Mr. Kelly Kimbley reports
PETROFRONTIER ANNOUNCES CLOSING OF CREDIT FACILITY
Petrofrontier Corp. has closed the credit facility announced on April 30, 2018. On April 27, 2018, the company signed a term sheet with a corporation wholly owned by Al Kroontje, a director of the company, which will provide for a credit facility of up to $1.5-million. The advances under the credit facility will bear interest at 8 per cent per annum payable monthly and are secured by a general security agreement with the minimum advance being $500,000. The lender will also be paid a structuring fee equal to 2 per cent of the amount of any advance under the credit facility, with a minimum structuring fee of $10,000 payable.
The lender will have the option to convert the advances under the credit facility into common shares of the company. The conversion price per common share shall be: (i) eight cents for the first year of the term of the loan; and (ii) 10 cents for the second year of the term of the loan.
The credit facility will mature two years from the date of closing. Proceeds from the credit facility will be used for working capital purposes and capital expenditures.
Related-party participation in the private placement
The aggregate credit facility is being made available to the corporation by a director of the company, which is deemed to be a related-party transaction as defined under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions).
Neither the company, nor, to the knowledge of the company after reasonable inquiry, a related party, has knowledge of any material information concerning the company or its securities that has not been generally disclosed.
The offering is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to subsections 5.5(c) and 5.7(1)(b) as it was a distribution of securities for cash and neither the fair market value of the securities distributed to, nor the consideration received from, interested parties exceeded $2.5-million.
The company did not file a material change report more than 21 days before the expected closing of the credit facility because the details of the participation therein by related parties of the company were not settled until shortly prior to closing of the credit facility and the company wished to close on an expedited basis for business reasons.
About Petrofrontier Corp.
Petrofrontier is a junior energy company currently focused on developing two Mannville heavy oil plays in the Cold Lake and Wabasca areas of Alberta.
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