Petrofrontier Announces Closing of Credit Facility and Early Warning Report

CALGARY, AB / ACCESSWIRE / June 4, 2019 / PetroFrontier Corp. (“PetroFrontier” or the “Company“) (TSX-V: PFC) is pleased to announce that on June 3, 2019, it closed the credit facility previously announced on April 25, 2019 (the “Credit Facility“). The Credit Facility provides that advances will be made from time to time in minimum amounts of $200,000 up to a maximum of $2,000,000 and is for a two year term. Advances made pursuant to the Credit Facility will bear interest at 8% per annum with interest payable monthly. Advances are secured by a General Security Agreement issued in favor of the lender. The lender will be paid a structuring fee equal to 2% of the amount of any advance made pursuant to the Credit Facility subject to a minimum structuring fee of $10,000.

The lender will have the option to convert the advances made pursuant to the Credit Facility into common shares of the Company (“Common Shares“). The conversion price per Common Share is: (i) $0.065 for the first year of the term of the Credit Facility; and (ii) $0.10 for the second year of the term of the Credit Facility.

In connection with closing of the Credit Facility, the parties agreed to terminate the conversion privileges contained in the convertible debenture issued to Kasten on July 21, 2016.

Proceeds from the Credit Facility will be used for general working capital purposes and for capital expenditure commitments.

Related Party Participation in the Credit Facility

The Credit Facility was provided by Kasten Energy Inc. (“Kasten“). Kasten is a control person of PetroFrontier which deems the credit facility to be a “related party transaction” as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Kasten currently owns, or exercises control over 46.79% of the common shares of the Corporation. Assuming the entire credit facility of $2,000,000 is drawn and subsequently converted into Common Shares during the first year of the term of the Credit Facility, Kasten would own Common Shares representing 55.87% of the then issued and outstanding common shares of the Company.

Neither the Company nor the related party, to the knowledge of the Company after reasonable inquiry, has knowledge of any material information concerning the Company or its securities that has not been generally disclosed

The Offering is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to subsections 5.5(c) and 5.7(b) as it was a distribution of securities for cash and neither the fair market value of the securities distributed to, nor the consideration received from, interested parties exceeded $2,500,000.

The Company did not file a material change report more than 21 days before the expected closing of the Credit Facility because the details of the participation therein by related parties of the Company were not settled until shortly prior to closing of the Credit Facility and the Company wished to close on an expedited basis for business reasons. The Company’s independent board of directors has reviewed and accepted the terms of the Credit Facility.

Early Warning Report

This information is issued pursuant to Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids and National Instrument 62-103- The Early Warning System and Related Take-Over Bid and Insider Reporting Issues.

On June 3, 2019, Kasten Energy Inc. (“Kasten“) closed a credit facility (“Credit Facility“) with PetroFrontier Corp. (the “Issuer“) of up to $2,000,000 which grants Kasten the fight to convert advances made under the Credit Facility into common shares (“Common Shares“) of the Issuer. The conversion price is i) $0.065 per Common Share for the first year of the Credit Facility and ii) $0.10 per Common Share for the second year of the two year Credit Facility.

Kasten is a corporation continued in the Province of Alberta whose head office address is 900, 903 8th Ave S.W. Calgary, AB T2P 0P7. Kasten’s principal business is that of investments in the oil and gas business in Alberta – either through direct participation in oil and gas exploration and development activities or indirectly via equity investments into corporations involved in similar activities.

Immediately prior to closing the Credit Facility, Kasten held a total of 70,000,000 Common Shares directly, representing 46.79% of the issued and outstanding Common Shares of the Issuer. If the maximum of $2,000,000 is drawn under the Credit Facility and Kasten elects to convert such amount into Common Shares during the first year of the Credit Facility, Kasten would own Common Shares representing 55.87% of the then issued and outstanding common shares of the Issuer.

If converted, Kasten will have acquired the Common Shares as consideration for cash advances made under the Credit Facility and Kasten may, in the future, increase or decrease its ownership of securities of the Issuer, directly or indirectly, from time to time depending upon, among other things, the business and prospects of the Issuer and future market conditions.

Immediately prior to closing the Credit Facility, the parties agreed to terminate the conversion privileges contained in the convertible debenture granted by the Issuer to Kasten on July 21, 2016.

A report respecting this acquisition will be filed with the applicable securities commissions using the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) and will be available for viewing on the Issuer’s profile at www.sedar.com.

About PetroFrontier Corp.

PetroFrontier is a junior energy company currently focused on developing two Mannville heavy oil plays in the Cold Lake and Wabasca areas of Alberta.

PetroFrontier’s head office is in Calgary, Alberta and its common shares are listed for trading on the TSX Venture Exchange under the symbol “PFC”.

Forward-Looking Statements

This press release may contain forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of PetroFrontier. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. Any forward-looking statements are made as of the date of this release and, other than as required by applicable securities laws, PetroFrontier does not assume any obligation to update or revise them to reflect new events or circumstances.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release.

For more information, please contact

Kelly Kimbley, President & CEO
PetroFrontier Corp.
Suite 900, 903 – 8 Avenue S.W.
Calgary, Alberta, Canada T2P 0P7
Telephone: (403) 718-0366
Email: [email protected]
Website: www.petrofrontier.com

SOURCE: PetroFrontier Corp.

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