The number of Common Shares to be issued will be based upon the net asset value ("NAV") of Pyramid and Capco, determined by, among other factors, the discounted NAV of the oil and gas reserves of each company. An independent committee will select an independent third party appraiser to provide a fairness opinion on the transaction. Both companies have agreed to abide by the results of this opinion. The completion of this business combination will be subject to all necessary documentation, due diligence, and regulatory and shareholder approvals.
Capco is currently trading on the pink sheets in the US, but has not filed current financial information with the appropriate regulatory authorities. It anticipates that financial statements for the period ending December 31, 2006 and March 31, 2007 will be completed and filed within two to three months. A follow-up press release will be issued at that time. Capco's reserve report as of December 31, 2006 is not prepared in accordance with NI 51-101 guidelines and such evaluation is being conducted currently and the results will be announced in a follow-up press release.
Due diligence by both parties is ongoing, and this transaction will be subject to disinterested shareholder approval and review by the TSX Venture Exchange. There is no assurance that the Exchange will accept the proposed transaction, the disinterested shareholders will approve it, or that both companies will be satisfied with their due diligence results.
Mr. Ilyas Chaudhary, the majority shareholder in both companies, as well as being the CEO of both companies, will not participate in the selection of the third party appraiser for the transaction, nor will he vote on any issue concerning this transaction. No other Capco directors have been identified at this time to join the board of Pyramid.
Following the acquisition, Pyramid expects to raise funds to expand the oil and gas production of the combined company, mainly in the Gulf of Mexico, focusing on low-risk producing opportunities.
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