GENERAL INFORMATION / MASTER DOWNHOLE CANADA INC.
ASE SYMBOL: MDH.A
AUGUST 1, 1997
Master Downhole Reaches Agreement with Wenzel Downhole
CALGARY, ALBERTA--Master Downhole Canada Inc. (MDH.A) is pleased
to announce that the Company has reached an agreement (subject to
shareholder and regulatory approval) with Wenzel Downhole Tools
Inc. to purchase the patents and proprietary knowledge of Wenzel
Downhole Tools Inc. and the existing business of Wenzel Downhole
Tools Inc. and to change our Company's name to Wenzel Downhole
Tools Inc..
In exchange for Wenzel's name and technology, Wenzel shall
receive:
(i) a $ 1,000,000.00 non-interest bearing note which shall be
payable to Wenzel 15 years from the date approvals are obtained,
(ii) 900,000 Class A voting common shares of Master Downhole at a
price of $0.40 per share.
(iii) 8,100,000 non-voting preferred shares of Master Downhole
convertible on a one to one basis for Class A voting common shares
of Master Downhole by Wenzel Downhole Tools Inc. up to a maximum
holding of 10 percent of the then issued Common Shares of the
Company, and are non-redeemable and non-dividend bearing; and
(iv) a purchase price adjustment equal to 4 percent of gross sales
or rentals of patent based products. This purchase price
adjustment was negotiated to account for a difference between the
value placed on the technology by the vendor and the value placed
on the assets by the purchaser. The purchase price adjustment has
been accounted for in the valuation of the business. The purchase
price adjustment shall be payable for 15 years from the date
approvals are obtained.
The assets being purchase have been valued by management at $
5,300,000.00. Based upon the stock price, the total purchase
price is $ 4,600,000.00, before discounting the value of the 15
year note.
Management is of the option that this acquisition will
significantly increase the company's gross revenues and earnings
per share. In addition to sales in Canada, Wenzel is presently
shipping tools to the United States, Scotland, Germany, Italy,
Russia, South America, the Middle east and China. The combination
of Mason Tools and Wenzel Downhole Tools will enhance the
Company's access to the international downhole tools market.
Wenzel Downhole Tools Inc. is a private company that specializes
in the development and manufacture of downhole drilling motors.
It currently holds the rights to 5 patents in Canada and the
United States in connection with downhole drilling motors. Wenzel
Downhole Tools Inc. was founded in 1989 and has progressively
become involved in developing, manufacturing and marketing tools
for the oil and gas industry.
Management expects to hold the shareholders' meeting to approve
the acquisition of the Wenzel assets and to change the name of the
Company on or about October 10, 1997.
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