C Level II International Holding Inc. (CII) announced details concerning its proposed Qualifying Transaction with Canadian Oil Recovery & Remediation Enterprises Inc. (CORRE).
Further to a Letter Agreement dated September 6, 2007 entered into by and between CII and CORRE, CII agreed to purchase all of the issued and outstanding shares of CORRE in exchange for the issuance to the shareholders of CORRE of an aggregate of 108,679,346 common shares of CII (prior to consolidation) at a deemed price of $0.175 per CII common share, for total consideration of $19,018,885, assuming conversion of the Convertible Debentures and including securities issued pursuant to the Subscription Receipt Financing. The acquisition is expected to occur through the amalgamation of CORRE and 2159864 Ontario Inc., a wholly owned subsidiary of CII, pursuant to which CORRE outstanding securities will be exchanged for equivalent CII securities as further provided herein.
In accordance with the Letter Agreement, CORRE has completed an non-brokered offering of convertible debentures in the aggregate amount of $6,161,000, which shall automatically convert into 8,214,667 common shares of CORRE at a price of $0.75 per common share immediately prior to closing of the acquisition. The convertible debentures mature on July 1, 2010 if not otherwise converted and entitle the holder to an annual coupon payment equal to 7% of the principal amount of the convertible debentures, with such coupon payment accruing and payable every 6 months, commencing on February 1, 2008. The holders of the convertible debentures shall have the option to convert their coupon entitlement into CORRE common shares on the same basis as their conversion rights respecting the principal of the convertible debentures. On February 1, 2008, 144,218 CORRE common shares were issued to holders having exercised their interest conversion right.
Furthermore, in accordance with the Letter Agreement, CORRE has also completed a non-brokered private placement of subscription receipts at a price of $1.00 per Subscription Receipt for gross proceeds of $3,000,000, each such subscription receipt will convert immediately prior to closing of the acquisition into one (1) CORRE unit (the "Unit"), each Unit being comprised of one (1) CORRE common share and one half (1/2) of one CORRE common share purchase warrant, each whole CORRE Warrant entitling its holder to acquire one (1) CORRE common share at a price of $1.25 per share for a period of two (2) years from date of grant. Upon closing of the acquisition, the CORRE Warrants are to be exchanged for 8,571,429 CII warrants which shall have the same terms and conditions as the CORRE Warrants, with the exception of the exercise price which shall be adjusted as per the applicable conversion ratio.
Proceeds from the convertible debenture and subscription receipts financings are expected to be used to complete fabrication and testing of the Apex and OS equipment, to finance CORRE's business objectives as well as general working capital.
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