Kruger announces proposed acquisition of oil and gas interest, change of business to the oil and gas industry and financing up to approximately $1.0 million
May 2, 2008Kruger Capital Corp. ("Kruger" or the "Company") announced a proposed financing and that it has entered into a Letter of Intent dated April 29, 2008 with Dolar Energy, L.L.C. ("Dolar"), a private company incorporated pursuant to the laws of the state of Utah, U.S.A. to acquire an undivided 25% interest in certain oil and gas properties located in Sublette County, Wyoming (the "Acquisition"). Dolar is arm's length from the Company and is owned and controlled by Mark S. Dolar and Janet K. Dolar.
Proposed Financing
Kruger intends to carry out a non-brokered private placement for up to 2,500,000 units at a price of $0.42 per unit, each unit consisting of one common share and one common share purchase warrant. Each full warrant will entitle the holder to purchase one additional common share at a price of $0.65 per share, for two years following the closing of the private placement. The securities will be subject to a four-month hold period under applicable securities laws.
The closing of the private placement is subject to the receipt of all necessary regulatory approvals. The proceeds from the placement will be used to finance Kruger's share of initial capital expenditure requirements pursuant to the Acquisition. The use of proceeds is subject to further change based upon the results of initial work programs.
Change of Business
The completion of the Acquisition will be a change of business for the Company, in accordance with the policies of the TSX Venture Exchange, with a new focus on the international oil and gas industry. The Company was previously engaged in the business of owning and operating commercial property in British Columbia. In January 2007, the Company sold its commercial property to a third party.
The closing of the Acquisition is subject to a number of conditions, including (a) execution of a definitive purchase and sale agreement; (b) completion of satisfactory due diligence; (c) regulatory and shareholder approval; and (d) closing of the Acquisition on or before August 31, 2008, or such later date as may be agreed to under the applicable agreements.
Under the terms of the Acquisition, Kruger will incorporate a wholly-owned US subsidiary (the "Subsidiary") which will acquire a 25% interest in and to an approximately 1,441 net acre leasehold position in the North Pinedale Project situated along the northern extent of the Pinedale Anticline located in Sublette County, Wyoming. The Subsidiary will joint venture as a non-operating partner with a US exploration company with extensive expertise and experience in completing the over pressurized Lance and Mesaverde formations objectives in the project area.
Kruger, through its Subsidiary, will purchase an undivided 25% interest in the properties for consideration of 200,000 common shares of Kruger and a cash payment of $80,000 (U.S.) upon closing. If the first two wells drilled are completed as producing wells capable of producing in paying quantities, Kruger shall pay to Dolar an additional $300,000 (US) cash, or 300,000 common shares of Kruger, or a combination of both, at Dolar's option, after Kruger has generated a 15% rate of return from its investment in the first two wells in the project.
The interest purchased by Kruger will represent a working interest in the Properties and Kruger will be required to contribute its proportionate share of the costs associated with the Properties. A drill program is scheduled to commence in the fall of 2008.
A finder's fee of 30,000 common shares of Kruger will be paid to Clancy Wendt in connection with the Acquisition.
The Company intends to apply for an exemption from the sponsorship requirements of the policies of the TSX Venture Exchange, however there are no assurances that such an exemption will be obtained.
The completion of the Acquisition will be a change of business for the Company with a new focus on the international oil and gas industry. Completion of the transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
For further information, please call:
Kruger Capital Corp.
Eric Carlson, President
(604) 689-3040
