Corridor jumps 43% on financing, management news

Corridor Resources Inc. [CDH-TSX] jumped 43.2% Monday January 13, following a flurry of announcements, including a proposed new management team, a $50 million financing, and a plan to change its name to Headwater Exploration Inc.

Corridor has strategic natural gas production and reserves in New Brunswick that supply a portion of Atlantic Canada’s natural gas needs. The company owns and operates a 49-kilometre pipeline lateral to the Maritimes and Northeast Pipeline and a natural gas processing facility with a capacity of 35 mmcf/d (5,8000 boe/d).

Corridor said the new management team will be led by Neil Roszell as Chairman and CEO, Jason Jaskela as President and Chief Operating Officer, Ali Horvath as Vice-President, Finance and Chief Financial Officer, Jonathan Grimwood as Vice-President, Exploration and Terry Danku as Vice-President, Engineering.

Most recently, the new management team led Ranging River Exploration Inc., a light oil producer with operations in southwest Saskatchewan and southeast Alberta that was sold to Baytex Energy Corp. [BTE-TSX] in August 2018.

The company said it has entered into an agreement with members of the new management team which provides for a non-brokered private placement of Corridor units, generating gross proceeds of $20 million, and a brokered private placement of Corridor common shares that could generate a further $30 million. The private placements are priced at 92 cents per unit and 92 cents per common share.

Following completion of the transaction, it is expected that the name of the company will be changed to Headwater Exploration Inc., subject to necessary shareholder approvals.

“This is an exceptional opportunity to invest in a company with a material cash position, and strategic assets that provide significant free cash flow at current commodity prices,” Roszell said. “The Headwater management team is energized and truly believes that the Corridor platform can lead us into becoming a leading Canadian energy producer.”

The shares rallied on the news, rising 43.2% or 38 cents to $1.26 on heavy volume of 5.7 million. The shares are currently trading in a 52-week range of 63 cents and 92 cents.

Under the terms of the non-brokered private placement, the initial investors, together with additional subscribers identified by the initial investors, will subscribe for 21.7 million units at 92 cents per unit. Each unit will consist of one common share and one warrant, entitling the holder to purchase one common share at 92 cents for up to four years from the issue date.

The warrants will vest and become exercisable as to one-third upon the 20 day value weighted average price of the common shares equalling or exceeding $1.30 per share, an additional one-third upon the market price equalling or exceeding $1.60 per share and a final one-third upon the market price equalling or exceeding $1.90 per share.

Concurrent with the non-brokered private placement, the brokered private placement will be completed with an underwriting syndicate. It will consist of a minimum of 21.7 million and a maximum of 32.6 million common shares priced at 92 cents, potentially generating proceeds of between $20 and $30 million.