Issue of Shares Under General Mandate for Settlement of Trade Creditor

Source Press Release
Company Sunshine Oilsands Ltd. 
Tags Strategy - Corporate
Date December 20, 2018

The Board of Directors (the “Board”) of Sunshine Oilsands Ltd. (the “Corporation” or “Sunshine”) (HKEX: 2012) wishes to announce the following:

ISSUE OF SHARES UNDER GENERAL MANDATE FOR SETTLEMENT OF TRADE CREDITOR

On Hong Kong (December 20, 2018) / Calgary, Alberta (December 20, 2018), the Corporation entered into Settlement Agreement with the Trade Creditor, being an Independent Third Party and a trade creditor to the Corporation, pursuant to which the Corporation will allot and issue the Relevant Shares to the Trade Creditor as full and final settlement of the Partial Trade Payable.

The Issue Price is HK$0.133, which represents

(i) a discount of approximately 18.80% as to the average closing price of HK$0.164 per Share as quoted on the Hong Kong Stock Exchange for the last five consecutive trading days immediately prior to and including December 19, 2018; and

(ii) a discount of approximately 17.90% to the closing price of HK$0.162 per Share as quoted on the Hong Kong Stock Exchange on December 20, 2018.

There will be a lock-up period of 4 months from the date of Issuance under which the Trade Creditor undertake not to transfer and/or dispose of the Relevant Shares.

The Relevant Shares, which shall rank pari passu in all respect with the existing Shares, will be allotted and issued under the General Mandate. The Corporation will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in the Relevant Shares. Up to the date of this announcement, the Board has allotted and issued 150,833,952 Shares under the General Mandate. No shareholders’ approval is required for the allotment and issue of the Relevant Shares.

Shareholders and potential investors should note that completion of the Issuance is subject to fulfilment of the conditions under the Settlement Agreement. As the Issuance may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

THE ISSUE OF THE RELEVANT SHARES

Pursuant to the Settlement Agreement entered into between the Corporation and the Trade Creditor on Hong Kong (December 20, 2018) / Calgary, Alberta (December 20, 2018), the Corporation will allot and issue the Relevant Shares at the Issue Price to the Trade Creditor as full and final settlement of the Partial Trade Payable.

THE RELEVANT SHARES

Assuming no further issue of new Shares or repurchase of Shares (other than those failing to be issued upon full exercise of the share options), the Relevant Shares represent (i) approximately 0.10% of the existing issued share capital of the Corporation as at the date of this announcement; and (ii) approximately 0.10% of the total enlarged issued share capital of the Corporation immediately following completion of the Issuance.

ISSUE PRICE

The Issue Price is HK$0.133, which represents

(i) a discount of approximately 18.80% as to the average closing price of HK$0.164 per Share as quoted on the Hong Kong Stock Exchange for the last five consecutive trading days immediately prior to and including December 19, 2018; and

(ii) a discount of approximately 17.90% to the closing price of HK$0.162 per Share as quoted on the Hong Kong Stock Exchange on December 20, 2018.

It was arrived after arm’s length negotiation between the Corporation and the Trade Creditor with reference to the market condition and the prevailing market price of the Shares.

LOCK-UP

There shall be a lock-up period of 4 months from the date of Issuance to the Trade Creditor under which the Trade Creditor undertake not to transfer and/or dispose of the Relevant Shares.

GENERAL MANDATE TO ISSUE THE RELEVANT SHARES

The Relevant Shares will be allotted and issued pursuant to the General Mandate and the issue of the Relevant Shares is not subject to Shareholders’ approval. The maximum number of Shares that can be issued under the General Mandate is 1,195,831,634 Shares. Up to the date of this announcement, the Board has allotted and issued 150,833,952 Shares under the General Mandate. No shareholders’ approval is required for the allotment and issue of the Relevant Shares.

RANKING AND APPLICATION FOR LISTING

The Relevant Shares will be issued under the General Mandate and will rank pari passu in all respects among themselves and with the existing Shares in issue on the Completion Date. Application will be made to the Stock Exchange for the grant of the listing of, and permission to deal in the Relevant Shares.

CONDITIONS

Completion of the Settlement Agreement shall be subject to and conditional upon the following:

(i) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in the Relevant Shares; and

(ii) all relevant approvals and consents from governmental or other competent authority or in accordance with applicable laws having been obtained, if necessary. 

None of the above conditions are capable of being waived. In the event that the conditions of the Issuance are not fulfilled on or before January 4, 2019 (or such other time and date as may be agreed between the parties to the Settlement Agreement), the Settlement Agreement shall cease and determine and neither the Corporation nor the Trade Creditor shall have any obligations and liabilities under the Settlement Agreement. 

