20:10:59 EDT Tue 11 Aug 2020
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Pacific Arc Resources Ltd (2)
Symbol PAV
Shares Issued 16,343,418
Close 2019-10-02 C$ 0.27
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Pacific Arc signs LOI for RTO by oil exploration outfit

2019-11-05 14:33 ET - News Release

Mr. John MacPhail reports


Pacific Arc Resources Ltd. has entered into a non-binding letter of intent, dated Oct. 28, 2019, with Port Energy Ltd., a British Virgin Islands-based company involved in the oil and gas exploration and production business pursuing the identification and acquisition of oil and gas resources within prolific basins across sub-Saharan Africa. The LOI outlines the proposed terms and conditions pursuant to which the company and Port Energy will effect a business combination that will result in a reverse takeover of the company by the securityholders of Port Energy and the listing for trading of the securities of the resulting issuer on the TSX Venture Exchange. Each share of Port Energy shall be exchanged for common shares of the company based on an exchange ratio, which reflects a value for the company of $3.85-million plus cash on hand and a value of $33-million for Port Energy on a premoney basis (that is prior to completion of the concurrent financing (as defined herein)) .

The proposed transaction is an arm's-length transaction subject to requisite regulatory approval, including the approval of the TSX-V. The parties will prepare a filing statement in accordance with the rules of the TSX-V, outlining the terms of the proposed transaction.

Port Energy holds 90 per cent of the participating interests in a production-sharing contract (PSC) for the Ultra Profound-1 deepwater block (UP-1), a 5,295-square-kilometre area located in ultradeep water in the joint offshore development zone between the republics of Senegal and Guinea-Bissau, and administered by the Management and Cooperation Agency Between Senegal and Guinea-Bissau (AGC). Further details concerning Port Energy, its operations, management and financial status will be provided following completion of due diligence investigations and the negotiation of a definitive agreement in respect of the proposed transaction. Until then, confidentiality provisions preclude the disclosure of certain information concerning Port Energy.

The proposed transaction

The proposed transaction will be structured as an amalgamation, arrangement, takeover bid, share purchase or other similar form of transaction, or a series of transactions determined by the legal and tax advisers to each of Pacific Arc and Port Energy. The final structure for the proposed transaction will be determined after Pacific Arc and Port Energy have considered all applicable tax, securities law and accounting considerations.

Completion of the proposed transaction is subject to a number of conditions, including the negotiation and signing of a definitive agreement, receipt of all necessary securityholder and regulatory approvals, including the approval of the TSX-V, and completion of the concurrent financing (as defined herein).

In connection with the proposed transaction, the company and Port Energy will be required to, among other things:

  1. Complete an equity financing of a minimum of $4-million and a maximum of $7-million concurrently with the completion of the proposed transaction;
  2. Replace the directors and officers of the company on closing of the proposed transaction with nominees of Port Energy and two board nominees of the company.

Upon successful completion of the proposed transaction, the resulting issuer will carry on the business currently carried on by Port Energy. There can be no guarantees that the proposed transaction will be completed as proposed or at all.

The shares of the company will remain halted until all necessary filings have been accepted by applicable regulatory authorities. Unless the proposed transaction fails to close, the company does not expect the shares of the company to resume trading again until the listing has been accepted by the TSX-V.

Further comprehensive information regarding the proposed transaction will be provided in a future press release at such time the parties execute a definitive agreement.

Trading halt

Trading in the Pacific Arc common shares has been voluntarily halted and may remain halted pending the review of the proposed transaction by the TSX-V. There can be no assurance that trading in the Pacific Arc common shares will resume prior to the completion of the proposed transaction.


Sponsorship of the proposed transaction is required unless an exemption is available or a waiver from this requirement can be obtained in accordance with the policies of the TSX-V. Pacific Arc intends to apply for a waiver to the sponsorship requirement. There is no assurance that a waiver from this requirement will be granted.

Significant conditions to completion of the proposed transaction

Completion of the proposed transaction is subject to a number of conditions, including, but not limited to: (a) closing conditions customary to transactions of the nature of the proposed transaction; (b) approvals of all regulatory bodies having jurisdiction in connection with the proposed transaction; (c) TSX-V regulatory approval; and (d) the completion of the concurrent financing for a minimum amount of $4-million.

There can be no assurance that the proposed transaction will be completed as proposed or at all.

Bridge financing

Pacific Arc, subject to TSX-V approval, is proceeding with a non-brokered private placement of up to 2,023,809 common shares at a price, as per regulatory guidelines, of 21 cents per share for gross proceeds of up to $425,000.

The shares issued under the private placement will be subject to a four-month hold period from the date of closing. Since the pricing of the concurrent financing has not been determined, the TSX-V may apply additional escrow conditions to the shares issued under the private placement.

Net proceeds from the private placement will be used to finance costs, such as legal, audit, technical consultants' fees and other due diligence costs, associated with proceeding to completion of the reverse takeover.

An insider of the company may acquire shares under the private placement. Any such participation would be considered to be a related party transaction as defined under Multilateral Instrument 61-101. The transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of any shares issued to nor the consideration paid by such person will exceed 25 per cent of the company's market capitalization.

We seek Safe Harbor.

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