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P Squared Renewables Inc. Announces Qualifying Transaction with Borealis Geopower Inc.



Calgary, Alberta / TheNewswire / July 5, 2017 - P Squared Renewables Inc. (TSXV: PSQ.P) ("P Squared") is pleased to announce that it has entered into a binding term sheet (the "Term Sheet") with Borealis GeoPower Inc. ("Borealis" or "the Company") and the shareholders of Borealis which sets out the material terms and conditions pursuant to which the parties have agreed to complete a transaction that will result in Borealis becoming a wholly owned subsidiary of P Squared (the "Transaction"). The Transaction is to be the Qualifying Transaction of P Squared pursuant to Policy 2.4 of the TSX Venture Exchange (the "TSXV"). The Term Sheet was negotiated at arm's length and is effective as of July 1, 2017. See "Qualifying Transaction" below.

Borealis GeoPower

Borealis is a Renewable Geothermal Energy Company with its head office in Calgary, Alberta that will access heat from geothermal wells to produce renewable power and heat. Borealis is incorporated under the Canada Business Corporations Act. The Company has two geothermal energy projects in British Columbia, both of which are in the exploration stage and are drill bit ready. The Company's flagship project is the Canoe Reach Energy Project located near Valemount, British Columbia where the Company intends to build a 15 MW power plant. The Company plans to sell the power to BC Hydro as well as to other customers via direct electricity sales. As part of the Canoe Reach Energy Project, the Company intends to also build "Sustainaville", a geothermal energized commercial "Geo-Park" that will offer geothermal renewable power and heat alternatives along with the ability to grow a diversified local economy supporting food, forestry, mining, tourism and community district heating. The Company's other project is the Lakelse Lake Energy Project located near Terrace, British Columbia that is being developed in conjunction with Borealis's First Nation partner. The Company has a 49% interest in this Project. The plans for this Project include a 15 MW power plant and an associated Geo-Park for Greenhouse operations.

Borealis has developed proprietary geothermal exploration technology with the support of Canadian funding agencies for:

  • - optimized geothermal exploration methodology; and

    - advanced exploration data analysis and reservoir characterization for geothermal resources.

A summary of any significant financial information with respect to Borealis will be included in a subsequent news release.

Qualifying Transaction

P Squared has entered into the Term Sheet with Borealis and its shareholders which sets out the material terms and conditions of the acquisition by P Squared of all issued and outstanding common shares of Borealis (the "Borealis Shares"), resulting in Borealis becoming a wholly owned subsidiary of P Squared. A total of 11 million common shares of P Squared are to be issued in exchange for the 1,627 Borealis Shares issued outstanding, being an exchange ratio of 6,760.91 common shares of PSQ for each Borealis Share. Following the completion of the Transaction, and prior to giving effect to the Private Placement (see "Private Placement" below), 22 million common shares of P Squared will be issued and outstanding. The Term Sheet also includes covenants in respect of the conduct of business and changes in capital structure by each of P Squared and Borealis prior to the completion of the Transaction.

The Term Sheet is to be superseded by a definitive share exchange agreement (the "Definitive Agreement"). The Transaction will be effected pursuant to the Term Sheet if the Definitive Agreement is not entered into. It is intended that the Transaction will be completed by the end of September 2017 and, in any event, no later than December 31, 2017 (or such other date as may be mutually agreed in writing between P Squared and Borealis). The Transaction is subject to the completion by P Squared of a private placement financing for minimum proceeds of $5 million (see "Private Placement" below), obtaining requisite regulatory approval, including the acceptance of the TSXV and the satisfaction or waiver of customary closing conditions, including the approval of the directors of P Squared of the Transaction and the completion of due diligence investigations to the satisfaction of P Squared, as well as the conditions described below. The legal structure for the Transaction will be confirmed after the parties have considered all applicable tax, securities law and accounting efficiencies, however, it is currently contemplated that the transaction will be structured as a securities exchange.

It is not anticipated that the Transaction will be subject to the approval of the shareholders of P Squared. Certain of the common shares issuable pursuant to the Transaction will be subject to the escrow requirements of the TSXV or hold periods as required by applicable securities laws.

Bridge Loan

Subject to prior acceptance of the Exchange and the satisfaction of all conditions of the Exchange in respect of same, PSQ has agreed to provide a secured loan to Borealis in the principal amount of $225,000 (the "Bridge Loan"). The proceeds of the Bridge Loan shall be used by Borealis solely to fund its operating activities and to fund its expenses incurred in connection with the Transaction. The actual uses of funds need to be pre-approved in writing by PSQ with funds being advanced as approvals are given. The Bridge Loan shall accrue interest at the rate of 6% per annum, compounding semi-annually and shall be due and payable on July 1, 2018. The repayment of the Bridge Loan shall be secured by a first place security interest in all of the present and after acquired personal property of BGP granted pursuant to a general security agreement entered into between PSQ and BGP.

