L.G.R. Resources Ltd. has now entered into a definitive agreement with Stream Oil & Gas Ltd. for the acquisition, by way of share exchange, of all the issued and outstanding shares of Stream as previously announced on June 19, August 16 and December 27, 2007 (the "Business Combination").
The Agreement provides that the Company will purchase from the shareholders of Stream all of the issued and outstanding shares in the capital of Stream, being a total of 33,278,010 shares (the "Stream Shares"), on the basis of one post-consolidated common share of the Company (a "New LGR Share") for every one Stream Share.
It is also a requirement of the Agreement that prior to closing the Company effect the cancellation of 15,000,000 pre-consolidated escrowed shares of the Company (the "Escrow Cancellation") and consolidate its issued capital on a four old shares for one new share basis (the "Consolidation"). There are currently 36,609,325 common shares of the Company outstanding, of which approximately 5,402,331 post-consolidated shares will be issued following the Escrow Cancellation and Consolidation. After giving effect to the issuance of 33,278,010 New LGR Shares to the shareholders of Stream in exchange for the Stream Shares pursuant to the Business Combination there will be approximately 38,680,341 post-consolidated shares of the Company outstanding.
In addition, the Company has agreed to issue new warrants ("LGR Warrants") to the holders of existing Stream warrants (the "Stream Warrants") entitling such holders to acquire an equal number of New LGR Shares at the same prices as the existing Stream Warrants. The Company is advised by Stream that there are rights under currently outstanding Stream Warrants to purchase up to a total of 5,380,705 Stream Shares at prices of $1.50 and $1.75 per share on or before August 9, 2009.
The Company has also agreed to loan up to US$1,000,000 to Stream (the "Stream Loan") to fund, among other things, the evaluation and development of Stream's oil and gas properties and for general working capital purposes. The Stream Loan will bear interest at 10% per annum and be repayable within one year from the date of funding, unless the Business Combination is not completed in which event the Stream Loan will be repayable on terms to be negotiated between the Company and Stream prior to funding.
Upon closing of the Agreement, all but one of the four existing directors and officers of the Company will resign and be replaced by representatives of Stream although it is anticipated that each such director and officer will continue with the Company in a consulting role and receive a two year stock option to purchase up to 100,000 New LGR Shares at a price of $1.50 per share. The name of the Company will also be changed to a name designated by Stream.
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