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Mart amends arrangement agreement, announces private placement with Delta Oil

Mart Resources has announced that, further to its press release of October 16 2015, Mart and Delta Oil Nigeria have jointly agreed, pursuant to the terms of an amending agreement to amend the terms of the arrangement agreement dated October 16, 2015 in order to provide Delta with additional time to satisfy the financing condition contained in the arrangement agreement.

Delta is providing significant equity to the proposed purchase of Mart common shares pursuant to the proposed plan of arrangement but has been sourcing funding for a portion of the purchase price from traditional bank financing. However, as most of Mart’s free cash flow is currently being applied towards servicing bank debt due to the depressed oil price, Delta has advised that additional bank funding cannot be obtained until there is an increase in oil price or a change to Mart’s borrowing terms. Accordingly Delta will seek alternative sources of funds that will not require debt servicing to satisfy the Financing Condition. The consideration to be paid to Mart shareholders remains unchanged at CAD$0.35 for each Mart common share held for aggregate consideration for all of Mart’s current shares of approx. CAD$124.92 million.

Delta has agreed to provide financing to Mart while Delta sources alternative funding, and accordingly in connection with the extension to satisfy the Financing Condition, Delta or a wholly-owned subsidiary thereof has agreed to purchase, on a non-brokered private placement basis, 44,617,000 units at a price of CAD$0.18 per Unit for an aggregate consideration of CAD$8,031,060 (payable in US dollars and based on an exchange rate of CAD$1.3283:US$1.00) (the ‘Private Placement’).

Each Unit consists of one Mart common share and one non-transferable common share purchase warrant, with each Warrant entitling the holder thereof to acquire one additional Common Share in the capital of the Company at a price of CAD$0.225 per common share (payable in US dollars and based on an exchange rate of CAD$1.3283:US$1.00), expiring February 15, 2016. The closing of the private placement is conditional only upon receipt of the requisite approval of the Arrangement by the holders of Common Shares and options at a special meeting and the approval of the TSX and will occur forthwith following the Special Meeting. The proceeds of the private placement will be used for general working capital purposes.

If the Financing Condition is not met and the Arrangement transaction does not proceed, Delta or its wholly-owned subsidiary will own approximately 11.11% of the outstanding shares of Mart, and will be entitled to increase their ownership to 19.99% of the outstanding shares of Mart if Delta exercises all of the Warrants.

The Amending Agreement provides the parties with an outside date of February 15, 2016 to satisfy the conditions to the Arrangement, including the Financing Condition, and close the Arrangement transaction. Mart and Delta have agreed to continue to use their reasonable commercial efforts to complete the transaction by January 29, 2016. An information circular regarding the Arrangement is expected to be mailed to Mart security holders in late November 2015 for the Special Meeting which is currently anticipated to take place at the earliest possible date in order to permit Mart to access the proceeds of the Private Placement.

The actual closing date of the Arrangement transaction will be dependent on the timing of the satisfaction of the conditions to the Arrangement, including the Financing Condition. Other than amendments to the dates and the inclusion of the Private Placement, all of the other terms and conditions of the Arrangement Agreement remain the same.

Source : energymixreport.com
Posted On: 11/12/2015 12:00:00 AM

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