EFFECTS ON SHAREHOLDING STRUCTURE OF THE CORPORATION

As at the date of this announcement, the Corporation has 6,129,992,124 Shares in issue. The shareholding structure of the Corporation as at the date of this announcement and immediately after completion of the Issuance (assuming that there are no other changes to the shareholding structure of the Corporation from the date of this announcement to the date of completion of the Issuance) are as follows:

As at the date of this announcement  Immediately after Completion of the Placing (assuming that there are no other changes to the shareholding structure of the Corporation from the date of this announcement to the date of completion of the Issuance) 
Name of Shareholders  Number of Shares    Approx. % of Shares      Number of Shares  Approx. % of Shares 
Kwok Ping Sun  1,687,377,000    27.53%      1,687,377,000  27.50% 
Trade Creditor        5,854,500  0.10% 
Other public shareholders (excluding the Trade Creditor)  4,442,615,124    72.47%      4,442,615,124  72.40% 
               
Total  6,129,992,124    100.00%      6,135,846,624  100.00% 

REASONS FOR AND BENEFITS OF ENTERING INTO THE SETTLEMENT AGREEMENT

As at the date of the Settlement Agreement, the Corporation has a partial trade payable balance of CDN$ 133,846.53 with the Trade Creditor (approximately HK$ 778,630.19) this Partial Trade Payable will be settled by the issuance of 5,854,500 Shares.

The Directors are of the view that the settlement of the Partial Trade Payable by way of Issuance would not result in significant cash outflow of the Corporation while reducing the indebtedness of the Corporation. Accordingly, the Directors consider that the terms of the Settlement Agreement are fair and reasonable and the Issuance is in the interests of the Corporation and its Shareholders as a whole.

FUND RAISING ACTIVITIES OF THE CORPORATION IN THE PAST 12 MONTHS 

Save as disclosed below, the Corporation has not conducted any other fundraising activities during the 12 months immediately preceding the date of this announcement.

Date               of announcement  Fund        raising activity  Approximate net proceeds raised  Intended use of the net proceeds  Actual use of the net proceeds 
December       20, 2017  Private placement of           Common Shares under General Mandate  HK$15,880,115.1 (approximately CDN$2,617,042.97 (1))  (i)        for general working capital of the Corporation; and (ii)     as funds for future development of    the      existing business    of    the Corporation, including     funding the    development and operation costs of the West Ells project  HK$15,880,115.1 (approximately CDN$2,617,042.97 (1)) - approximately 95% used as funds for development of existing business including funding operation costs and approximately 5% as general working capital 
January 22, 2018  Private placement of Common Shares under General Mandate  HK$21,835,040 (approximately CDN$3,467,404.3 (2))  (i)        for general working capital of the Corporation; and (ii)  for repayment of shareholder’s loan  HK$21,835,040 (approximately CDN$3,467,404.3(2)) approximately 92% used for repayment of shareholder’s loan and 8% as general working capital 
February         13,  Private placement  HK$28,286,303.6  (i)      for     general  HK$28,286,303.6 
2018  of           Common  (approximately  working capital of  (approximately 
  Shares         under  CDN$4,559,752.1  the      Corporation;  CDN$4,559,752.1(3)) 
  General Mandate  (3))  and  approximately 48% used for 
      (ii) for repayment of  repayment of shareholder’s 
      shareholder’s loan  loan and 52% as general 
        working capital 
March 14, 2018  Private placement  HK$25,096,942.5  For settlement of  HK$25,096,942.5 
  of           Common Shares         under  (approximately CDN$4,133,466.4(  indebtedness  (approximately CDN$4,133,466.4(4)) – there 
  General Mandate  4))    is no actual cash inflow into 
Date               of announcement  Fund        raising activity  Approximate net proceeds raised  Intended use of the net proceeds  Actual use of the net proceeds 
        the    Corporation    as    the issuance of shares was to offset the indebtedness that Sunshine owes to its trade creditors 
March 14, 2018  Private placement of           Common Shares under General Mandate  HK$4,996,299.50 (approximately CDN$822,890.52(4 ))  For settlement of indebtedness  HK$4,996,299.50 (approximately CDN$822,890.52(4)) – there is no actual cash inflow into the Corporation as the issuance of shares was to offset the indebtedness that Sunshine owes to its trade creditor 
June 15, 2018  Private placement of           Common Shares under General Mandate  HK$6,583,710 (approximately CDN$1,094,870.9 7(5))  For settlement of partial            trade payable  HK$6,583,710 (approximately CDN$1,094,870.97(5))          – there is no actual cash inflow into the Corporation as the issuance of shares was to offset the partial trade payable that Sunshine owes to its trade creditor 
July 5, 2018  Private placement of Convertible Bonds          under General Mandate  HK$10,917,500 (approximately CDN$     1,829,773 (6))  For             general working capital  HK$10,917,500 (approximately CDN$ 1,829,773 (6)) –100% as general working capital 
July 16, 2018  Private placement of           Common Shares under General Mandate  HK$2,749,920 (approximately CDN$461,436.58 (7))  For settlement of partial            trade payable  HK$2,749,920 (approximately CDN$461,436.58 (7)) – there is no actual cash inflow into the Corporation as the issuance of shares was to offset the partial trade payable that Sunshine owes to its trade creditor 
September      20, 2018  Private placement of           Common Shares under General Mandate  HK$1,886,997.60 (approximately CDN$311,354.60 (8))  For settlement of partial             trade payable  HK$1,886,997.60 (approximately CDN$311,354.60 (8)) – there is no actual cash inflow into the Corporation as the issuance of shares was to offset the partial trade payable that Sunshine owes to its trade creditor 
September      21, 2018  Private placement of           Common Shares under General Mandate  HK$1,382,361.70 (approximately CDN$227,398.50 (9))  For settlement of trade payable  HK$1,382,361.70 (approximately CDN$227,398.50  (9))  – there is no  actual  cash inflow into the     Corporation    as    the issuance   of   shares  was to 
Date               of announcement  Fund        raising activity  Approximate net proceeds raised  Intended use of the net proceeds  Actual use of the net proceeds 
        offset the trade payable that Sunshine owes to its trade creditor 
October 5, 2018  Private placement of Convertible Bonds          under General Mandate  HK$10,945,000 (approximately CDN$ 1,801,547(10 ))  (i)        for general working capital of the Corporation; and (ii)         for future development of the existing business  HK$10,945,000 (approximately CDN$      1,801,547(10))      for general working capital of the Corporation 
November       16, 2018  Private placement of           Common Shares under General Mandate  HK$4,793,472 (approximately CDN$808,179.38 (11))  For settlement of trade payable  CDN$808,179.38 (11)) – there is no actual cash inflow into the Corporation as the issuance of shares was to offset the trade payable that Sunshine  owes  to  its  trade creditor 
November  21,  Private placement  HK$334,324  For settlement  of  CDN$56,601.05 (12)) – there 
2018    of           Common  (approximately  trade payable    is no actual cash inflow into 
    Shares         under  CDN$56,601.05      the     Corporation    as     the 
    General Mandate  (12))      issuance of shares was to 
            offset the trade payable that 
            Sunshine owes to its trade 
            creditor 
November  29,  Private placement  HK$144,072  For settlement  of  CDN$24,492.24 (13)) – there 
2018    of           Common  (approximately  trade payable    is no actual cash inflow into 
    Shares         under  CDN$24,492.24      the     Corporation    as     the 
    General Mandate  (13))      issuance of shares was to 
            offset the trade payable that 
            Sunshine owes to its trade 
            creditor 
December  14,  Private placement  HK$3,833,671  For settlement  of  CDN$655,557.74 (14)) – there 
2018    of           Common  (approximately  trade payable    is no actual cash inflow into 
    Shares         under  CDN$655,557.74      the     Corporation    as     the 
    General Mandate  (14))      issuance of shares was to 
            offset the trade payable that 
            Sunshine owes to its trade 
            creditor 

