Connected Transaction Payment of Director Fee in Shares in Lieu of Cash Under General Mandate and  Change of Registered Office

Source Press Release
Company Sunshine Oilsands Ltd. 
Tags People, Strategy - Corporate
Date May 15, 2019

The Board announces that it has on May 15, 2019 approved the payment of 100% of the director fee of directors stipulated below ( the “Connected Directors”) for the period from October 1, 2017 to April 30, 2019 in shares (“Shares”) in lieu of cash, subject to conditions and compliance with the reporting, announcement and Independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

An aggregate of 21,779,902 Shares are proposed to be issued to the Connected Directors. The new Shares to be issued and allotted by the Corporation pursuant to the aforesaid payment represent approximately 0.35% of the Corporation’s issued share capital as at the date of this announcement and approximately 0.35% of the Corporation’s enlarged issued share capital after the said payment issuance and allotment.

THE PROPOSED ISSUE OF SHARES IN LIEU OF DIRECTOR FEE

The key terms and details of the proposed issue of Shares for payment of director fee of the Connected Directors in lieu of cash are set out below.

I.            Non-Executive Directors

Name of Directors  1. Mr. Michael J Hibberd (“Mr. Hibberd”)2  2. Mr. Hong Luo (“Mr. Luo”)  3. Ms. Xijuan Jiang (“Ms. Jiang”) 
Number of new Shares to be conditionally issued: (assuming no change in the total number of issued shares between the date of this announcement and the date of issue of all Shares)  3,524,371 Shares, representing approximately 0.06% of the existing total issued Shares and 0.06% of the total issued Shares as enlarged by the proposed issue of the Shares.  4,687,337 Shares, representing approximately 0.08% of the existing total issued Shares and 0.08% of the total issued Shares as enlarged by the proposed issue of the Shares  4,940,707 Shares, representing approximately 0.08% of the existing total issued Shares and 0.08% of the total issued Shares as enlarged by the proposed issue of the Shares 
Value of Shares:  Approximately HK$ 324,242.101 (CAD 55,640 equivalent)  Approximately HK$ 431,235.001 (CAD 74,000 equivalent)  Approximately HK$ 454,545.001 (CAD 78,000 equivalent) 

  1. II.     Independent Non-Executive Directors
Name of Directors  4. Ms. Joanne Yan (“Ms. Yan ”)2  5. Mr. Yi He (“Mr. He”) 
Number of new Shares to be conditionally issued: (assuming no change in the total number of issued shares between the date of this announcement and the date of issue of all Shares)  3,243,384 Shares, representing approximately 0.05% of the existing total issued Shares and 0.05% of the total issued Shares as enlarged by the issue of the proposed issue Shares  5,384,103 Shares, representing approximately 0.09% of the existing total issued Shares and 0.09% of the total issued Shares as enlarged by the issue of proposed issue Shares 
Value of Shares:  Approximately HK$ 298,391.311 (CAD 51,204 equivalent)  Approximately HK$ 495,337.501 (CAD 85,000 equivalent) 

Notes:

  1. 1.     Based on the Bank of Canada's nominal noon exchange rate (as at May 14, 2019) of CDN$1.00 =HK$5.8275.
  2. 2.   For Mr. Hibberd and Ms. Yan, the amount of the director fees for the period from 1 October 2017 to 30 April 2019 and therefore the number of Shares to be issued for payment of such director fees are calculated net of Canadian withholding tax.

All Shares are to be issued at the closing price of the date of this announcement (“Issue Date”) of HK$0.092 per share, representing:

(i)            a discount of approximately 2.95% as to the average closing price of HK$0.0948 per Share as quoted on the Hong Kong Stock Exchange for the last five consecutive trading days immediately prior to and including May 14, 2019; and

(ii)           at par with the closing price of HK$0.092 per Share as quoted on the Hong Kong Stock Exchange on May 15, 2019.

Up to the date of this announcement, the Board has allotted and issued 156,688,452 shares under the General Mandate.

