Vancouver, British Columbia--(Newsfile Corp. - July 9, 2018) - Verisante Technology, Inc. (TSXV: VRS) (the "Company" or "Verisante"), is pleased to announce it has entered into a Definitive Agreement with Myanmar based SIM Co. Ltd. ("SIM") dated June 30, 2018, whereby VRS shall acquire all the issued and outstanding common shares of SIM, a land development Company pursuing construction and operation of an Offshore Supply Base (OSB) to service the awakening oil and gas industry in the Ayarwaddy region of Myanmar.
Acquisition Terms
Subject to Exchange approval, as well as applicable director and shareholder approvals, SIM shall sell and VRS shall acquire, on an arm"s-length basis, all of the issued and outstanding Common voting shares of SIM (the "SIM Shares") from the current holders of the SIM Shares ("SIM Shareholders"). The total purchase price shall be satisfied by VRS issuing 500,000,000 of its Common shares ("VRS Shares") to the SIM Shareholders. The price was determined using a $0.10 share price for VRS and a minimum enterprise value for SIM of $50million according to the valuation report conducted by International Realty Valuation, Inc. The consideration for the Acquisition was determined through arm"s-length negotiation by the parties.
According to the unaudited financial statements provided to VRS by SIM, SIM has a minimum asset value of $50mil from its 184 acres of land and the issued government permit to develop and operate the OSB for 30 years. Currently, SIM has no liabilities or revenues.
The proposed arm"s-length acquisition (the "Acquisition") is subject to customary conditions, including necessary corporate and shareholder approvals and applicable exchange acceptance. Upon completion of the Acquisition the issuer will be an Emerging Market Issuer, and will seek to meet the requirements as an Industrial Issuer, as defined in Exchange Policy. 2.10. The issuer will be operating an OSB that will provide support facilities such as cranes, lifting equipment, warehouses, waste management and other support services to oil and gas companies operating in the region. This will constitute a Change of Business ("COB") and a Reverse Takeover ("RTO") as defined by TSXV Policy 5.2.
SIM is controlled by U Aung Kyaw (Aaron Aung), who shall become the Company"s President and CEO upon completion of the Acquisition.
The Company has not retained a Sponsor for the transaction at this time, and will be seeking a waiver of sponsorship from the TSX.
Under the Definitive Agreement, dated June 30, 2018, SIM and VRS also agree to raise $500,000 pursuant to debt financing or for issuance of Common shares of VRS, via a private placement. A contemplated Debt financing will be in a straight loan with an annual simple interest of 12% paid quarterly. A Private placement financing shall be for common shares at a price of $0.10 per share. The Proceeds of this financing are to be used: (1) for costs relating to the RTO; (2) for Pre-construction expenses of the OSB; and (3) for working capital and general corporate purposes.
There is no finder"s fee payable in connection with the $500,000 financing.
The Company has not advanced any funds to SIM but contemplates advancing up to $150,000 to SIM for additional survey and design expenses in addition to audit or other expenses relating to the RTO that may arise prior to closing.
Upon completion of the Acquisition, an additional $15 million in equity financing will be sought for the construction and development of the OSB. The Company will welcome strategic or financial investors to discuss the terms of this financing. Upon the anticipated closing of the $15mil financing in 2018, the company"s projected EBITDA for the fiscal years 2019-2021 is expected to reach $2.6mil, $7.2mil, and $12.9mil respectively.
The closing date for the proposed Acquisition is expected to be on or around September 30, 2018. Trading of the common shares of the Company has been halted by the TSXV and will remain halted pending completion or termination of the proposed Acquisition, pursuant to TSXV Policy 5.2.
Upon completion of the Acquisition, the names, backgrounds, and jurisdictions of all Persons who will constitute Principals or Insiders of the Resulting Issuer as known as of this date is as follows:
About the Oil & Gas Industry in Myanmar
Myanmar"s proven natural gas reserves are about 1,820 billion cubic feet (BCF) and its crude oil reserves are estimated to top 139 million barrels. Currently, there are 53 onshore oil and gas blocks in Myanmar. The country has designated a total of 51 offshore blocks, 38 of which foreign companies (including PTTEP, Chevron, Shell, BP, Total, ConocoPhillips, Petronas, Daewoo) and others hold stakes. In total, there are 32 companies from 20 countries active in the Myanmar oil and gas sector.
Opportunities to invest in Myanmar oil and gas are emerging on the back of a string of changes and restructuring efforts now taking place in the sector.
Learning from Malaysia and Norway, The Ministry of Electricity and Energy (MOEE) is currently revising the existing terms and conditions of Myanmar"s existing oil and gas Production Sharing Contracts (PSCs) to create mutual benefits for government and investors and draw new investments into the sector.
The PSCs are being reviewed ahead of potential tenders for up to 31 Myanmar oil and gas blocks, which will be open to both local and foreign investors in the near future.
More than 70% of Myanmar"s offshore blocks remain unexplored. With the recent recovery in oil prices and new supply bases to facilitate offshore gas exploration, investment into this sector is expected to increase steadily.
About Offshore Supply Bases in Myanmar
An important development in 2017 has been the Myanmar Investment Commission"s (MIC"s) approval of offshore supply bases. A big hurdle for international oil and gas companies operating in the country comes from the lack of an offshore supply base. There is only one supply base in Yangon, and the nearest platforms are in Singapore and Thailand. Oil and gas companies in Myanmar use supply bases in those two countries, which are at least 4-5 days away by boat. The day rate of a drill ship is over $350,000 per day and vessels require 10 days for a round-trip to and from Singapore.
The cost is enormous for oil and gas companies to operate off the coast of Myanmar - which means that Myanmar is deprived of an important economic activity while other countries benefit from operations in its waters.
A domestic offshore supply base would make supplies for drilling activities cheaper, available within a shorter time, and quicker, in terms of assuring an easier customs clearance - thereby successfully addressing the needs of its own offshore operators. MIC provided a series of permits for up to six OSB projects. SIM"s Ayarwaddy Offshore Supply Base (AOSB) was the first project to receive a permit from MIC.