Notes

  1. 1.     Based on the Bank of Canada's nominal noon exchange rate (as at December 19, 2017) of CDN$1.00 =HK$6.0667
  2. 2.     Based on the Bank of Canada's nominal noon exchange rate (as at January 21, 2018) of CDN$1.00 =HK$6.2972
  3. 3.     Based on the Bank of Canada's nominal noon exchange rate (as at February 12, 2018) of CDN$1.00 =HK$6.2035
  4. 4.     Based on the Bank of Canada's nominal noon exchange rate (as at March 13, 2018) of CDN$1.00 =HK$6.0716
    1. 5.     Based on the Bank of Canada's nominal noon exchange rate (as at June 14, 2018) of CDN$1.00=HK$6.013
  1. 6.     Based on the Bank of Canada's nominal noon exchange rate (as at July 4, 2018) of CDN$1.00=HK$5.967
  1. 7.     Based on the Bank of Canada's nominal noon exchange rate (as at July 13, 2018) of CDN$1.00=HK$5.959
  1. 8.     Based on the Bank of Canada's nominal noon exchange rate (as at September 19, 2018) of CDN$1.00 =HK$6.061
  2. 9.     Based on the Bank of Canada's nominal noon exchange rate (as at September 20, 2018) of CDN$1.00 =HK$6.079
  3. 10.   Based on the Bank of Canada's nominal noon exchange rate (as at October 4, 2018) of CDN$1.00 =HK$6.075
  4. 11.   Based on the Bank of Canada's nominal noon exchange rate (as at November 15, 2018) of CDN$1.00 =HK$5.931
  5. 12.   Based on the Bank of Canada's nominal noon exchange rate (as at November 20, 2018) of CDN$1.00 =HK$5.907
  6. 13.   Based on the Bank of Canada's nominal noon exchange rate (as at November 28, 2018) of CDN$1.00 =HK$5.8824
  7. 14.   Based on the Bank of Canada's nominal noon exchange rate (as at December 13, 2018) of CDN$1.00 =HK$5.8480

For further enquiries, please contact:

Mr. Kwok Ping Sun

Executive Chairman '

Tel: (852) 3188 9298

Email: investorrelations@sunshineoilsands.com

Website: 

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