FOR: US OIL SANDS INC.
TSX VENTURE SYMBOL: USO
Date issue: June 13, 2017
Time in: 2:25 PM e
Attention:
CALGARY, ALBERTA–(Marketwired – June 13, 2017) – US Oil Sands Inc. (“US Oil
Sands” or the “Company”) (TSX VENTURE:USO), an innovator of oil extraction
technologies, announces that it has entered into a non-binding letter of intent
with ACMO S.a R.L. (“ACMO”), the Company’s largest shareholder, for a US$5
million senior secured convertible loan facility (the “Loan Facility”) to fund
the remaining PR Spring Project (the “Project”) start-up costs and to provide
working capital for the Company (the “Financing”).
In conjunction with the Financing, the Company will be seeking to obtain from a
majority of disinterested shareholders written consent for the Financing and
the delisting of the common shares of the Company from the TSX Venture Exchange
(the “Exchange”). If a majority of disinterested shareholders do not provide
their consent in a timely manner, the Board will likely approve seeking
creditor protection as management and the Board of Directors believe that the
Company has exhausted all other financing alternatives. The Board and
management expect that under any such creditor protection proceedings, the
shareholders of US Oil Sands would experience greater dilution than under the
terms contemplated by the Financing and it is possible that all existing equity
holdings in the Company may be extinguished.
FINANCING
The Loan Facility consists of US$2.5 million available on closing and a further
US$2.5 million available upon the Project producing 500 barrels per day of oil
for five consecutive days. The Loan Facility will rank pari passu with the
Company’s US$7.5 million loan (the “Existing Loan”), will not bear any interest
and will mature 10 years from the closing date. At any time between the closing
date and maturity, the Loan Facility may be convertible into that number of
common shares of the Company that provides ACMO with 90% of the Company’s fully
diluted common shares outstanding when combined with its existing share
holdings. ACMO currently holds 31% of the Company’s common shares and 58% on a
fully diluted basis when including the 24 million warrants issued in connection
with the January 2017 financing transaction. Pursuant to the Loan Facility
transaction, ACMO will cancel the aforementioned 24 million warrants.
The policies of the Exchange do not permit the completion of the Loan Facility
on the terms currently contemplated due to, among other things, the conversion
rights attached to the Loan Facility. Therefore, the Company is seeking the
consent of a majority of disinterested shareholders to a voluntary delisting of
the common shares from the Exchange in order to proceed with the Loan Facility.
In conjunction with the Financing, the Existing Loan will be amended so that
its repayment date will be extended to January 12, 2019, interest payable in
respect of the Existing Loan will be reduced to zero percent per annum and all
accrued and unpaid interest will be forgiven.
Upon closing, the Company will reconstitute its Board of Directors such that
the number of directors will decrease from five to three, each of which will be
nominees of ACMO.
Completion of the Financing is subject to negotiation of definitive agreements
which will require final Board approval and satisfaction of the conditions
therein.
WRITTEN CONSENTS
Application will be made to the Exchange to delist the Company’s common shares
from trading on the Exchange subject to obtaining written consents from a
majority of disinterested shareholders. ACMO is the only shareholder who has an
interest in the Financing and will be excluded from providing consent for
purposes of satisfying this condition. The Company has prepared a form of
shareholder consent letter and will be contacting shareholders to obtain their
written consent. To obtain the form of consent or if shareholders have any
questions relating to the Financing or the delisting, shareholders are
encouraged to immediately contact the Company as follows:
/T/
—————————————————————————-
Cameron Todd, Chief cameron.todd@usoilsandsinc.com 1 403 233 9366 ext. 21
Executive Officer
—————————————————————————-
Glen Snarr, glen.snarr@usoilsandsinc.com 1 403 233 9366 ext. 24
President & Chief
Financial Officer
—————————————————————————-
Jack Copping, jack.copping@usoilsandsinc.com 1 403 233 9366 ext. 27
Manager, Corporate
Development
—————————————————————————-
/T/
The Company asks that shareholders deliver their written consent to Glen Snarr
by email at glen.snarr@usoilsandsinc.com or by fax at 587-353-5373, preferably
no later than Friday June 16, 2017, at which time the Board of Directors will
assess the level of shareholder support for the Financing and its alternative
course of action to apply for creditor protection.
