|March 10, 2008|
Flow Enters into Share Exchange Agreement with Zimtu
|March 10, 2008 - Flow Energy Ltd. (TSXv: FLO.P) (the "Company") announces that it has entered into a formal Share Exchange Agreement dated March 7, 2008 with Zimtu Capital Corp. ("Zimtu") and Petrol One Corp. ("Petrol One"), pursuant to which the Company will acquire all of the issued and outstanding common shares of Zimtu from Petrol One, subject to regulatory approval.|
Zimtu is a private British Columbia investment company whose assets consist of a portfolio of equity investments, cash and equipment. Petrol One, a British Columbia public company listed on the CNQ Exchange, is the sole shareholder of Zimtu. As at Zimtu's year ended November 30, 2007, Zimtu had approximately $370,000 in cash, advances and accounts receivable, $100,672 in prepaid expenses and deposits. During its fiscal year, Zimtu generated revenue of $1,159,190 and had net income and retained earnings of $3,659,570. As at November 30, 2007, Zimtu held securities in the following public and private companies:
Number of Shares Commerce Resources Corp. 2,469,178 Evolving Gold Gorp. 81,469 Solex Resources Corp. 330,411 CIC Mining Resources Ltd. 90,000 Cougar Minerals Corp. 741,931 Vital Resources Corp. 157,667 Kingsman Resources Inc. 534,000 Austin Developments Corp. 30,000 Petrol One Corp. 215,000 Hybrid Fuels Inc. 200,000 Western Potash Corp. 3,278,571 T-Bills 345,000 Doubloon Exploration Corp. 1,580,002Under the terms of the Share Exchange Agreement, the Company will acquire of all of the issued common shares of Zimtu (the "Zimtu Shares"). In consideration for the Zimtu Shares, the Company will issue 50,000,000 Special Warrants of the Company (the "Flow Securities") to Petrol One at a deemed price of $0.12 per Flow Security. Petrol One, in satisfaction of a share dividend owed to its shareholders as described in a news release dated April 17, 2006, will direct that all of the Flow Securities be distributed to those shareholders of Petrol One on record as of April 21, 2006. Petrol One shareholders will receive 15 Flow Securities for every one common share of Petrol One held.
Concurrent with the share exchange transaction, the Company will be completing a brokered and non-brokered private placement (the "Financing") of up to a total of 9,700,000 units at a price of $0.12 per share for aggregate gross proceeds of $1,164,000. Each unit consists of one common share and one share purchase warrant, exercisable into one additional common share of the Company at a price of $0.24 per share for a period of one year from the date of closing. Northern Securities is acting as the agent on the brokered portion of the Financing, raising $500,000 of the total private placement. Northern Securities will be paid a cash commission of $50,000 and will be granted 416,667 non transferable agent's warrants. Each Agent's Warrant will be exercisable for a period of one year into one unit of the Company, on the same terms and conditions as the private placement units, at a price of $0.12 per unit. The proceeds of the private placement will be used for investment strategy and general working capital.
Also concurrent with the closing of the share exchange transaction, Robert Miller and Lorne Morozoff, current directors of the Company, will enter into an agreement whereby they will sell 1,100,000 escrowed common shares (the "Escrowed Shares") to David Hodge and Shaun Ledding at a price of $0.10 per share. Following the closing of the Transaction, Messrs. Miller and Morozoff will resign as directors of the Company, in favour of the nominees of Zimtu and Petrol One, being David Hodge and Shaun Ledding.
The Transaction will constitute the Company's "Qualifying Transaction" as such term is defined in Policy 2.4 of the TSX Venture Exchange (the "TSXv" or the "Exchange"), and upon completion will result in the listing of the Company as a Tier 2 Investment Issuer on the TSXv.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release
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The TSX Venture Exchange Inc. does not accept responsibility for the accuracy or adequacy of this news release.
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