The proposed issuance Shares have no nominal value and, if and when issued and fully paid, will be free and clear of all liens, encumbrances, equities or other third parties rights and will rank pari passu in all respects among themselves and with all other Class “A” Common Voting Shares in issue at the time, with the right to receive all dividends and other distributions on the Shares declared, made or paid on or after the date of allotment, and the Shares to be issued are not subject to any vesting condition. The Connected Directors will have the right to dispose these Shares and/or exercise the rights underlying thereof in accordance with their own wishes once these Shares are issued and allotted to them.

LISTING RULES IMPLICATIONS

Mr. Hibberd, Mr. Luo, Ms. Jiang, Ms. Yan and Mr. He, being Directors, are connected persons of the Corporation. Accordingly, the proposed issue of Shares for payment of director fee in lieu of cash is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The proposed issue of Shares is therefore subject to the following conditions :-

  1. Independent Shareholders approving the issue of the Shares for payment of Director Fee in lieu of cash; and
  2. the Stock Exchange granting the listing of and permission to deal in the proposed issue Shares.

An SGM will be convened at which Independent Shareholders will consider and vote by way of poll on the proposed issue of Shares to each of Mr. Hibberd, Mr. Luo, Ms. Jiang, Ms. Yan and Mr. He for payment of Director fee in lieu of cash. Each of Mr. Hibberd, Mr. Luo, Ms. Jiang, Ms. Yan and Mr. He and their respective associates, are required to abstain from voting on the relevant resolution in respect of the proposed issue of Shares for payment of Director fee in lieu of cash.

The Special Board Committee comprising Mr. Raymond S. Fong, the only independent non-executive Director who is not a Connected Director, has been formed to advise the Independent Shareholders on the issue of Shares for payment of director fees in lieu of cash.

Donvex Capital Limited, a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (as amended from time to time), has been appointed as the independent financial advisor to advise the Special Board Committee and the Independent Shareholders in respect of the issuance of Shares for payment of director fee in lieu of cash described therein.

The Connected Directors are considered as having material interests in the proposed issuance and therefore, have to abstain from voting on the Board resolutions approving this issuance.

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Shares to be issued to the Connected Directors.

A circular containing, among other things, further details of the issuance and allotment of Shares for payment of Director fee for Connected Directors, a letter of advice from the Special Board Committee to the Independent Shareholders, a letter of advice from Donvex Capital to the Special Board Committee and the Independent Shareholders in respect of the issuance of Shares as payment for Director fee in lieu of cash for the period from October 1, 2017 to April 30, 2019, and the notice convening the SGM will be dispatched to the Shareholders on or before May 31, 2019.

REASONS FOR THE ISSUE OF SHARES FOR PAYMENT OF DIRECTOR FEE IN LIEU OF CASH

The Corporation is engaged in the evaluation and the development of oil properties for the future production of bitumen in the Athabasca oilsands region in Alberta, Canada.

Currently, the Board comprises of nine Directors, of which four are non-executive Directors and three are independent non-executive Directors.

The Directors each receive annual retainer fees in the amount of CDN$40,000 (the “Base Retainer Fee”). In addition, the Directors will receive fee for each Board meeting for their participation. The Base Retainer Fees together with the fee for directors’ participation in the Board meeting were approved by the Board which believes that the quantum was fair and reasonable in light of industry standards and were in normal market terms which commensurate with the remuneration packages of directors of other comparable companies.

The Board is of the view that the proposed issue of Shares as payment of Director fee in lieu of cash provides an alternative form of remunerating the Directors for their service to the Company while reducing actual cash outflow by the Company. It also helps to align the interests of the Connected Directors to the Shareholders through ownership of Shares.

The Board (excluding the respective Connected Directors) is of the view that the terms of issue of Shares for payment of Director fee in lieu of cash to the respective Connected Director is fair and reasonable and in the interests of the Corporation and its Shareholders as a whole.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd