Pursuant to the Business Combination, Lycos:
- appointed a new management team led by Dave Burton as President and Chief Executive Officer, Lindsay Goos as Chief Financial Officer, Kyle Boon as Vice President, Jamie Conboy as Vice President, Exploration, Operations and Jeff Rideout as Vice President, Land. In addition, Sanjib (Sony) Gill, a partner in the Calgary office of the national law firm Stikeman Elliott LLP, will act as Corporate Secretary;
- appointed a new board of directors, comprised of Dave Burton, Kevin Olson, Ian Atkinson, Ali Horvath, Bruce Beynon, Don Cowie and Kel Johnston. Neil Roszell will serve as a Special Advisor to the Board;
- acquired all of the issued and outstanding common shares in the capital of Chronos (each, a “Chronos Share“) in exchange for twenty (20) common shares in the capital of Samoth (each, a “Samoth Share“) at a deemed price of $0.035 per Samoth Share;
- underwent a name change (the “Name Change“) from “Samoth Oilfield Inc.” to “Lycos Energy Inc.”; and
- effected a share consolidation (the “Consolidation“) on the basis of one (1) post-consolidation common share in the capital of Lycos (each, a “Lycos Share“) for every eight (8) pre-consolidation Samoth Shares, representing an exchange ratio, on a post-Consolidation basis, of two and a half (2.5) Lycos Shares at a deemed price of C$0.28 per Lycos Shares for every Chronos Share.
The TSXV has provided conditional approval for the Business Combination and listing of the Lycos Shares. The total number of Lycos Shares issued and outstanding at listing will be 318,147,806. The Business Combination did not result in a change of control (as defined in the policies of the TSXV) of Lycos as the new insiders of Lycos hold in aggregate less than 10% of the issued and outstanding Lycos Shares.
In conjunction with the Business Combination, Chronos completed its previously announced non-brokered private placement (the “Subscription Receipt Private Placement“) of subscription receipts of Chronos (each, a “Subscription Receipt“) for aggregate gross proceeds of $53.0 million and its non-brokered private placement of units of Chronos (each, a “Unit“) for additional aggregate gross proceeds of $12.0 million (the “Unit Private Placement“, and together with the Subscription Receipt Private Placement, the “Chronos Financings“).
The net proceeds from the Chronos Financings will be used to fund the business plan of Lycos and for working capital and general corporate purposes. Additional details in respect of the Transaction are disclosed in the joint press releases of Chronos and Samoth dated November 7, 2022. Advisors received aggregate compensation equal to $2,570,000 in cash and 1,117,144 in Units, at a deemed issuance price of $0.70 per Unit, with respect to the Business Combination and the Subscription Receipt Private Placement, as applicable.
The Subscription Receipt Private Placement
Chronos issued an aggregate of 75,714,285 Subscription Receipts at an offering price of $0.70 per Subscription Receipt under the Subscription Receipt Private Placement. Pursuant to the terms of the subscription receipt agreement (the “Subscription Receipt Agreement“) dated December 6, 2022, between Chronos and Odyssey Trust Company, in its capacity as subscription receipt agent, each Subscription Receipt was automatically exchanged for one Chronos Share immediately prior to the Business Combination being effected. Each Chronos Share issued pursuant to the Subscription Receipts was acquired by Samoth in exchange for twenty (20) Samoth Shares, and subject to the Consolidation, resulting in each holder of Subscription Receipts receiving two and a half (2.5) Lycos Shares for each Subscription Receipt held.
The Unit Private Placement
Contemporaneous with the closing of the Business Combination, an aggregate of 17,142,858 Units were issued pursuant to the Unit Private Placement at an offering price of $0.70 per Unit. Each Unit was comprised of one Chronos Share and one Chronos Share purchase warrant (each, a “Chronos Warrant“). Each Chronos Share issued pursuant to the Units was acquired by Samoth in exchange for twenty (20) Samoth Shares, and following the completion of the Consolidation, resulted in each holder of Units receiving two and a half (2.5) Lycos Shares for each Unit held. Each Chronos Warrant was exchanged at the same ratio, resulting in holders of Units receiving two and a half (2.5) Lycos Share purchase warrants (each, a “Lycos Warrant“) for each Unit held. Each whole Lycos Warrant entitles the holder thereof to purchase one (1) Lycos Share for a period of five (5) years following the date of issuance at an exercise price of $0.28 per Lycos Warrant (the “Exercise Price“) and shall vest and become exercisable as to one-third upon the 10-day weighted average trading price of the Lycos Share (the “Market Price“) equaling or exceeding $0.42, an additional one-third upon the Market Price equaling or exceeding $0.49, and a final one-third upon the Market Price equaling or exceeding $0.56.
No fractional securities were be issued. Any fractional interest in Lycos Shares or Lycos Warrants that is less than 0.5 resulting from the Consolidation will be rounded down to the nearest whole number and any fractional interest in Lycos Shares or Lycos Warrants that is 0.5 or greater will be rounded up to the nearest whole number.
Additional Information for Samoth Shareholders
Registered holders of pre-Consolidation Samoth Shares will receive a letter of transmittal by mail, from the transfer agent of Lycos, Odyssey Trust Company, advising of the completion of the Consolidation, the Name Change and the Business Combination, and providing instructions to exchange share certificates or DRS statements representing pre-Consolidation Samoth Shares for their entitlement to Lycos Shares. Non-registered shareholders holding Samoth Shares through an intermediary (a securities broker, dealer, bank or financial institution) should be aware that the intermediary may have different procedures for processing the Consolidation and the Name Change than those that will be put in place for registered shareholders. If shareholders hold their Samoth Shares through intermediaries and have questions in this regard, they are encouraged to contact their intermediaries. For more information on the Consolidation and the Name Change, shareholders are encouraged to refer to the management information circular dated July 7, 2022, a copy of which is available on the Corporation’s SEDAR profile.