One partner gets out of oil and into tech, the other gets a pipeline to U.S. investors through a listing on NASDAQ.
That's how both characterized a deal announced Tuesday that would merge Texas oil and gas explorer Torchlight Energy Resources Inc. and Metamaterial Inc. of Halifax.
The proposed deal would give Metamaterial control, with its shareholders holding 75 per cent of the new company and Torchlight shareholders the rest.
Metamaterial will also have six out of seven members on the new company's board, Metamaterial president and CEO George Palikaras said Tuesday. Palikaras will be the CEO of the combined company, which has yet to settle on a name.
He was direct in describing what's in it for Metamaterial: Torchlight's listing on the NASDAQ.
"Our shareholders will basically get access to a much larger market. The company will be able to benefit from the U.S. It's the primary technology exchange, the NASDAQ," he said.
"(It) will allow us to take our company to a global scale."
The sides signed a non-binding letter of intent on Sept. 15 regarding the proposed transaction.
The motivation for Torchlight is to move on from its oil and gas exploration assets and give its shareholders access to clean technology markets. If the merger goes through, Torchlight would be expected to sell off its oil and gas assets by June 30, 2021.
"During the past six months the oil and gas market has softened due to the economic slowdown resulting from the pandemic," said John Brda, CEO of Torchlight, in a news release.
"In order to unlock value potential from our national listing and access to the capital markets, we shifted some attention from the divestiture of our oil and gas assets to an acquisition strategy targeting proven disruptive technology companies with strong environmental, social and governance (ESG) priorities. This proposed transaction is the first step in that effort, providing our shareholders with access to the multibillion-dollar target market and new applications that are being revolutionized with sustainable technologies, while allowing them to participate in the future upside from our oil and gas asset divestitures."
Torchlight management would remain with the new company in an advisory role as it transitions from its oil and gas assets.
Metamaterial is a clean technology and advanced materials developer and equipment manufacturer for the automotive, aerospace and defence, energy, consumer electronics and medical markets. The company was formed in 2010 in the U.K., and in 2013 moved its headquarters to Halifax Regional Municipality. It is located on Research Drive in Dartmouth, but the company announced in August that it is planning to move into a 53,000-square-foot facility in the Highfield Park area before the end of this year.
The company also has offices in the U.S., U.K. and Japan.
"We are trying to grow a global business right here from home," Palikaras said.