Private Placement

Immediately prior to or concurrent with the closing of the Proposed Transaction, P Squared will complete a private placement financing ("Private Placement") for a minimum gross proceeds of $5 million and a maximum gross proceeds of $10 million. Details of the Private Placement, including detailed uses of proceeds, will be announced when finalized. The proceeds of the Private Placement will be sufficient to satisfy the requirements of the TSXV in connection with P Squared's application for acceptance of the Transaction as its Qualifying Transaction. Funds will be held in escrow if raised prior to closing of the Transaction. If the Transaction fails to close, funds raised will be returned to subscribers. The proceeds of the Financing will be used to fund work programs on Borealis' Canoe Reach Energy Project and Lakelse Lake Energy Project, to pursue asset acquisitions, to repay amounts owed by Borealis to arm's length and non-arm's length lenders and for general corporate purposes.

Officers and Board of Directors

Upon completion of the Transaction, the Board of Directors of P Squared is to be comprised of the current Directors of P Squared, being Shabir Premji (Executive Chair), Jack Pastuszko, Tim Mahoney and Greg Hu, and two nominees of Borealis, being Alison Thompson and Tim Thompson. Also, the following people will serve as officers and/or key employees of P Squared and Borealis upon the completion of the Transaction.

  • - Shabir Premji - Executive Chair and CEO of P Squared

    - Alison Thompson - President of Borealis GeoPower Inc.

    - Jack Pastuszko - Vice President Business Development of P Squared

    - Craig Dunn - Chief Geologist of Borealis GeoPower Inc.

Brief biographies of the key personnel follow.

Shabir Premji, Executive Chair, CEO and Director

Mr. Premji was the Founder, Executive Chairman and Director of Alberta Oilsands Inc. ("AOS"). AOS discovered multi- million barrels of oil sands in the Athabasca fairway in Alberta and owned over 140 sections of oil sands leases. AOS also owned two blocks of oil exploration leases in Kenya that were merged with Africa Oil Inc. which discovered the first commercial reservoirs of oil in that country. Mr. Premji is also the President of Platform Energy Inc., a company that provides strategic advisory services to the energy sector.

Mr. Premji was educated in Tanzania, England and Canada and obtained his membership to the Institute of Chartered Accountants in England and Wales in 1977, and later obtained his membership to the Institute of Chartered Accountants of Alberta and to the Canadian Institute of Chartered Accountants in 1982.

Alison Thompson, Director and President of Borealis GeoPower Inc.

Having held positions at a coal based utility in the US and hydrocarbon majors in Canada such as Suncor and Nexen and now as a Principal and Co-Founder at Borealis GeoPower, Ms. Thompson has stood on both sides of what sometimes seems like a deep divide between renewable and non-renewable energy production. As an engineer she brings a depth of understanding of the technology behind energy production. Through her incredible diversity of experience, she has developed an intimate understanding of the political landscape and business culture of energy in Canada and beyond.

Ms. Thompson's board experience is equally as diverse as her career experience. Locally, she is a Fellow of The Natural Step's Alberta Energy Futures Lab. Nationally, Ms. Thompson is the Chair and a Founder of the Canadian Geothermal Energy Association. Globally, she serves on the US based Geothermal Resources Council's Public Outreach Committee. She was a director of the International Geothermal Association and remains as a committee member charged with crafting geothermal resource specifications with the United Nations Economic Commission for Europe. She has been an Expert Technology Evaluator for the European Commission and the US Department of Energy.

Locally, Ms. Thompson has served on the Board of Directors of Alberta Innovates and DEEP Earth Energy Production and was an Officer of Magma Energy (now Alterra Power). Nationally, she was a board member of Youth Science Canada and Petroleum Technology Alliance Canada. Internationally, she had a seat on the Executive Committee of the International Energy Agency's Geothermal Implementing Agreement.

Ms. Thompson holds Bachelor and Master of Chemical Engineering degrees from McGill University, a Professional Engineering designation from APEGA as well as an MBA degree with a concentration in finance from Queen's University.

Greg Hu, Director

Dr. Hu has over 25 years' experience in the oil sands industry. Prior to his involvement with the Corporation, Dr. Hu co-founded and is the current Chief Executive Officer of Loring Tarcore Labs Ltd., a position he has held since 2006. Dr. Hu obtained his Bachelor of Science and Masters of Science in geology from China University of Geosciences in 1983 and 1987, respectively. He obtained his Ph.D. in geology from the University of Western Ontario in 1997. Dr. Hu is a member of the Canadian Society of Petroleum Geologists (CSPG), Canadian Heavy Oil Association (CHOA), and the Association of Professional Engineers and Geoscientists of Alberta (APEGA).

