Valencia Ventures Inc. is pleased to announce that it has entered into an amalgamation agreement dated March 13, 2015 with Chelsea Natural Gas Ltd., a British Columbia company, and a subsidiary of Valencia, whereby Valencia will acquire all of the issued and outstanding shares of Chelsea CNG.
It is expected that the Transaction will be effected by way of a three-cornered amalgamation pursuant to which a wholly-owned subsidiary of Valencia will amalgamate with Chelsea CNG, and the holders of Class "A" voting shares of Chelsea CNG will receive 1.6 common share of Valencia for each one share of Chelsea CNG so held. There are currently 16,473,422 common shares of Valencia issued and outstanding and 22,000,000 Class "A" voting shares of Chelsea CNG. Following completion of the Transaction, the newly amalgamated company, which will hold all of Chelsea CNG assets, will be a wholly-owned subsidiary of Valencia. The completion of the Transaction remains subject to a number of conditions, as set forth below.
Chelsea CNG operates a Canadian compressed natural gas (CNG) distribution system for motor vehicles in Canada. Chelsea CNG engages in two major activities: (1) Chelsea CNG develops and operates compressed natural gas fueling stations throughout Canada; and (2) Chelsea CNG modifies land driven motor vehicles such as cars and trucks to enable them to use compressed natural gas as their fuel. Currently, Chelsea CNG primarily serves businesses that operate vehicle fleets. Chelsea CNG converts vehicle fleets to enable those vehicles to use compressed natural gas as fuel. Chelsea CNG then develops and operates compressed natural gas fuelling stations to serve those fleets. Chelsea CNG's customers save expense by lowering the operating and capital costs of maintaining their vehicle fleets, particularly for those businesses that rely on vehicle fleets to serve their customers. Chelsea CNG also operates shared fueling stations available to smaller fleet owners whose vehicles use compressed natural gas for fuel. Chelsea CNG generates revenue on sales of fuel from the stations that it operates. It also generates revenue from the fees earned from converting vehicles from traditional fuel to compressed natural gas and selling dedicated natural gas heavy duty vehicles.
In connection with the transaction, Valencia has provided Chelsea CNG with a $250,000 loan (the "Loan") for working capital purposes until the Transaction is completed. In the event the Transaction is not completed by June 30, 2015, the Loan is secured against the Class "A" voting shares of Chelsea CNG owned by the founding shareholders of VVI, comprising over 90% of the Class "A" voting shares of Chelsea CNG.
"In Canada, there are many commercial and municipal fleets which are small in number. This fact makes it difficult for individual fleet operators to justify the expense of building their own compressed natural gas refueling facilities and converting their existing vehicle inventory," said Steve Carmichael, President and CEO of Chelsea Natural Gas Ltd. "Chelsea CNG's fuelling solutions, and vehicle conversion products, allow us to offer a cost-effective way for fleet operators to take advantage of the economic and environmental benefits that come with using compressed natural gas as a transportation fuel."
In connection with the proposed Acquisition, the Company intends to complete a private placement financing for proceeds of not less than $3,000,000 (the "Financing"). The final terms of the Financing are currently being negotiated and an additional announcement will be made by the Company upon the terms of the Financing being finalized. It is anticipated that the proceeds of the Financing will be used for meeting the initial listing requirements of the Exchange, funding Chelsea CNG's business operations, including commitments to build fueling station, expand the scale and number of its conversion facilities, and for general working capital. A finder's fee may be payable in connection with the Financing.
The Transaction will constitute a Reverse Takeover and a Change of Business for the Company under the policies of the TSX Venture Exchange (the "Exchange"). Additional information as required by the policies of the Exchange will follow in subsequent press releases. Closing of the Transaction is subject to a number of conditions including the completion of the Financing, receipt of all required shareholder, regulatory and third party consents and approvals including Exchange approval, and satisfaction of other customary closing conditions. The Transaction cannot close until the required approvals are obtained. There can be no assurance that the Transaction will be completed as proposed or at all. If required pursuant to Exchange Policy 2.2, the Company will retain a sponsor in connection with the Transaction. The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the Transaction, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative. Trading in the common shares of the Company will remain halted pending further filings with the Exchange.