RIA Resources enters into arrangement agreement with Qwest Diversified Capital Corp.

Apr 04, 2013, 13:25 ET from Ria Resources Corp.

CALGARY, April 4, 2013 /CNW/ - RIA Resources Corp. (TSXV: RIA) ("RIA") is pleased to announced it has entered into an arm's length arrangement agreement (the "Arrangement Agreement") dated effective April 3, 2013 with Qwest Diversified Capital Corp. ("QDCC") pursuant to which QDCC will acquire all of the common shares of RIA ("RIA Shares") by way of a plan of arrangement (the "Arrangement").   The Arrangement Agreement supersedes the non-binding letter of intent dated February 1, 2013 between RIA and Qwest Investment Management Corp., the terms and conditions of which were announced by RIA on February 5, 2013.  It is anticipated that the effective date of the Arrangement will be on or before June 15, 2013 (the "Effective Date").

Under the terms of the Arrangement Agreement, RIA shareholders will receive 0.014 (the "Exchange Ratio") of a series 1 preferred share of QDCC ("QDCC Preferred Shares") for each RIA Share held.  The QDCC Preferred Shares will be issued from QDCC's treasury at a deemed price of $10.00 per QDCC Preferred Share.  Accordingly, the Exchange Ratio implies a value of $0.14 per RIA Share, representing a 211% premium to the closing price of RIA's Shares on the TSX Venture Exchange on April 3, 2013, the last day of trading prior to this announcement.  The Exchange Ratio was derived from the net asset value of RIA's oil and gas assets set forth in an independently prepared engineering report.

Holders of QDCC Preferred Shares have the right to redeem their shares at a price per share equivalent to net asset value of QDCC divided by the number of QDCC Preferred Shares issued and outstanding at a date at least five years and one day from the date of issue of the QDCC Preferred Shares to RIA shareholders, all as more fully described in the articles of incorporation and unanimous shareholders agreement of QDCC. The QDCC Preferred Shares are non-voting shares, and are eligible for discretionary dividends to be determined by the Board of Directors of QDCC from time to time.  Although the payment and the amount of dividends declared will be subject to the discretion of the Board of Directors it is the Board of Directors intention to exercise its discretion in favour of paying dividends on the QDCC Preferred Shares, subject to commodity prices and the overall financial performance of QDCC, on a quarterly basis.

QDCC intends to, but is not obligated to, complete an offering of QDCC Preferred Shares under an offering memorandum, of up to $700,000 at $10.00 per QDCC Preferred Share (the "QDCC Preferred Shares Offering") prior to the Arrangement.  The Arrangement is not conditional on the completion of the QDCC Preferred Shares Offering.  QDCC does not intend to list the QDCC Preferred Shares on the TSX Venture Exchange or any other exchange in the near future.

As at the date hereof there are 23,684,045 RIA Shares issued and outstanding; 880,000 options to purchase RIA Shares ("RIA Options"); 1,300,000 common share purchase warrants ("Warrants"); and a debenture convertible into 1,704,348 RIA Shares ("Convertible Debenture"), all as more fully detailed within RIA's October 31, 2012 Financial Statements. RIA covenanted in the Arrangement Agreement to cause the holders of outstanding, unexercised RIA Options to enter into agreements (prior to the Effective Date) to convert RIA Options with an exercise price of less than $0.14 into 0.004 of a QDCC Preferred Share up to a maximum of 3,550 QDCC Preferred Shares immediately following the completion of the Arrangement, and to cause the holder of the outstanding, unexercised Warrants to enter into an agreement (prior to the Effective Date) for the cancellation of the Warrants for nominal consideration immediately following the completion of the Arrangement.  QDCC has agreed to enter into an agreement with the holder of the Convertible Debenture (prior to the Effective Date) providing that QDCC undertakes and agrees in QDCC's capacity as the sole shareholder of RIA post-Arrangement to cause RIA to payout all amounts owing under the Convertible Debenture on or before June 30, 2013.

Subject to approval by the TSX Venture Exchange, Chinook Financial Ltd., which is a non-arm's length creditor of RIA, intends to convert a principal amount of $380,000 of RIA debt owed to it into 3,800,000 RIA Shares prior to the Effective Date.

A special meeting of RIA Shareholders to approve the Arrangement is to be held on or before May 31, 2013.  After considering strategic alternatives for RIA, RIA's board of directors has determined that the Arrangement is in the best interests of holders of RIA Shares, offers fair consideration to holders of RIA Shares and recommends that holders of RIA shares vote in favor of the Arrangement.  RIA's board of directors has unanimously approved the Arrangement and the Arrangement Agreement.

About QDCC

QDCC is a wholly-owned subsidiary of Qwest Development Holdings Corp., a corporation controlled by Qwest Investment Management Corp. QDCC's objectives are to invest in and acquire junior oil and gas companies and other oil and gas assets.  The proposed acquisition of RIA will be the first acquisition by QDCC.

About RIA

RIA is a company listed and trading on the TSX Venture Exchange, symbol: RIA.  RIA's principal business is the exploration, development and production of oil, natural gas and associated liquids in Western Canada, principally in the Province of Alberta.

Forward Looking Statements

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events contemplated under the Arrangement Agreement and the objectives and intentions of QDCC following the Arrangement. All statements other than statements of historical fact are forward-looking statements. The use of any of the words ''anticipate'', ''plan'', ''contemplate'', ''continue'', ''estimate'', ''expect'', ''intend'', ''propose'', ''might'', ''may'', ''will'', ''shall'', ''project'', ''should'', ''could'', ''would'', ''believe'', ''predict'', ''forecast'', ''pursue'', ''potential'' and ''capable'' and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although RIA believes these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Such statements include the closing of the proposed Arrangement on the terms and conditions set out above, the anticipated timing for stated events, and QDCC's intentions to complete the QDCC Preferred Shares Offering, to not list the QDCC Preferred Shares on the TSX Venture Exchange or any other exchange and the plan to pay dividends.  Actual results could differ materially from those anticipated in these forward-looking statements as a result of the proposed Arrangement not closing when planned, not closing on the terms and conditions set out above, or if a closing occurs at all; the failure of RIA to obtain the necessary regulatory, shareholder and other third party approvals required in order to proceed with the proposed Arrangement; regulatory decisions, competitive factors in the industries in which RIA and QDCC operate, prevailing economic conditions, the impact of general economic conditions; volatility in market prices for oil and natural gas; industry conditions; volatility of commodity prices; currency fluctuation; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition from other producers; the lack of availability of qualified personnel or management; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; ability to access sufficient capital from internal and external sources; and other factors, many of which are beyond the control of RIA and QDCC. The forward-looking statements contained in this news release represent RIA's expectations as of the date hereof, and are subject to change after such date.  RIA disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable securities regulations.

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.

SOURCE Ria Resources Corp.