Pulse Oil Corp. Announces Rights Offering and Standby Commitment of $1,500,000
Not for distribution to United States newswire services or for dissemination in the United States.
CALGARY, Alberta, March 26, 2021 (GLOBE NEWSWIRE) — Pulse Oil Corp. (Pulse or “Pulse“) (TSXV: PUL) announced that it will be issuing rights (the “Rights Offering“) to holders of its common shares (“Common Shares“) of record at the close of business on April 6, 2021 (the “Record Date”) to shareholders in Eligible Jurisdictions. Pursuant to the Rights Offering, each holder of Common Shares (a “Shareholder”) will receive one (1) transferable right (each, a “Right”) for each Common Share held as of the Record Date. One (1) Right will entitle the holder thereof to subscribe for one (1) Common Share at a subscription price of $0.01 per Common Share (the “Basic Subscription Privilege”) until 5:00 p.m. (Toronto time) (the “Expiry Time”) on April 30, 2021. Assuming the exercise of all Rights, the Rights Offering will raise gross proceeds of $1,515,924.
The Rights will be issued to Shareholders resident in each province and territory of Canada (the “Eligible Jurisdictions”) and Shareholders resident outside of the Eligible Jurisdictions who have satisfied Pulse as to their ability to legally receive the Rights. Accordingly, and subject to the detailed provisions of the right offering circular dated March 26, 2021 (the “Circular”), Rights DRS advice statements (“Rights DRS”) will not be mailed to Shareholders resident outside of the Eligible Jurisdictions, unless such Shareholders are able to establish to the satisfaction of Pulse, on or before April 19, 2021, that they are eligible to participate in the Rights Offering. Shareholders who fully exercise their Rights will be entitled to subscribe pro rata for Common Shares (the “Additional Shares”) not otherwise subscribed for by other holders of Rights prior to the expiry time, if any, pursuant to the Basic Subscription Privilege (the “Additional Subscription Privilege”).
Neither the Rights being offered or the Common Shares issuable upon exercise of the Rights have been or will be registered under the United States Securities Act of 1933, as amended, and may not be exercised, offered or sold, as applicable, in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy Common Shares. There shall be no offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of such securities under the laws of any such jurisdiction.
Standby Commitment Agreement
In connection with the Rights Offering, Pulse has entered into a standby commitment agreement (the “Standby Commitment Agreement“) with Patrick Harrison (the “Standby Purchaser“), an insider of Pulse currently owning 16.02% of Pulse’s Common Shares. The Standby Purchaser has agreed, subject to certain terms and conditions, to exercise his Basic Subscription Privilege in respect of any Rights he holds, and, in addition thereto, acquire any additional Common Shares available as a result of any unexercised Rights under the Rights Offering (the “Standby Commitment“), such that Pulse will, subject to the terms of the Standby Commitment Agreement, be guaranteed to issue 150,000,000 Common Shares in connection with the Rights Offering for aggregate gross proceeds of $1,500,000. The Standby Commitment has been approved by the independent directors of the Company. As consideration for the Standby Commitment, the Company has agreed to issue 37,500,000 bonus warrants (the “Standby Commitment Warrants”) to the Standby Purchaser (being 25% of the amount of the Standby Commitment). Each Standby Commitment Warrant will be exercisable for sixty (60) months from the date of issuance into one Common Share at a price of $0.05 per share.
The Standby Purchaser is a “related party” of Pulse under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“) because the Standby Purchaser exercises control and direction over more than 10% of the issued and outstanding Common Shares. The Rights Offering is not subject to the related party rules under MI 61-101 based on a prescribed exception related to rights offerings.
Early Warning Disclosure
Patrick Harrison is providing the following additional information pursuant to the early warning requirements of applicable Canadian securities laws:
Prior to the entering into of the Standby Commitment Agreement, Patrick Harrison beneficially owned an aggregate of 24,285,714 Common Shares, representing approximately 16.02% of the issued and outstanding Common Shares. Assuming none of the holders of Rights (other than Patrick Harrison) take up their Basic Subscription Privilege and the Standby Purchaser provides its Standby Commitment in full, Patrick Harrison would acquire an aggregate of 150,000,000 Common Shares, in connection with the Rights Offering and 37,500,000 Share Purchase Warrants in connection with the Standby Commitment. Following closing of the Rights Offering, Patrick Harrison would beneficially own an aggregate of 174,285,714 Common Shares, which would represent approximately 57.79% of the issued and outstanding Common Shares, an increase in Patrick Harrison’s shareholding percentage of approximately 41.77%. In addition, if Patrick Harrison exercises his Share Purchase Warrants, he would own 211,785,714 Common Shares or approximately 62.46% of the issued and outstanding Common Shares.
