Whitebark Energy Ltd (ASX:WBE) has been advised of the approval...

Whitebark Energy Ltd (ASX:WBE) has been advised of the approval from the Court of the Queen’s Bench in Alberta on the sale and investment procedures (SISP) proposed by the company’s Canadian subsidiary Salt Bush Energy Ltd (SBE).

This means the key terms of the sale process for the Wizard Lake Oil Field in Alberta have now been approved.

The court approved payment of a C$50,000 break fee and C$25,000 expense reimbursement if WBE subsidiary Ironbark Energy (IBE) is not the successful bidder.

The following SISP milestone deadlines are proposed:

• Phase 1: begin marketing asset on February 15 2021;
• Phase 1 bid deadline: 5.00pm April 16, 2021 (60 days after commencement date); and
• Phase 2: qualified bidders (superior bids to stalking horse bid, if any) and the stalking horse bidder (IBE) will be invited to attend an auction on the third business day after the bid deadline.

The contemplated completion date of any transaction arising from the SISP is May 17, 2021.

Cost of SISP process

WBE holds approximately 82.5% of SBE’s obligations.

The payment direction from WBE reduces the amount of cash consideration required at closing so that the IBE bid is equivalent to a cash offer of around C$2 million.

Total cost of the SISP process is estimated to be C$150,000, which WBE has agreed to fund under a secured interim financing facility (the debtor in possession financing).

The facility must be repaid in full on closing of the sale or restructure from a portion of the cash consideration before any further distributions are made.

Acquisition of Point Loma Resources’ assets

At the same time, but independent of the NOI process, SBE has executed an agreement with BDO Canada in its capacity as receiver of Point Loma Resources Inc (PLX), to acquire all of PLX’s assets in the Wizard Lake field for C$10.00 subject to the following key terms and conditions:

• The date of the transfer is June 8, 2020, the date the receiver was appointed;
• SBE makes no further claims against PLX and releases PLX from paying the amount owed to SBE calculated by SBE to be C$996,481; and
• SBE assumes the assets on an “as is, where is” basis.

While a binding letter agreement has been executed a more detailed quit claim agreement will be prepared and executed.

The transaction is subject to Alberta Energy Regulator (AER) approval.

Upon completion, SBE’s land position will increase to 6400 acres from 5632 acres prior to the transaction.

Resignation of directors

The board of WBE has accepted the resignations of David Messina and Stephen Keenihan as directors of the company.

In accordance with his executive’s employment contract, Messina has given three months written notice to WBE.

Messina will continue to work through a transition period to enable an orderly transition and assist with the handover to his replacement once appointed.

Appointment of directors

The company has appointed Matthew White and Duncan Gordon to the board.

White has more than 27 years’ experience as an accountant, business and tax advisor and has more than 12 years’ experience as a registered mortgage broker and over three years’ experience as a financial planner.

Gordon is a founder and co-principal of Adelaide Equity Partners Ltd and has extensive experience as a corporate and financial advisor to the mining and natural resources sector.

Gordon has taken principal roles in advising ASX-listed companies on a range of corporate matters including identification of major corporate acquisition and divestment opportunities, initial public offerings, raising debt and raising equity capital both within and outside Australia.

Strategic review

It is anticipated that the incoming directors of WBE will conduct a strategic review process around the direction of the company including:

• A review of the company’s financial position and current operations;
• Assess the future of the company’s asset base in conjunction with the existing process in place around Saltbush Energy;
• Ensuring the Company is capitalised appropriately to meet its future obligations; and
• Identification of further opportunities.

Quick facts: Whitebark Energy Ltd