Jack Pastuszko, Vice President Business Development and Director

Mr. Pastuszko is a renewable energy entrepreneur. He has held Senior Technical Sales positions with various instrumentation and control solutions providers from 2012 to 2016, including Pembina Controls Inc., Multigas Detection Ltd., Westech Industrial Ltd. and Procon Systems Inc. Prior thereto, he was the Senior Sales Manager with Suzlon Wind Energy Corp. (October 2011 to November 2012).

Tim Mahoney, Director

Mr. Mahoney is a former United States Congressman for Florida's 16th Congressional District (2006-2008). In January 2009, Mr. Mahoney co-founded Caribou LLC, an advisory firm that provides both strategic and tactical advice for CEO's and their boards. Mr. Mahoney earned a Bachelor of Arts in Computer Science and Business at West Virginia University in Morgantown in 1978 and a Master of Business Administration at The George Washington University in Washington, D.C. in 1983.

Tim Thompson, Director

Mr. Thompson leads Oliver Wyman's Upstream Energy Practice in Calgary. With over 28 years combined industry and consulting experience, he has assisted developing various elements of the strategic agenda for clients spanning the entire energy value chain. His primary focus is North American Upstream producers and he is one of the firm's leaders in developing intellectual capital.

Prior to Management Consulting, Tim had an 11-year Midstream career, with functional focus on Engineering, Planning, Regulatory and ultimately Profit and Loss responsibility related to delivering Major Projects. He is currently the Chair of Borealis.

Mr. Thompson holds a Masters in Business Administration (Operations Specialty) from Queens University (Summa Cum Laude), an undergraduate degree in Philosophy from Dalhousie University (Summa Cum Laude), and also an undergraduate degree in Engineering Physics, from Queens University.

Craig Dunn - Chief Geologist of Borealis GeoPower Inc.

Mr. Dunn is a professional geologist registered in BC and Alberta. Mr. Dunn began his geological career geological analysis for a myriad of exploration assignments with organizations such as the DeBeers, Associated Mining Consultants Ltd, Oil Sands Geological Associates, and PHH ARC Environmental Ltd. In 2003, Mr. Dunn established WellDunn Consulting, an independent geological consulting firm to the oil and gas industry. With a portfolio of clients that spans numerous senior national and international oil and gas companies on a variety of exploration drilling projects throughout Western Canada. His interest in renewable energy has led to a wide array of geothermal exploration projects in the US including Sierra Geothermal Power's Nevada properties at Reese River, Barren Hills, Alum and Silver Peak.

In his role with Borealis as Chief Geologist, Mr. Dunn acted as the lead geoscientist involved in the development of the Optimized Geothermal Exploration program as a resource development strategy and subsurface reservoir mapping tool. This screening model for exploration and mapping involves aspects of both sub-surface (geological, down-hole engineering et al.) and surface (economics, market, infrastructure, et al.) analysis. This allows Borealis to provide a complete picture of any property's quality, and gives us the ability to differentiate between alternative assets and development paths.

Daniel Kenney, Corporate Secretary

Mr. Kenney has been a partner with the law firm of DLA Piper (Canada) LLP since September 2004.

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV Policies. P Squared is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV,, however, there is no assurance that P Squared will ultimately obtain this exemption. P Squared intends to include any additional information regarding sponsorship in a subsequent press release.

About P Squared

P Squared is a Capital Pool Company, that was incorporated under the provisions of the Business Corporations Act (Alberta) on March 10, 2017. P Squared was listed on the TSXV on June 21, 2017 under the trading symbol "PSQ.P". P Squared has 11,000,000 common shares ("P Squared Shares") outstanding and options exercisable or exchangeable for an aggregate of 1,100,000 P Squared Shares at an exercise price of $0.10 per P Squared Share. It is a capital pool company and intends for the Transaction to constitute its "Qualifying Transaction" as such term is defined in the policies of the TSXV. P Squared is a "reporting issuer" in the provinces of Alberta and British Columbia.

Trading in the P Squared Shares

Trading in the PSQ Shares will remain halted pending the review of the Transaction by the TSXV. There can be no assurance that trading in the PSQ Shares will resume prior to the completion of the Transaction.

Further Information

A comprehensive news release with further particulars relating to the Transaction, the Private Placement, the Bridge Loan, financial particulars of each of Borealis and the Resulting Issuer, will follow in accordance with the Policies of the TSXV.

All information contained in this news release with respect to P Squared and Borealis was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, majority of the minority shareholder approval. 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 management information circular or 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. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the Transaction; the business plans of Borealis; the terms and conditions of the proposed Private Placement; future exploration and testing; use of funds; and the business and operations of the Resulting Issuer after the proposed transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive applicable Board, shareholder or regulatory approvals; and the results of exploration and testing programs. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. These forward-looking statements are made as of the date hereof and P Squared disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.

For further information regarding the Transaction, please contact:

Shabir Premji, Executive Chair, P Squared Renewables

Telephone: (403) 870-1841

Email: spremji@p2renewables.com


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