RIA Resources enters into LOI for proposed acquisition of RIA Resources by Plan of Arrangement

Feb 05, 2013, 10:58 ET from RIA Resources Corp.

CALGARY, Feb. 4, 2013 /CNW/ - RIA Resources Corp. (TSXV: RIA) ("RIA" or the "Corporation") is pleased to announced that it has entered into a non-binding letter of intent ("LOI") dated February 1, 2013 with Qwest Investment Management Corp. ("Qwest") regarding the proposed acquisition by a fund to be formed by Qwest (the "Qwest Contrarian Fund") to acquire all of the shares of RIA ("RIA Shares") by way of a plan of arrangement (the "Arrangement").   Subject to legal and tax advice, the Qwest Contrarian Fund is to be established as a "mutual fund trust" under the Income Tax Act.  The Qwest Contrarian Fund's investment objectives will be 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 of the Qwest Contrarian Fund.

Subject to tax advice, the Units proposed to be issued by Qwest Contrarian Fund under the Arrangement will have the following features:

  • Units shall be issued in series with each series redeemable by the Qwest Contrarian Fund in 5 year terms;
  • Each series of Units shall bear 8% annual interest which shall be paid out in Units on a semi-annual basis in arrears; and
  • The Units will not be listed on any market or exchange.

It is proposed that the Qwest Contrarian Fund will, upon completion of the Arrangement, be initially funded by way of a private placement (the "Seed Round Private Placement") of not less than $500,000 at $10/Unit.  All Units issued under the Arrangement to RIA shareholders shall be of the same series of the Units held by the Initial Unit holders.

Pursuant to the terms of the LOI, it is proposed that the Qwest Contrarian Fund will acquire, directly or indirectly, all of the outstanding RIA Shares, including RIA Shares which may be issued in connection with currently granted or issued stock options (the "Stock Options") and other equity based compensation securities of RIA, if any, on the basis that the RIA shareholder will receive, subject to the parties reaching a definitive agreement, 0.014 of a Unit for each RIA Share held (the "Exchange Ratio").  The final Exchange Ratio shall be determined on the basis of the NAV of RIA's oil and gas assets set forth in an independently prepared engineering report, a valuation of tax pools, and the value of Units set in the Seed Round Private Placement.

As at the date hereof there are not more than 23,684,045 RIA Shares issued and outstanding; 880,000 Stock Options; 1,300,000 common share purchase warrants (the "Warrants") and a debenture convertible into 1,704,348 RIA Shares, all as more fully detailed within RIA's July 31, 2012 Financial Statements.  Stock Options with an exercise price of less than $0.14 shall be cancelled, as part of the plan of arrangement, in exchange for 0.004 of a Unit to a maximum of 3,550 Units.  In addition it is proposed that on or before the closing date of the Arrangement, the Warrants shall be cancelled and the outstanding debt of $963,000 and accrued interest thereon owing by RIA to Chinook Financial Ltd. shall, subject to applicable TSX Venture Exchange approval, be converted into RIA Shares at $0.10 per share.  Immediately prior to closing of the Arrangement, there will be 35,018,393 RIA Shares issued and outstanding on a fully diluted basis comprised as follows:

  RIA Shares
Current issued and outstanding RIA Shares: 23,684,045
RIA Shares issued upon conversion of the Debenture: 1,704,348
RIA Shares issued upon conversion of outstanding debt of $963,000: 9,630,000
Total: 35,018,393

Upon completion of the Arrangement, RIA shareholders will hold Units of the Qwest Contrarian Fund which will not trade on the TSX Venture Exchange or any other stock exchange.

The parties have agreed in the LOI to cooperate in structuring the proposed transaction in the most efficient and practicable structure possible for the benefit of RIA and the Qwest Contrarian Fund, acting reasonably, including in a manner that would accommodate a reorganization and having regard to the various tax, corporate, securities law and accounting considerations. In the event that RIA and Qwest agree that the proposed transaction is to be carried out other than by way of a plan of arrangement, the terms and conditions of the LOI shall apply with appropriate modifications.

The LOI establishes that the parties shall enter into a definitive agreement for the proposed transaction by February 15, 2013.  RIA intends to issue a press release disclosing the final terms of any definitive agreement entered into with Qwest with respect to the proposed Arrangement promptly upon execution of the same.

RIA is a company listed and trading on the TSX Venture Exchange, symbol: RIA.

Forward Looking Statements

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events contemplated under the LOI. 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 and the anticipated timing for stated events.  Actual results could differ materially from those anticipated in these forward-looking statements as a result of the proposed Arrangement not closing when planned, 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; the failure of the parties to reach a definitive agreement for the proposed Arrangement, regulatory decisions, competitive factors in the industries in which RIA and Qwest operate, prevailing economic conditions; and other factors, many of which are beyond the control of RIA and Qwest. 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.