Vancouver, B.C. / ACCESSWIRE / November 27, 2014 / WELLSTAR ENERGY CORP. (TSX-V: WSE) (the "Company") wishes to announce that it has issued a promissory note (the "Note") in respect of a loan (the "Loan") made to the Company by Andrew H. Rees (the "Lender"), in the principal amount of $203,000 having a maturity date of 12 months from the date of issuance and bearing interest at a rate of 11% per annum payable on such maturity date. To secure the Company's obligations under the Note, the Company will enter into a general security agreement with the Lender in the next 30 days, pursuant to which the Company has granted the Lender general security up to the principal amount of the Loan and over all of its present and future assets. In consideration of establishing the Loan, the Company will pay the Lender a bonus of 1,160,000 common share purchase warrants (the "Warrants"), with each whole Warrant exercisable to purchase one common share of the Company for a period of five years from the date of issuance, at a price of $0.09. The Loan and the granting of Warrants to the Lender will be subject to the approval of the TSX Venture Exchange.
The Lender is a "Related Party" of the Company pursuant to the TSX Venture Exchange policies, as Mr. Rees is the President, Chief Executive Officer and director of the Company. As such the transaction constitutes a "Related Party Transaction". The Company is relying on exemptions from the formal valuation and minority approval requirements that apply to Related Party Transactions.
The Loan, and the terms of the Note were approved by the board of directors of the Company, other than Mr. Rees, declared his interest as the Lender and has abstained from voting with respect to the Loan and the Note. The board of directors believe that the Loan is in the best interests of the Company.
The Company is also pleased to announce that it has completed a non-brokered private placement in the aggregate amount of $85,000 consisting of 9% convertible debenture units of the Company (the "CD Units") (the "Offering"). Each CD Unit consists of $1,000 in principal amount of 9.0% convertible debentures (the "Debentures") maturing on November 27, 2019, and that number of common share purchase warrants (the "CD Unit Warrants") equal to one-half of the shares issuable upon conversion of $1,000 in principal amount of Debentures. The principal and any accrued and unpaid interest under the Debentures will be convertible at the holder's option into fully-paid non-assessable common shares of the Company at: (a) with respect to principal, a conversion price equal to the greater of $0.18, or the "Market Price" of the Company's common shares as defined under the policies of the TSXV; and (b) with respect to accrued and unpaid interest at the Market Price of the Company's common shares at the time of settlement. Each CD Unit Warrant will be exercisable until November 27, 2018 at an exercise price of $0.25 per common share. The Debentures and CD Unit Warrants comprising the CD Units, and any underlying common shares, are subject to a hold period expiring March 28, 2015 pursuant to National Instrument 45-102 and the policies of the TSXV.
Net proceeds from the Loan and the offering will be applied towards oil and gas operations, property acquisitions and for general working capital purposes.
For further information please contact:
Andrew H Rees at (604) 669-6463
ON BEHALF OF THE BOARD
(signed) "Andrew H. Rees"
Andrew H. Rees
President and Chief Executive Officer
None of the securities issued in connection with the Offering have been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
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.
Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Except as required pursuant to applicable securities laws, the Company will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by the Company. Readers are cautioned not to place undue reliance on forward looking statements.
Source: WELLSTAR ENERGY CORP