Woodbridge Ventures II Inc. has signed a definitive merger agreement with Greenflame Resources Inc., marking a major step in the company’s transformation into an operating entity within the oil sector. The operation, which constitutes Woodbridge’s qualifying transaction under Policy 2.4 of the TSX Venture Exchange, provides for the acquisition of 100% of Greenflame’s common shares through a merger with a wholly owned Woodbridge subsidiary.
A structured merger based on share exchange
Under the agreement, Woodbridge shares will be consolidated on the basis of one post-consolidation share for 3.2711 existing shares. Each Greenflame shareholder will receive 2.80679 pre-consolidation Woodbridge shares for each Greenflame share held. Greenflame will merge with Woodbridge’s subsidiary to form a new legal entity, fully owned by Woodbridge and named Amalco. Upon closing, all Greenflame share options will be converted into Woodbridge share options on an adjusted basis.
Greenflame shares held by dissenting shareholders will be cancelled at the closing date without conversion into Woodbridge shares. Dissenting shareholders will retain only the right to be paid the fair value of their shares, as defined by applicable regulation.
A strategic repositioning in oil
Following completion of the transaction, the resulting issuer is expected to be listed as a Tier 2 oil and gas issuer on the TSX Venture Exchange. The merged company will operate under the name Greenflame PetroCaribe Inc., or another name selected by Greenflame. The resulting share capital will be held approximately 89% by current Greenflame shareholders, 9% by investors in the concurrent financing, and 2% by Woodbridge shareholders.
The transaction qualifies as a related party transaction under Multilateral Instrument 61-101 on protection of minority shareholders. A special meeting will be held for Woodbridge minority shareholders, excluding Raphael Danon, to vote on the deal.
Concurrent financing to support expansion plans
Greenflame plans to raise between $5mn and $10mn through the issuance of subscription receipts. These receipts will automatically convert into Greenflame shares prior to the merger’s closing, subject to conditional approval from the exchange and satisfaction of closing conditions. The issued shares will then be exchanged for Woodbridge shares.
The raised funds will be used for enhanced oil recovery activities, potential operational expansion in Trinidad and working capital needs. While no broker has officially been appointed, commissions and compensation warrants may be issued to eligible finders based on market conditions.
