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Zara Resources settles $483,808 debt with shares

2014-11-27 09:53 ET - News Release

Mr. Daniel Wettreich reports

ZARA CONVERTS DEBT TO COMMON SHARES

Zara Resources Inc. has settled indebtedness owing to four different parties in the total amount of $483,808 by the issuance of a total of 9,676,160 common shares at five cents per common share. No commission is payable in relation to the debt conversion. The common shares are subject to a hold period of four months and a day. The total amount of Zara shares issued and outstanding is now 42,294,760.

Of the indebtedness, $160,104 was due to Sammiri Capital Inc., a private company owned by Daniel Wettreich, a director and chief executive officer of Zara. Immediately after the transaction and including the shares held by Sammiri, Mr. Wettreich holds, directly and indirectly, a total of 26,854,182 common shares of the company, representing approximately 63.49 per cent of the company's issued and outstanding common shares.

Of the indebtedness, $56,500 was due to Vista Gold Resources Inc., a private company owned by Sethu Raman, a director of Zara. Immediately after the transaction and including the shares held by Vista, Mr. Raman holds, directly and indirectly, a total of 1,963,333 common shares of the company, representing approximately 4.64 per cent of the company's issued and outstanding common shares.

The participation by Mr. Wettreich and Mr. Raman in the debt conversion is considered to be a related party transaction, as defined in Multilateral Instrument 61-101, Protection of Minority Securityholders in Special Transactions. A special committee consisting of independent directors established by the board of directors determined the related party transaction is fair and reasonable in the circumstances to the company. The company has relied on Section 5.5(b) and Section 5.5(c) of MI 61-101 for an exemption from the formal valuation requirement, and Section 5.7(b) of MI 61-101 for an exemption from the minority shareholder approval requirements. A material change report in respect of the related party transaction will not be filed at least 21 days in advance of the closing of the debt conversion due to the company's immediate need to address its financial situation, which omission is both reasonable and fair in the circumstances. MI 61-101 requires if a material change report is filed less than 21 days before the expected date of the closing of the transaction, an explanation is to be provided as to why the shorter period is reasonable or necessary in the circumstances.

We seek Safe Harbor.

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