- Reabold and Daybreak proposed Equity Exchange Agreement has been approved by Daybreak shareholders.
- Post completion of the agreement, Reabold will hold 42% of Daybreak’s share capital.
- The transaction will create a self-funded oil and gas operator with a strong balance sheet.
In a major upbeat market update, Reabold Resources PLC (LON:RBD) announced today that Daybreak Oil and Gas Inc has received a nod from its shareholders for the Equity Exchange Agreement at a Special Shareholder Meeting.
Earlier in October 2021, Reabold and Daybreak signed a conditional Equity Exchange Agreement under which Daybreak would acquire Reabold California LLC, a subsidiary of RBD. In exchange, Daybreak would issue 160,964,489 shares to Gaelic Resources Limited, a Company wholly-owned by Reabold.
Daybreak is a US OTC (Over the Counter) traded oil and gas operator with assets in California. The transaction will result in Reabold California LLC becoming fully owned subsidiary of Daybreak and Reabold, indirectly, will become a major shareholder of in Daybreak with approximately 42% interest.
Daybreak’s shareholders voted in favour of the Equity Exchange Agreement at a special meeting.
Data source: Company update, 23 May 2022
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Proposed conditions for the Equity Exchange Agreement
The agreement required certain conditions to be met prior to the completion of the transaction. The conditions were:
- Daybreak to raise a minimum of US$2.5 million through an equity raise to fund the efforts to increase production across Daybreak’s enhanced portfolio.
- Conversion of certain debts into equity.
Reabold has reported that the conditions have now been met and the transaction is scheduled to be completed this week, including the transfer of the Consideration Shares to Reabold.
Rationale behind the transaction:
- Creates a self-funded, OTC traded Californian oil and gas company with a strong balance sheet, in which Reabold will hold a significant stake.
- Daybreak will grow its portfolio by developing existing licences and could consider strategic acquisition opportunities utilising its in-state management team and expertise.
- With a strong focus on California, Daybreak can take advantage of large market potential through consolidating assets in the state, resulting in additional synergetic development opportunities.
- Reabold will indirectly receive shares of an OTC listed entity as part of the deal, giving Daybreak more flexibility and funding options in the future.
Reabold California LLC has two oil and gas licences in its portfolio - Monroe Swell and West Brentwood. The transaction will create a US-listed exploration and production company in which Reabold will have a significant shareholding.
RBD was trading at GBX 0.34 during the early hours of trade today.