Corporate M&A

Advantagewon to Acquire Groundstar for Tax Losses

By Isha Makkar
September 09, 2020
a minute read
Shaking Hands

Toronto-based Advantagewon Oil Corp. (AOC) has signed a definitive agreement to acquire Calgary-based independent Groundstar Resources Ltd., a company that has C$32 million in accumulated tax losses. AOC stated that the acquisition of these losses will enable it to “defer a significant amount of income tax when it enters a taxable position.”

The transaction will be structured as an amalgamation of Groundstar and Opulence Resources Inc., a recently acquired Canadian E&P subsidiary of AOC. The purchase price for the company will be C$465,000, including the assumption of debt. The consideration will be paid for via the issuance of one common share of AOC for every ten Groundstar shares held.

In May this year, AOC had entered into a Letter of Intent to acquire Groundstar in an all-stock corporate transaction valued at CA$335,000, subject to certain adjustments. At the time, Groundstar had approximately C$30 million in accumulated tax losses.

Groundstar was previously engaged in exploration, development, and production in the Neilburg area of Saskatchewan, and also held an interest in a concession agreement with a joint venture partner in Egypt. However, trading in the company’s shares on the Toronto Stock Exchange had been suspended in September 2018 due to non-compliance issues, and the company ceased oil & gas operating activities during 2019.

CSE-listed AOC is currently focused on development and enhanced oil recovery opportunities in Canada following the sale of its U.S. assets in early 2020.

The transaction is subject to customary closing conditions, including shareholders, regulatory and exchange approvals, and is expected to close by December 31st, 2020.

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