Groundstar Resources Limited Announces Financing TSX Venture Exchange:GSA

(MENAFNEditorial) NOT FOR DISTRIBUTION TO THE U.S.A. NEWS WIRE SERVICES OR FOR DISSEMINATION TO THE U.S.A.

CALGARY, Alberta, Feb. 27, 2018 (GLOBE NEWSWIRE) -- Groundstar Resources Limited (TSXV:GSA) (the 'Company') is pleased to announce that, in conjunction with a reorganization of its short-term debt, it is 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. Each CDU will 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 33,333 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 February 26, 2020 (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 $0.03 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.

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 on or about March 15, 2018 and the Second Financing expected to close on or about March 30, 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.

In conjunction with the proposed Financings and the restructuring the Company as described herein, the Company further wishes to announce the appointment of Stephen Hughes to the position of Interim President and CEO relieving Ty Pfeifer of his responsibilities as acting CEO. The Company wishes to thank Mr. Pfeifer for his efforts and valued assistance and looks forward to continuing to work with him as he remains on the board of directors of the Company.

Mr. Hughes has over 10 years of investment banking experience. For the majority of his career, he focused on small-cap resource companies where he completed a wide variety of advisory and capital market transactions while working at Canadian independent investment banks. Since 2014, Mr. Hughes' focus has been on business development, corporate advisory and restructurings of private and publicly listed companies. Presently he is a director of the Company and co-founder of Burmis Capital Partners.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the 'U.S. Securities Act') or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Groundstar Resources Limited

Incorporated in 1968, Groundstar Resources Limited is a publicly traded oil and gas company actively growing a portfolio targeting producing oil and gas assets with development opportunities and exploration upside. The Company's current portfolio of resource assets provides both near term and longer-term potential. Groundstar is quoted and trades under the ticker symbol 'GSA' on the TSX Venture Exchange.

Contact Information:

Groundstar Resources Limited, Suite 430, 440 - 2nd Avenue SW, Calgary, Alberta T2P 5E9

Stephen Hughes
587.580.9344

This press release contains forward-looking statements within the meaning of applicable securities laws, including expectations regarding the anticipated closing of the Financings and the timing thereof, the gross proceeds expected to be received in connection therewith, the price at which the securities are being issued and the anticipated use of proceeds from the Financings. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating to production, costs and expenses and health, safety and environmental risks), commodity price and exchange rate fluctuation, uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures and uncertainties regarding whether regulatory approval for the Financings will be received and if received, on the timelines expected and at the anticipated pricing, as well as the intended use of the net proceeds of the Financings. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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 press release.