Groundstar Resources Limited Announces Update to Financing

CALGARY, Alberta, March 22, 2018 (GLOBE NEWSWIRE) --

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Groundstar Resources Limited (GSA.V) (the “Company”) is providing an update to its press release dated February 27, 2018 wherein it announced that it was conducting a non-brokered private placement of a maximum of $70,000 aggregate principle amount of convertible debenture units (the “Convertible Debenture Units” or “CDUs”) at a price of CAD$1,000 per Convertible Debenture Unit. The Company is announcing that it has amended the terms of the CDUs with respect to the conversion price of same (subject to regulatory approval) and, as a result, the number of warrants issued as part of each CDU, as well as slight delays with respect to the closings of the different offerings described therein. The result is that each CDU will now consist of a debenture in the principal amount of CAD$1,000 (the “Convertible Debenture”) and bear interest at 12% and include warrants (the “Warrants”) exercisable into 50,000 common shares in the capital of the Company (the “Offering”). Each Warrant will be exercisable to acquire one common share in the capital of the Company (each, a “Warrant Share”) at an exercise price of $0.05 per Warrant Share for a period of two years following the Closing Date (as hereinafter defined).

The Convertible Debentures will bear interest from the Closing Date at 12.0% per annum, payable semi- annually on June 30 and December 31 of each year and will expire on the date that is two years from the closing date (the “Maturity Date”), will be secured by the assets of the Company and be subordinate to any existing secured parties of the Company. The Convertible Debentures are convertible into common shares in the capital of the Company (“Debenture Shares”) at the option of the holder at any time prior to the close of business on the earlier of: (i) the last business day immediately preceding the Maturity Date; and (ii) the date when the Common Shares are consolidated as set forth below, at a conversion price of $0.02 per Common Share (the “Conversion Price”), subject to adjustment in certain events. The Company intends to effect a share consolidation of its common shares at a ratio to be determined in order to ensure that the conversion pricing meets the policies of the TSX Venture Exchange (“TSXV”). All share prices in this press release are pre-consolidation amounts and will be adjusted in accordance with whatever exchange ratio is ultimately approved by the shareholders of the Company at its next annual meeting of shareholders and any such post-consolidation share price will be compliant with the pricing parameters set forth in the policies of the TSXV. Further, the transactions described herein are subject to all necessary approvals of the TSXV.

Subsequent to the issuance of the Convertible Debenture Units, the Company proposes to proceed with an additional financing (the “Second Financing”) of up to 20 million units in the capital of the Company (the “Common Units”) at a price of $0.01 per unit, each unit consisting of a common share in the capital of the Company (“Common Share”) and a common share purchase warrant (a “Warrant”) for gross proceeds of up to CAD$200,000. Each Warrant will permit the holder to acquire one additional Common Share at a price of $0.05 in the first year from closing and at $0.075 in the second year from closing.

Closing the Second Financing is contingent on completion of a proposal to renegotiate the debt due to the Company’s major creditors into long-term obligations. Changes in Management and the Board may also occur upon closing.

Notwithstanding the foregoing, in the event that demand for the Offering or the Second Financing is greater than anticipated, the Board of Directors of the Company may increase the size of the Offering or the Second Financing to such amount as they may determine in their sole discretion, subject to approval of the TSXV regarding same. In addition, while the Company intends to seek an exemption for the anticipated pricing of the Offering and the Second Financing, the granting of such exemption is subject to approval of the TSXV. The aforementioned financings will be completed in two tranches over the next month, with the Offering expected to close in the near future, possibly in multiple tranches, and the Second Financing expected to close on or about April 15, 2018 (each, a “Closing Date”).

The Company will utilize the net proceeds from the Offering and the Second Financing (collectively, the “Financings”) for general corporate purposes and to seek different corporate opportunities, which may involve drilling new wells, seeking a farm-in opportunity or acquiring producing assets.

The Convertible Debenture Units and Common Units will be issued on a private placement basis in the Provinces of Alberta, British Columbia, Ontario and such other jurisdictions as the Company may determine in its sole discretion and will be subject to a statutory hold period of four months and a day from the applicable closing date of each tranche of the Financings. Closing of the Financings and the applicable pricing thereof are subject to approval of the TSXV.

The Financings are open to all existing shareholders of the Company and such other individuals or entities as the Company may determine in its sole discretion. It is currently anticipated that insiders of the Company will subscribe for a significant amount of the Offering.