Mr. J. Frank Callaghan reports
LIONS GATE ENERGY INC. ANNOUNCES A PROPOSED SHARE CONSOLIDATION,
SHARES-FOR-DEBT TRANSACTION AND ADVANCED NOTICE PROVISIONS
Lions Gate Energy Inc. proposes to consolidate its share capital on a one-new-share-for-six-old-share basis. The company will seek the approval of its shareholders at its annual general meeting
to be held on Dec. 15, 2014. The proposed consolidation will be undertaken after
shareholder approval has been received. As at the record date, the authorized share capital of the
company consists of an unlimited number of common shares, of which
29,334,752 are issued and outstanding. If the consolidation is approved and implemented, the company
would have approximately 4,889,125 issued and outstanding common shares. The company anticipates
that it will change its name and stock symbol upon completion of the proposed consolidation. The board
of directors of the company believes that an amendment to the company's share structure
will be favourable to assist in attracting additional equity investment in the company and possible property
acquisitions. The consolidation is subject to receipt of all necessary regulatory approvals, including TSX
Venture Exchange, as well as shareholder approval, with respect to the proposed
consolidation.
Shares-for-debt transaction
The company also announces that it proposes to enter into debt settlement agreements with certain of its
creditors pursuant to which the company will issue an aggregate of up to 2,734,542 common shares at a
deemed price of 18 cents (as at today's date) per common share (subject to further adjustment in
accordance with exchange policies). The company`s choice to settle outstanding indebtedness with
common shares is part of its plans to move the company forward and to preserve its funds for
operations. The issuance of common shares is subject to the approval by the exchange and subject to a
four-month hold period. The company would issue the common shares once the issuance has been
approved by the exchange.
As a result of the debt settlement, J. Frank Callaghan, president and chief executive officer of
the company, and Standard Drilling & Engineering Ltd., a company wholly
owned by Mr. Callaghan, will receive approximately up to $492,217.58 in common shares, which
represent amounts owed by the company to Mr. Callaghan in management consulting fees, outstanding
cash advances and accounts payable to Standard Drilling. The issuance of the common shares would
result in Mr. Callaghan, directly or indirectly, beneficially owning or controlling more than 20 per cent of the
outstanding common shares and becoming a new control person as defined by the policies of the
exchange. Assuming up to 2,734,542 common shares are issued to Mr. Callaghan, Mr. Callaghan's
common shares position would be up to 47.48 per cent on an undiluted basis and up to 64.42 per cent on a diluted
basis. As such, the debt settlement transaction is subject to receipt of disinterested shareholder approval
and approval by the exchange. The common shares issuable pursuant to the debt settlement transaction
will be subject to a four-month hold period.
The company is also seeking to negotiate debt settlement arrangements with other creditors, the total
amount of which is yet to be determined. A further news release with more additional information will be
issued upon exchange approval.
Advance notice provisions
The company also announces that it proposing the amendment of the company's articles to implement
advance notice provisions for the nomination of directors. The
purpose of the advance notice provisions is to provide shareholders, directors and management of Lions
Gate with a clear framework for nominating directors of the company. Lions Gate is committed to:
- Facilitating an orderly and efficient annual general or, where the need arises, special meeting process;
- Ensuring that all shareholders receive adequate notice of the director nominations and sufficient
information regarding all director nominees;
- Allowing shareholders to register an informed vote
after having been afforded reasonable time for appropriate deliberation.
The advance notice provisions
are intended to further these objectives.
The advance notice provisions, among other things, include a provision that requires advance notice to
the company in certain circumstances where nominations of persons for election to the board are made
by shareholders of the company. The advance notice provisions fix a deadline by which director
nominations must be submitted to the company prior to any annual or special meeting of shareholders
and set forth the information that must be included in the notice to the company. No person will be
eligible for election as a director of Lions Gate unless nominated in accordance with the advance notice
provisions. In the case of an annual meeting of shareholders, notice to the company must be made not
fewer than 30 days and not more than 65 days prior to the date of the annual meeting, provided, however,
that, in the event that the annual meeting is to be held on a date that is fewer than 50 days after the date on
which the first public announcement of the date of the annual meeting was made, notice may be made not
later than the close of business on the 10th day following such public announcement. In the case of a
special meeting of shareholders called for the purpose of electing directors (whether or not called for
other purposes), notice to the company must be made not later than the close of business on the 15th day
following the day on which the first public announcement of the date of the special meeting was made.
The advance notice provisions will be effective upon confirmation by the company's shareholders and
are subject to receipt of exchange approval. The company will ask its shareholders to pass an ordinary
resolution to confirm the alteration of the company's articles at its coming annual general meeting
on Dec. 15, 2014. In the event the company's shareholders do not confirm the addition of the
advance notice provisions to the company's articles, the company's articles will remain unchanged.
We seek Safe Harbor.
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