The Common Shares will be acquired for investment purposes. Patrick Harrison may from time to time acquire additional securities of Pulse, dispose of some or all of the existing or additional securities of Pulse, or may continue to hold the same number of securities of Pulse.
Pulse understands that certain directors and officers of Pulse who own Common Shares intend to exercise their rights to purchase Common Shares under the Rights Offering.
Pulse currently has 151,592,357 Common Shares issued and outstanding. If all Rights issued under the Rights Offering are validly exercised, an additional 151,592,357 Common Shares would be issued along with another 37,500,000 if the Share Purchase Warrants are subsequently exercised.
The net proceeds from the Rights Offering will be used for capital expenditures to grow production and cashflow by reactivating existing wells within Pulse’s 100% interests in the Bigoray and Queenstown areas, to pay agreed settlements related to outstanding vendor payables and for general corporate purposes. The Rights Offering is subject to receipt of final approval of the TSX Venture Exchange (the “TSXV”).
The Rights will be listed and posted for trading on the TSXV under the symbol “PUL.RT” on a “when issued” basis commencing on April 5, 2021 and will cease trading at 12:00 p.m. (Toronto time) on April 30, 2021.
Complete details of the Rights Offering are set out in the Circular and the rights offering notice (the “Notice”), which are filed under Pulse’s profile at www.sedar.com. Registered Shareholders who wish to exercise their Rights must complete and forward the Rights DRS, together with applicable funds, to Computershare Investor Services Inc., the depositary for the Rights Offering, on or before the Expiry Time of the Rights Offering. Shareholders who own their Common Shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary.
Pulse CEO, Garth Johnson commented, “This is a big step forward for Pulse. We’ve had to persevere through financing uncertainty, Covid-19 and a significant drop in commodity prices. Our team had to cut costs, re-group and take a serious look at our options to continue as a going-concern. We believe in our people and our producing assets and we chose to do our best to work hard and persevere. Today’s announcement is a positive step forward and with the proceeds of this financing, we will invest in reactivating oil and gas production, increase cashflow, honour agreements with vendors that we have negotiated with to settle their accounts and strengthen our balance sheet. We have worked hard to find the best way forward and to limit dilution to our shareholders via this Rights Offering and we appreciate our shareholders’ support during what has been the most challenging time we have experienced in this industry to date. We are all looking forward to getting back to creating value, not just trying to survive another day. I also would like to thank our small team of employees, consultants, contractors and vendors who have stuck with us through these unprecedented times.”
Pulse is a Canadian company incorporated under the Business Corporations Act (Alberta) that is focused on a 100% Working Interest Enhanced Oil Project Located in West Central Alberta, Canada. The project includes two established Nisku pinnacle reef reservoirs that have been producing sweet light crude oil for over 40 years. The Company plans to institute a proven recovery methodology (NGL solvent injection) to further enhance the ultimate oil recovery from these two proven pools. With under 10 million barrels of oil recovered to date, and representing just 35% recovery factor from the pools, Pulse is moving forward to execute the EOR project and unlock significant value for shareholders.
Neither the 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.
For further information contact:
Pulse Oil Corp.
President and COO
Forward Looking Statements:
This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein are forward-looking information. In particular, this news release contains forward-looking information regarding but not limited to: the Rights Offering, the Standby Commitment, the potential outstanding Common Shares after the Rights Offering, and the planned use of proceeds. There can be no assurance that such forward-looking information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such forward-looking information. This forward-looking information reflects Pulse’s current beliefs and is based on information currently available to Pulse and on assumptions Pulse believes are reasonable. These assumptions include, but are not limited to: the underlying value of Pulse and its Common Shares; market acceptance of the Rights Offering; TSXV final approval of the Rights Offering; Pulse’s general and administrative costs remaining constant; and the market acceptance of Pulse’s business strategy. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Pulse to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic, competitive, political and social uncertainties; general capital market conditions and market prices for securities; delay or failure to receive board or regulatory approvals; the actual results of future operations; competition; changes in legislation, including environmental legislation, affecting Pulse; the timing and availability of external financing on acceptable terms; and loss of key individuals. A description of additional risk factors that may cause actual results to differ materially from forward-looking information can be found in Pulse’s disclosure documents on the SEDAR website at www.sedar.com. Although Pulse has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Forward-looking information contained in this news release is expressly qualified by this cautionary statement. The forward-looking information contained in this news release represents the expectations of Pulse as of the date of this news release and, accordingly, is subject to change after such date. However, Pulse expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.