CPE News (9/1/2020) – Yorktown Partners LLC announced that it will transfer of ESI Energy Services Inc. (CSE: OPI) shares held by certain funds under management to Battery Mineral Resources Corp. (BMR). Both are Yorktown portfolio companies.
Yorktown Energy Partners IV, L.P., Yorktown Energy Partners VI, L.P and Yorktown Energy Partners XI, L.P. will transfer an aggregate of 46,087,215 common shares in the capital of ESI Energy to BMR in exchange for 30,000,000 common shares of BMR.
For purposes of the share transfers, each common share of BMR issued in exchange for an ESI share will have an ascribed value of CDN $0.65. Based on that ascribed value, the consideration to be paid, at the date of closing, for the ESI shares transferred to BMR by the Yorktown funds will be CDN $19,500,000, which implies a sale price for each ESI share of CDN $0.42.
The ESI common shares to be transferred represent approximately 89.2% of the total number of outstanding common shares of ESI on an undiluted basis.
The transfers of the ESI shares from the Yorktown funds to BMR are to be undertaken in connection with an effort on the part of the Yorktown funds to wind down their investments in ESI and to provide BMR with potential access to additional financial resources to support further exploration and development of BMR’s existing mining properties and BMR’s participation in other mining-related opportunities
After giving effect to the purchase of ESI Shares from the Yorktown Entities, BMR will directly own and control 46,087,215 ESI Shares, representing approximately 89.2% of the outstanding ESI shares.
Prior to giving effect to the share transfer transactions, Weston Energy, LLC directly owns approximately 61% of the outstanding common shares of BMR and Weston Energy II LLC directly owns approximately 9% of the outstanding common shares of BMR. Yorktown XI is the controlling shareholder of both Weston Energy, LLC and Weston Energy II LLC.
After giving effect to the issuance of BMR shares in exchange for the ESI shares to be transferred to BMR: Yorktown IV will directly own approximately 15.23% of the outstanding common shares of BMR and Yorktown VI will directly own approximately 4.92% of the outstanding common shares of BMR; and Yorktown XI will directly own approximately 3.28% of the outstanding common shares of BMR. Weston Energy, LLC will directly own approximately 47.2% of the outstanding common shares of BMR and Weston Energy II LLC will directly own approximately 7% of the outstanding common shares of BMR.
Battery Mineral Resources Corp. is focused on exploration activities involving battery metals (cobalt, nickel and copper) and precious metals (silver or gold), principally in Canada.
ESI Energy Services Inc. is a pipeline and renewables equipment rental and sales company with principal operations in Leduc, Alberta and Phoenix, Arizona.
photo credit: ESI Energy Services Inc.
News Release
Yorktown Funds agree to transfer common shares of ESI Energy Services Inc. to Battery Mineral Resources Corp., a Yorktown portfolio company
NEW YORK, NY AND VANCOUVER, BC, Sept. 1, 2020 /CNW/ – Yorktown Energy Partners IV, L.P. (“Yorktown IV”), Yorktown Energy Partners VI, L.P (“Yorktown VI”) and Yorktown Energy Partners XI, L.P. (“Yorktown XI” and together with Yorktown IV and Yorktown VI, the “Yorktown Entities”), each of which is a limited partnership managed by Yorktown Partners LLC (“Yorktown Partners”), and Battery Mineral Resources Corp. (“BMR”), a British Columbia corporation, jointly announce today that they have entered into an agreement of purchase and sale (dated August 31, 2020) providing for the transfer of an aggregate of 46,087,215 common shares in the capital of ESI Energy Services Inc. (“ESI”) from the Yorktown Entities to BMR in exchange for 30,000,000 common shares of BMR, subject to increase in certain circumstances. The ESI common shares to be transferred represent approximately 89.2% of the total number of outstanding common shares of ESI (“ESI Shares”), calculated on an undiluted basis. The shareholders of BMR include Weston Energy, LLC and Weston Energy II LLC. Prior to giving effect to the share transfer transactions noted in this news release, Weston Energy, LLC directly owns approximately 61% of the outstanding common shares of BMR and Weston Energy II LLC directly owns approximately 9% of the outstanding common shares of BMR. Yorktown XI is the controlling shareholder of both Weston Energy, LLC and Weston Energy II LLC.
