!Forterra Environmental Agrees to Merge with Solar Module Manufacturer
- Agreement calls for privately held OSM Solar Corp. to amalgamate with Forterra through an exchange of shares
- Shareholders of OSM would receive 90% of shares of Forterra; plan for an up to 10:1 consolidation of Forterra's issued and outstanding shares
- Future of Forterra depends on successful pursuit of strategy to broaden its business into other renewable sectors of the Canadian marketplace
- OSM's solar modules, manufactured in Welland, qualify under Ontario's manufacturing content rules for the FIT program
PUSLINCH, ON, May 17 /CNW/ - Forterra Environmental Corp. (Forterra orthe company) (TSXV: FTE), a manufacturer, marketer, and seller oforganic soil amendment products based on worm castings, today announcedthat it has entered into an agreement to merge with OSM Solar Corp.(OSM). The transaction would constitute a reverse takeover (RTO)pursuant to the policies of the TSX Venture Exchange.
OSM is a privately held company with its manufacturing plant and headoffice in Welland, Ontario. It designs and builds high-performancesolar panels that are used to power businesses, government andagricultural facilities, and homes. OSM's solar panels qualify underthe Ontario manufacturing content rules of the province'sFeed-In-Tariff (FIT) program. OSM expects to sell its solar panels inother provinces as well as in the United States. OSM's management hasmore than 25 years of experience in the manufacture of solar panelcomponents.
Under the agreement, Forterra and OSM would carry out an amalgamationfollowing which all of the issued and outstanding shares of OSM will beexchanged for common shares of Forterra on a basis such that theshareowners of OSM will receive shares representing 90 percent of thetotal number of issued and outstanding shares of Forterra calculated ona fully diluted basis after giving effect to the amalgamation and an upto 10:1 consolidation of Forterra's shares. Current shareholders ofForterra would own 10 percent of the issued and outstanding shares ofthe company after the amalgamation and consolidation are completed.
Forterra and OSM are intending to complete a definitive agreement forthe RTO transaction no later than June 30, 2011 and are targeting toclose the merger by August 31, 2011. Completion of the RTO andconsolidation require the approval of Forterra's shareholders. Thecompany expects to hold an Annual and Special Meeting this summer toseek the approval of its shareholders. Proceeding with the transactionalso is subject to the satisfaction or waiver of a number of otherconditions, including but not limited to the completion of further duediligence by Forterra and OSM, the consents and approvals of governmentand regulatory bodies, including the TSX Venture Exchange, and theconsent of the debentureholders of Forterra to make their debenturesnon-interest bearing and to extend their maturity to December 31, 2012.
Following completion of the amalgamation, it is expected that the Boardof Directors of Forterra will consist of the company's currentdirectors (Don Green, Bruce Bent, Rod Malcolm, John Gamble, and DavidWoolford) and the addition of Dr. Taesung Kim. Dr. Kim is the ChiefExecutive Officer of Symphony Energy, a manufacturer of solar energymodules. OSM's solar energy systems are based on the use of theSymphony brand of photovoltaic (PV) modules. Dr. Kim will be taking onincreasing responsibilities for OSM's research and development programsin the future.
"For about the past four years, Forterra has struggled to establishitself as a company manufacturing, marketing, and sellingenvironmentally friendly, organic soil enhancers," said Don Green,Chairman and Chief Executive Officer. "During these years, we havelearned a great deal about the marketplace and refined our products andproduction processes. However, we also have made many mistakes in ourlearning process and have not managed to make the business profitable.
"Sales did not materialize as anticipated. Our working capitalshortfall worsened significantly as the company became increasinglyindebted, putting Forterra's future in imminent jeopardy. We becameentirely dependent on loans and certain services supplied by directorsand some shareholders. In view of this and given the inventory on hand,Forterra reduced operations to a maintenance level. Changes madeincluded the departure of the company's President and Chief OperatingOfficer and other staff reductions," Mr. Green continued.
"We determined that any possible future for Forterra depended onpursuing a strategy that, if successful, will enable it to transitionand broaden its environmentally friendly business into other renewablesectors of the Canadian marketplace. Working particularly with JohnGamble, a director of Forterra who also is serving as Chief FinancialOfficer, our Board approved pursuing the amalgamation with OSM, forwhich Mr. Gamble serves as President & Chief Executive Officer.
"In our view, there is no doubt that Forterra needs to execute astrategy that broadens our business in the renewables sector andenables us to recapitalize the company in order to remain a goingconcern. As we pursue this strategy through the completion of theamalgamation with OSM, certain directors and shareholders of Forterrawill continue to provide the short-term financial support necessary tocontinue the business through this difficult time," Mr. Green said.