news: finally Seprotech Systems Inc (C-SET) - News Release
Seprotech, WESA sign binding deal for RTO
2012-09-24 14:39 ET - News Release
Shares issued 66,846,926
SET Close 2012-04-26 C$ 0.035
Mr. Ian Malone reports
SEPROTECH AND WESA ANNOUNCE EXECUTION OF SHARE EXCHANGE AGREEMENT
Seprotech Systems Inc. and WESA Group Inc., further to the previously announced non-binding letter of intent, have entered into a binding share exchange agreement, under which Seprotech will acquire 100 per cent of privately held WESA in a reverse takeover. Upon completion of the transaction, the combined entity is expected to be a leading provider of earth science and environmental engineering services, and waste water and water treatment systems. The intent is to build an integrated product and service organization that provides intelligent solutions to complex environmental problems both in Canada and abroad.
Transaction summary
The transaction is an arm's-length transaction and will constitute a reverse takeover pursuant to the policies of the TSX Venture Exchange. Completion of the transaction is subject to several conditions, including, but not limited to, the approval of a simple majority of Seprotech shareholders, the approval of the majority of the minority Seprotech shareholders and final approval by the TSX-V. Seprotech has convened a special meeting of shareholders on Oct. 24, 2012, to seek such shareholder approval and to approve a change of name from Seprotech Systems to BluMetric Environmental Inc. The other conditions are summarized below.
Seprotech currently has issued and outstanding 66,446,926 common shares and 5.33 million options to purchase Seprotech common shares, at prices ranging between 10 cents and 26 cents per share.
At the meeting, Seprotech also intends to seek the approval of its shareholders to consolidate its common shares on a one for 10 basis. Assuming completion of the consolidation, Seprotech would have issued and outstanding immediately prior to closing (i) 6,644,692 postconsolidation Seprotech common shares and (ii) options to purchase 533,000 common shares, each exercisable at a price of from $1 to $2.60 per share.
Shareholders will also be asked to approve a reduction in the stated capital of Seprotech to a nominal amount, in order to meet the solvency requirements of the Canada Business Corporations Act.
The transaction will be completed by way of a share exchange agreement, pursuant to which Seprotech will acquire all of the issued and outstanding shares of WESA in consideration for the issuance to the shareholders of WESA of 14,157,433 postconsolidation common shares of Seprotech, each at a deemed value of 66.4 cents per share for aggregate consideration of $9,400,536. Upon closing, WESA will become a wholly owned subsidiary of Seprotech, and WESA shareholders will control approximately 68.06 per cent of the common shares of the resulting issuer. Immediately following closing, Seprotech and WESA will be amalgamated.
Seprotech and WESA have also agreed on the additional consideration to be paid to WESA shareholders to reflect the value of inclusion of WESA's real estate assets, which were added to the transaction subsequent to the originally agreed-to valuations. The value of the equity in the real estate has been agreed at $1.88-million, resulting in total aggregate consideration of $11,280,536. This additional consideration is to be settled by the issuance to WESA shareholders of 2,831,325 special shares of Seprotech. Each special share will be automatically converted into common shares of the resulting issuer on the earlier of (i) completion of a qualified financing that occurs subsequently to the current transaction for gross proceeds of not less than $2-million, for an issue price of not less than 66.4 cents per common share and (ii) July 2, 2013. In the case of conversion upon a qualified financing, the conversion ratio will be a fraction equal to 66.4 cents divided by the issue price. In the case of a conversion in the absence of a qualified financing, the conversion ratio will be a fraction equal to 66.4 cents divided by the volume-weighted average trading price of the common shares on the TSX-V during the period from June 3, 2013, through June 28, 2013, provided that the conversion ratio will not be greater than 1 to 1 and the maximum number of common shares to be issued after giving effect to the share consolidation will be 2,831,325. Based on the floor conversion price of 66.4 cents, the WESA shareholders' ownership of the resulting issuer would increase to 71.90 per cent.
Management and board of directors of resulting issuer
Effective upon closing, the board of directors of the resulting issuer will include five members, consisting of Jordan B. Grant, former chairman and a director of Seprotech, William M. Touzel, Mark Stirling and Denis Douville, directors of Seprotech, and Roger M. Woeller, who will be appointed chief development officer of the resulting issuer.
The chief executive officer of the resulting issuer will be Mr. Touzel, who is presently president of WESA; the chief financial officer will be Ian W. Malone, presently chief financial officer of Seprotech. The other members of the senior management team of the resulting issuer will be Mr. Woeller, Harry J. Marshall, president of the water and waste water division, and Nell van Walsum, president of the professional services division.
Conditions to the transaction
The proposed transaction is subject to a number of terms and conditions, including the final approval of the TSX-V and other relevant regulatory authorities, and various other customary conditions that must be satisfied prior to closing, which is expected to take place no later than Dec. 31, 2012. The resulting issuer will also be required to complete a concurrent brokered private placement of common shares for aggregate gross proceeds of not less than $1-million, or more than $2-million, at a price per share to be negotiated.
Other information
Trading in Seprotech common shares will remain halted pending the satisfaction of all applicable requirements of the TSX-V. There can be no assurance that trading in Seprotech common shares will resume prior to the completion of the transaction. Further details concerning the transaction, WESA (including additional financial information) and other matters will be included in the management proxy circular being distributed to shareholders of Seprotech in advance of the special meeting of shareholders.
About WESA
WESA was founded in 1978 under the laws of Ontario. WESA is a professional services company focused on environmental earth sciences, water resources, waste management, occupational health, safety and hygiene, and renewable energy needs of industry and all levels of government. WESAtech, a wholly owned subsidiary, supplies turnkey water treatment systems to industry.
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