily exchange rate for U.S. dollars of 1.3600 as of Jan. 2, 2019, 36,834,286 common shares were issuable upon conversion of the new bonds and the new B bonds, and assuming such conversion, Mr. Hwang had ownership, directly and indirectly through PIHI, and control of 164,777,802 shares, or 69.63 per cent of the issued and outstanding common shares, representing a change in Mr. Hwang's securityholding percentage in the common shares of 2.59 per cent.

Mr. Hwang, through PIHI, will acquire beneficial ownership of further shares as share interest, and may convert new bonds and new B bonds or both, or purchase or sell shares in the market, in the future depending on market conditions and other factors relevant to his investment decisions. Mr. Hwang has no plans or future intentions by himself or with any joint actors, which relate to or would result in: a corporate transaction, such as a merger, reorganization or liquidation, involving Primeline or any of its subsidiaries; a sale or transfer of a material amount of Primeline's assets or those of any of its subsidiaries; a change in the board of directors or management of Primeline, including any plans to change the number or term of directors or fill any existing vacancy on the board; a material change in the present capitalization or dividend policy of Primeline; a material change in Primeline's business or corporate structure; a change in Primeline's articles or another action which might impede the acquisition of control of Primeline by any person or company; any class of Primeline's securities being delisted from the TSX-V; Primeline ceasing to be a reporting issuer in any jurisdiction of Canada; a solicitation of proxies from Primeline's securityholders; or any action similar to those enumerated above.

A copy of Mr. Hwang's early warning report relating to the transactions described above can be obtained from Robin Cook at FronTier Merchant Capital Group.

About Primeline Energy Holdings Inc.

Primeline is an exploration and production company focusing exclusively on China's natural resources to become a major supplier of gas and oil to the east China market. Primeline has a 100-per-cent contractor's interest in, and is the operator of, the petroleum contract with CNOOC for block 33/07 (5,877 square kilometres) and a 49-per-cent interest in the producing LS36-1 gas field in block 25/34, together with CNOOC (51-per-cent interest and acting as operator). Both blocks are located in the East China Sea. LS36-1 has been in production since July, 2014.

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