Of those 46,087,215 ESI Shares, 29,757,586 are to be transferred by Yorktown IV, 9,662,962 are to be transferred by Yorktown VI and 6,666,667 are to be transferred by Yorktown XI, representing 57.6%, 18.7% and 12.9% of the outstanding ESI Shares, respectively. In exchange, at closing, Yorktown IV will receive 19,500,000 common shares of BMR, Yorktown VI will receive 6,300,000 common shares of BMR and Yorktown XI will receive 4,200,000 common shares of BMR. The agreement of purchase and sale entered into between the Yorktown Entities and BMR provides for the issuance of up to an additional 30 million common shares of BMR to the Yorktown Entities if BMR receives proceeds in excess of $10 million on account of its ownership of ESI Shares in certain circumstances contemplated by the purchase and sale agreement on or prior to March 31, 2021. The Yorktown Entities understand that BMR is evaluating certain actions that may result in a wind down of the commercial relationship between BMR and ESI.
The transfers of ESI Shares from the Yorktown Entities to BMR will not be undertaken through the facilities of any stock exchange or other published market. For purposes of the share transfers, each common share of BMR issued in exchange for an ESI Share will have an ascribed value of CDN $0.65. Based on that ascribed value, the consideration to be paid, at the date of closing, for the ESI Shares transferred to BMR by the Yorktown Entities will be CDN $19,500,000, which implies a sale price for each ESI Share of CDN $0.42.
The transfers of the ESI Shares from the Yorktown Entities to BMR are to be undertaken in connection with an effort on the part of the Yorktown Entities to wind down their investments in ESI and to provide BMR with potential access to additional financial resources to support further exploration and development of BMR’s existing mining properties and BMR’s participation in other mining-related opportunities (through the sale of the ESI Shares now held by BMR, for example). Following any sale of the ESI Shares held by BMR, the Yorktown Entities anticipate that any directors of ESI who are associated with the Yorktown Entities will resign as directors of ESI.
After giving effect to the transfers of ESI Shares by the Yorktown Entities, the percentage of ESI Shares directly owned by each of the Yorktown Entities (as noted above) will decline to zero.
Prior to giving effect to the transfers of the ESI Shares to it, BMR neither owned nor controlled, directly or indirectly, any ESI Shares and its ownership percentage in ESI is zero. After giving effect to the purchase of ESI Shares from the Yorktown Entities, BMR will directly own and control 46,087,215 ESI Shares, representing approximately 89.2% of the outstanding ESI Shares.
BMR is acquiring the ESI Shares to increase access to financial resources to continue its mineral exploration program and other business initiatives. BMR will monitor its own financial conditions and cash needs, as well as ESI’s business, prospects, and financial condition. Depending on its evaluation of these and other factors, BMR may from time to time in the future increase or decrease its direct or indirect ownership, control or direction over the ESI Shares or other securities of ESI through market transactions, private agreements, or otherwise, including by effecting dispositions for cash.
After giving effect to the issuance of BMR shares in exchange for the ESI Shares to be transferred to BMR:
Yorktown IV will directly own approximately 15.23% of the outstanding common shares of BMR and Yorktown VI will directly own approximately 4.92% of the outstanding common shares of BMR; and
Yorktown XI will directly own approximately 3.28% of the outstanding common shares of BMR.
After giving effect to the share transfer transactions noted in this news release, Weston Energy, LLC will directly own approximately 47.2% of the outstanding common shares of BMR and Weston Energy II LLC will directly own approximately 7% of the outstanding common shares of BMR. As a result of its direct and indirect (through Weston Energy, LLC and Weston Energy II LLC) interests in BMR following completion of the share transfer transactions noted in this news release, Yorktown XI may (under securities laws in force in Canada) be considered a deemed beneficial owner of the ESI Shares that will be directly owned by BMR following completion of the share transfer transactions noted above.
Yorktown IV, Yorktown VI and Yorktown XI intend to file a report under National Instrument 62-103 – the Early Warning System and Related Takeover Bid and Insider Reporting Issues setting out additional information concerning the foregoing. For further information and to obtain a copy of such report, please contact Mr. Robert Signorino at Yorktown Partners LLC, 19th Floor 410 Park Ave., New York, NY 10022-4407 or by telephone at (212) 515-2100.
About the Yorktown Group
Each of the Yorktown Entities is a limited partnership formed under the laws of Delaware. Yorktown Partners manages the investment activities of various limited partnerships within the Yorktown group (a private equity investment group) and, in that capacity, may be viewed as having control and direction over securities owned by each of the Yorktown Entities.
The head office of Yorktown Partners and each of the Yorktown Entities is located at 19th Floor 410 Park Ave., New York, NY 10022-4407.
