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Wellstar Energy Corp (3)
Symbol WSE
Shares Issued 16,137,768
Close 2014-11-25 C$ 0.09
Market Cap C$ 1,452,399
Recent Sedar Documents

Wellstar borrows $203,000 from CEO, closes financing

2014-11-27 20:31 ET - News Release

Mr. Andrew Rees reports

WELLSTAR ENERGY ANNOUNCES A LOAN WITH RELATED PARTY AND THE CLOSING OF A PRIVATE PLACEMENT

Wellstar Energy Corp. has issued a promissory note in respect of a loan made to the company by Andrew H. Rees, in the principal amount of $203,000, having a maturity date of 12 months from the date of issuance and bearing interest at a rate of 11 per cent per year, payable on such maturity date. To secure the company's obligations under the note, the company will enter into a general security agreement with the lender in the next 30 days, pursuant to which the company has granted the lender general security up to the principal amount of the loan and over all of its present and future assets. In consideration of establishing the loan, the company will pay the lender a bonus of 1.16 million common share purchase warrants, with each whole warrant exercisable to purchase one common share of the company for a period of five years from the date of issuance, at a price of nine cents. The loan and the granting of warrants to the lender will be subject to the approval of the TSX Venture Exchange.

The lender is a related party of the company pursuant to TSX Venture Exchange policies, as Mr. Rees is president, chief executive officer and director of the company. As such, the transaction constitutes a related party transaction. The company is relying on exemptions from the formal valuation and minority approval requirements that apply to related party transactions.

The loan and the terms of the note were approved by the board of directors of the company, other than Mr. Rees, who declared his interest as the lender and abstained from voting with respect to the loan and the note. The board of directors believes that the loan is in the best interests of the company.

The company is also pleased to announce that it has completed a non-brokered private placement in the total amount of $85,000, consisting of 9-per-cent convertible debenture (CD) units of the company. Each CD unit consists of $1,000 in principal amount of 9-per-cent convertible debentures maturing on Nov. 27, 2019, and that number of common share purchase warrants equal to one-half of the shares issuable upon conversion of $1,000 in principal amount of debentures. The principal and any accrued and unpaid interest under the debentures will be convertible at the holder's option into fully paid, non-assessable common shares of the company at: (i) with respect to principal, a conversion price equal to the greater of 18 cents, or the market price of the company's common shares as defined under the policies of the TSX Venture Exchange; and (ii) with respect to accrued and unpaid interest, at the market price of the company's common shares at the time of settlement. Each CD unit warrant will be exercisable until Nov. 27, 2018, at an exercise price of 25 cents per common share. The debentures and CD unit warrants comprising the CD units, and any underlying common shares, are subject to a hold period expiring on March 28, 2015, pursuant to National Instrument 45-102 and the policies of the TSX Venture Exchange.

Net proceeds from the loan and the offering will be applied toward oil and gas operations and property acquisitions, and for general working capital purposes.

We seek Safe Harbor.

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