In light of the unfavourable equity markets for resource companies, PNG Gold minimized capital expenditures in 2014 and is not currently conducting or planning additional exploration drilling at its properties…
…it is intended that PNG Gold post-completion will change its name to VeroLube Inc
PNG Gold Corporation and VeroLube Inc. Announce Proposed Business Combination
Marketwired | PNG Gold
PNG Gold Corporation and VeroLube Inc. are pleased to announce that they have entered into a binding term sheet dated February 4, 2015 providing for the acquisition by PNG Gold of VeroLube, a private company incorporated under the federal laws of Canada. VeroLube is a provider of used motor oil re-refining services using its patented and certified ReGen™ re-refining process. PNG Gold has been engaged in exploration for gold in Papua New Guinea. In connection with the Business Combination, it is proposed that PNG Gold will consolidate its 131,168,368 issued and outstanding share on the basis of one new share for ten old, and will then acquire all of the 51,500,301 issued and outstanding common shares of VeroLube in exchange for common shares of PNG Gold on a 1:1 basis by way of a plan of arrangement or other similar transaction. In addition, all warrants of VeroLube will be exchanged for equivalent securities of PNG Gold. If the Business Combination is completed, it is intended that PNG Gold post-completion will change its name to VeroLube Inc. Upon completion, the Resulting Issuer will carry on VeroLube’s present business. Closing is to take place on or before June 30, 2015. The Business Combination will constitute a “Reverse Takeover” within the meaning of TSX Venture Exchange Policy 5.2. Trading in PNG Gold’s common shares on the Exchange has been halted, and will remain halted until the Exchange’s requirements for resumption of trading have been met, and additional information concerning the incoming principals of the merged company, sponsorship for the Transaction, and financial information concerning VeroLube, has been disclosed.
VeroLube was incorporated on February 23, 2012. In 2013, VeroLube purchased from PetroTex Hydrocarbons LLC the patents which form the foundation for the ReGen™ re-refining technology for producing high yields of high quality hydrocarbon products from used oils. VeroLube’s business plan includes acquiring an established sector participant involved in the oil collecting/blending/refining business with a view to building a used oil refinery based on its ReGen™ technology.
PNG Gold has been engaged in the exploration of its Normanby and Sehulea properties in Papua New Guinea. In light of the unfavourable equity markets for resource companies, PNG Gold minimized capital expenditures in 2014 and is not currently conducting or planning additional exploration drilling at its properties. Over the past several months, PNG Gold has been considering various alternatives to increase shareholder value, and believes that the proposed Business Combination with VeroLube represents significant opportunity.
PNG Gold has previously loaned VeroLube approximately $500,000 to pay certain of its liabilities, which is repayable on demand made at any time after March 30, 2015. The loan bears interest at the rate of 20% per annum, is prepayable without penalty and is convertible into common shares of VeroLube at the rate of $0.40 per share. The loan is secured against all of VeroLube’s present and after-acquired personal property. As partial consideration for the loan, VeroLube has agreed to issue 250,000 common shares to PNG Gold, and to grant PNG Gold a royalty-free, non-exclusive, perpetual license to use the ReGen™process in Canada, Mexico and Central and South America. It is a condition of closing that prior to the Closing Date PNG Gold lends VeroLube an additional $250,000 to maintain its business, and that upon written request PNG Gold will provide additional loans to VeroLube on terms satisfactory to PNG Gold in its sole discretion.
PNG Gold and VeroLube are arm’s length parties, and there are no current non-arm’s length parties of PNG Gold who are insiders of VeroLube, or presently hold any direct or indirect beneficial interest in either VeroLube or any of its assets, other than Greg Clarkes, the Chairman of PNG Gold, who holds an aggregate of 2,500,000 common shares of VeroLube (approximately 5%). Mr. Clarkes is resident in British Columbia.
Upon completion of the Business Combination, PNG Gold will appoint 3 and VeroLube will appoint 4 directors to the board of directors of the Resulting Issuer.
Completion of the Business Combination is subject to several customary conditions such as regulatory and shareholder approval, satisfactory completion of due diligence, absence of material changes, absence of litigation and accuracy of representations and warranties. PNG Gold and VeroLube will each seek the approval of their shareholders for the Business Combination at meetings to be held on or before the Closing Date.