In the event that the Company delists from the Exchange, the Company will
continue to be a reporting issuer under Canadian securities laws and will
remain subject to Canadian continuous disclosure requirements. It is the
Company’s understanding that, following the Exchange’s bulletin notice to
delist, the Exchange will keep the trading of the common shares of the Company
open for a short period of time, after which time such shares would not be able
to be traded on the Exchange. The Company would seek to develop a grey market
or another mechanism to facilitate trading of its shares.
PR SPRING PROJECT UPDATE
This past week for the first time, the Company introduced oil sands into the PR
Spring extraction plant, as the damaged decanting centrifuge has been repaired,
replaced and tested. The plant is now in the final stage of start-up and
working through normal start-up issues and challenges.
ABOUT US OIL SANDS INC.
US Oil Sands is engaged in the exploration and development of oil sands
properties and, through its wholly owned United States subsidiary US Oil Sands
(Utah) Inc., has a 100% interest in bitumen leases covering 32,005 acres of
land in Utah’s Uinta Basin. The Company plans to develop its oil sands
properties using its proprietary extraction process which uses a bio-solvent to
extract bitumen from oil sands without the need for tailings ponds. The Company
is in the pre-production stage, anticipating the commencement of bitumen
production and sales once it has completed start-up of the Project.
The foregoing contains forward-looking information relating to the future
performance of the Company including expectations relating to the completion of
start-up procedures and expectations relating to the delisting of the common
shares of the Company from the Exchange, completion of the Financing and the
potential impact to the Company if the Financing is not completed, the
likelihood of the Company proceeding with creditor protection proceedings if
the required written consent from shareholders is not obtained in a timely
manner and possible impact of such proceedings on shareholders and the
development of grey market trading following delisting. Forward looking
information is subject to a number of known and unknown risks, uncertainties
and other factors that may cause actual results to differ materially from those
anticipated in our forward-looking statements. Such risks and other factors
include, among others, the ability of the Company to obtain the necessary
consents from shareholders and approval from the Exchange, the ability of the
Company to negotiate definitive documentation in respect of the Loan Facility
and meet the conditions thereunder, the sufficiency of demand and interest to
enable the Company to facilitate trading in the Company’s common shares
following delisting, the actual results of exploration activities, changes in
world commodity markets or equity markets, the risks of the petroleum industry
including, without limitation, those associated with the environment, delays in
obtaining governmental approvals, permits or financing or in the completion of
development or construction activities, title disputes, change in government
and changes to regulations affecting the oil and gas industry, and other risks
and uncertainties detailed from time to time in the Company’s filings with
Canadian securities regulatory authorities (available at www.SEDAR.com).
Forward-looking statements are made based on various assumptions and on
management’s beliefs, estimates and opinions on the date the statements are
made.
Should one or more of these risks and uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in the forward-looking information contained herein. The
Company undertakes no obligation to update forward-looking statements if these
assumptions, beliefs, estimates and opinions or other circumstances should
change, except as required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
– END RELEASE – 13/06/2017
For further information:
US Oil Sands Inc.
Cameron Todd
CEO
+1 403 233 9366
OR
US Oil Sands Inc.
Glen Snarr
President & CFO
+1 403 233 9366
info@usoilsandsinc.com
OR
Investor Relations: US Oil Sands Inc.
Jack Copping
Manager, Corporate Development
+1 403 233 9366 ext. 27
jack.copping@usoilsandsinc.com
www.usoilsandsinc.com
COMPANY:
FOR: US OIL SANDS INC.
TSX VENTURE SYMBOL: USO
INDUSTRY: Energy and Utilities – Oil and Gas
RELEASE ID: 20170613CC0071
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