Doxa Energy to acquire ProStar as QT
DOXA ENERGY Ltd. and ProStar Geocorp Inc. have entered into a binding letter agreement dated Oct. 26, 2018, whereby Doxa will acquire all of the issued and outstanding securities of ProStar.
Upon successful completion of the proposed acquisition, it is anticipated that the company will be listed as a Tier 2 technology issuer on the TSX Venture Exchange and will carry on the business of ProStar. The transaction constitutes a reverse takeover of the company.
Pursuant to the transaction, the company will issue common shares to the holders of common shares in the capital of ProStar on the basis of approximately four postconsolidation Doxa shares for each ProStar share. It is anticipated that approximately 59.3 million Doxa shares will be issued pursuant to the transaction. It is a condition to the closing of the transaction that the ProStar shareholders will hold at least 80.01 per cent of the issued and outstanding Doxa shares on completion of the transaction, but prior to the completion of a concurrent financing.
The transaction is an arm’s-length transaction. Upon the completion of the transaction, it is expected that ProStar will become a wholly owned subsidiary of the company.
ProStar will complete a pretransaction private placement through the issuance of not more than 3.5 million ProStar shares and will settle a portion of its existing debt through the issuance of not more than 2.4 million ProStar shares.
Information concerning ProStar
ProStar is incorporated under the laws of the State of Delaware and is a software-as-a-service (SaaS) company that provides patented Geospatial Intelligence Software. ProStar’s flagship solution is Transparent Earth, a natively cloud and mobile solution designed to capture, record and display the precise location of subsurface assets, including buried utilities and pipelines.
Management and board of directors of resulting issuer
With the exception of Paul McKenzie, all of the current members of the company’s board of directors will resign and the following individuals will be appointed as management and directors of the resulting issuer:
• Page Tucker, chief executive officer and director;
• Paul McKenzie, director;
• Herb McKim, chairman and director;
• Jonathan Richards, chief financial officer and director.
The completion of the transaction is subject to the completion by the company of a consolidation of its share capital on a one-new-for-17old basis.
The parties to the transaction have agreed that prior to or concurrently with the closing of the transaction, t he company will settle approximately $3,490,396 in debt (including accrued and unpaid interest to Sept. 30, 2018) owed collectively to Armada Investments Ltd. (a company owned and controlled by chairman and director G. Arnold Armstrong) and Harvco LLC (a company owned and controlled by president and chief executive officer John Harvison) through the issuance of 218,149,750 preconsolidation Doxa shares at a price of 1.6 cents per preconsolidation Doxa share.
The debt settlements will result in the creation of a new control position to be held by Harvco LLC, which will be issued 49,579,486 preconsolidation Doxa shares, representing 21 per cent of the company, prior to the completion of the transaction and any private placement. The debt settlements are also related party transactions as defined under Multilateral Instrument 61101.
It is a condition of the transaction that the company completes a private placement of up to 10 million postconsolidation Doxa shares or units at a price of 50 cents per postconsolidation Doxa share. Additional details concerning the private placement will be provided in a subsequent press release.
The company intends to use the net proceeds of the private placement to finance the transaction, to develop the business of the resulting issuer and for working capital and general corporate purposes.
Disposition of oil and gas assets
At or prior to the closing of the transaction, the company will dispose of its existing oil and gas interests and related equipment in assets through the sale of its U.S. subsidiary to Dynamic Production LLC, a company controlled by Mr. Harvison, at their fair market value. As a condition of the disposition, the company will be released from the outstanding revolving secured credit facility with UMB Financial Corp., of which $153,333 (U.S.) is currently outstanding and matures on June 1, 2019, and accounts payable due to Dynamic, of which $1,729,844 (U.S.) is currently outstanding. As it is expected that the fair market value of the oil and gas assets is less than the outstanding balance of the credit facility, the disposition will not result in any payments to the company.
Approval for the consolidation, debt settlements and disposition will be sought from the company’s shareholders at its annual and special general meeting to be held on Dec. 12, 2018. The company does not anticipate seeking shareholder approval for the transaction.
Upon completion of the transaction, the company intends to
change its name to ProStar Holdings Inc. or such other name as ProStar and the company may determine, and the parties expect that the TSX-V will assign a new trading symbol for the resulting issuer.
We seek Safe Harbor.
Erika Flores condensed this news release (firstname.lastname@example.org).
George Arnold Armstrong, John Mark Bronson, Daniel J Frederiksen, Gerald H Graham, John D Harvison, Paul T McKenzie, Jonathon G Weiss
(DXA) Shares: 33,980,141