Yorktown IV Associates LLC is the sole general partner of Yorktown IV. As a result, Yorktown IV Associates LLC may be deemed to have the power to vote or direct the voting, or to dispose or direct the disposition, of securities owned by Yorktown IV. Yorktown IV Associates LLC disclaims beneficial ownership of the securities owned by Yorktown IV in excess of its pecuniary interests therein. However, Yorktown IV Associates LLC is deemed to beneficially own securities owned by Yorktown IV under applicable securities laws in Canada.
Yorktown VI Company L.P. is the sole general partner of Yorktown VI. Yorktown VI Associates LLC is the sole general partner of Yorktown VI Company L.P. As a result, Yorktown VI Associates LLC may be deemed to have the power to vote or direct the voting, or to dispose or direct the disposition, of securities owned by Yorktown VI. Yorktown VI Company L.P. and Yorktown VI Associates LLC disclaim beneficial ownership of the securities owned by Yorktown VI in excess of their pecuniary interests therein. However, Yorktown VI Company L.P. and Yorktown VI Associates LLC are deemed to beneficially own securities owned by Yorktown VI under applicable securities laws in Canada.
Yorktown XI Company L.P. is the sole general partner of Yorktown XI. Yorktown XI Associates LLC is the sole general partner of Yorktown XI Company L.P. As a result, Yorktown XI Associates LLC may be deemed to have the power to vote or direct the voting, or to dispose or direct the disposition, of securities owned by Yorktown XI. Yorktown XI Company L.P. and Yorktown XI Associates LLC disclaim beneficial ownership of the securities owned by Yorktown XI in excess of their pecuniary interests therein. However, Yorktown XI Company L.P. and Yorktown XI Associates LLC are deemed to beneficially own securities owned by Yorktown XI under applicable securities laws in Canada.
About Battery Mineral Resources Corp.
BMR is focused on exploration activities involving battery metals (cobalt, nickel and copper) and precious metals (silver or gold), principally in Canada. BMR has interests in additional cobalt, lithium and graphite projects in the United States and South Korea. The head office of BMR is located at Suite 400-744 West Hastings St., Vancouver, British Columbia V6C 1A5.
BMR also intends to file a report under NI 62-103 setting out additional information concerning the foregoing. For further information and to obtain a copy of such report, please contact the Corporate Secretary of Battery Mineral Resources Corp., at Suite 400, 744 West Hastings St., Vancouver BC V6C 1A5 or by telephone at (604) 229-3830, extension 1.
About ESI Energy Services Inc.
The outstanding common shares of ESI are listed on the Canadian Securities Exchange under the stock symbol “OPI”. ESI is a pipeline and renewables equipment rental and sales company with principal operations in Leduc, Alberta and Phoenix, Arizona. ESI, together with its operating subsidiaries, ESI Pipeline Services, Inc. and ESI Energy Services (Australia) Pty Ltd., supplies (rents and sells) backfill separation machines to mainline pipeline contractors, renewables and utility construction contractors, as well as oilfield pipeline and construction contractors. The head office of ESI is located at Suite 500 727 – 7th Avenue S.W., Calgary, Alberta T2P 0Z5.
Forward-Looking Information
This news release contains “forward-looking information”. All statements, other than statements of historical fact, that address activities, events, or developments that the Yorktown Entities or BMR believe, expect, or anticipate will, may, could or might occur in the future are “forward-looking information”. Forward-looking information contained herein may include, but is not limited to, statements with respect to the completion of the share transfer transactions noted in this news release, the business plans of the Yorktown Entities, Yorktown Partners, BMR and ESI. Forward-looking information contained herein reflects the current expectations or beliefs of the Yorkton Entities and is based certain assumptions. Such forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause the actual events or results to differ materially from any future events or results expressed or implied by the forward-looking information contained herein. Having regard to those risks, uncertainties and other factors readers should not place undue reliance on the forward-looking information contained herein. The forward-looking information contained in this news release is provided as of the date hereof and, except as may be required by applicable securities laws, the Yorkton Entities and BMR disclaim any intent or obligation to update or revise such forward-looking information, whether as a result of new information, future events or results or otherwise. None of the forward-looking information included in this news release is (and should not be considered to be) a guarantee of any future outcome.
SOURCE Yorktown Funds
For further information: Mr. Robert Signorino at Yorktown Partners LLC, (212) 515-2100; Corporate Secretary of Battery Mineral Resources Corp., (604) 229-3830, extension 1;