Convalo Health International Corp. Private Placement
By Yari Nieken on Nov 19, 2013 |
Foremost Capital participated in the financing of Convalo Health International Corp.
The below article outlines the transaction involving Convalo Health International which is pending completion.
Valiant Minerals to acquire Convalo Health as QT
2013-11-04 14:25 ET – News Release
Ms. Nadia Traversa reports
VALIANT MINERALS LTD. ANNOUNCES QUALIFYING TRANSACTION
Valiant Minerals Ltd. has entered into a letter of intent, dated effective Oct. 7, 2013, with Convalo Health International Corp., whereby the company has agreed to acquire all of the outstanding shares of Convalo.
Convalo is a private Canadian company focused on rolling up the highly fragmented and fast-growing U.S. outpatient addiction rehabilitation market. Convalo is focused on consolidating small outpatient treatment facilities in major cities across the United States, starting in Los Angeles, Calif. After acquiring small, local clinically focused, cash-flow-positive outpatient addiction rehabilitation centres in larger cities in the United States, Convalo plans to add significant patient enrolment and revenue to each site through local strategic marketing relationships and capital for a new, rebranded, club-like centre, expanding capacity to up to 100 patients. Convalo will also implement a standardized billing process and back-office system to reduce costs of operation and increase net margins.
With the passage of the Mental Health Parity and Addiction Equity Act by the U.S. Congress in 2008, health insurance coverage for addiction rehabilitation services in the United States have been widely expanded, putting massive pressure on the limited supply of addiction rehabilitation centres. As with most fast-growing health care market segments, insurance companies tend to favour outpatient services over more costly residential and in-hospital treatments. Convalo anticipates taking advantage of this market shift by focusing on acquiring and exclusively operating outpatient treatment centres.
The initial principals of Convalo, Michael Dalsin and Roger Greene (both of Southern California), are former partners and managing directors of Stanmore Capital Partners of Irvine, Calif., and are currently chairman and executive director, respectively, of Patient Home Monitoring Corp., a company focused on rolling up U.S. health care companies, offering services to often older, chronically ill patients.
It is currently anticipated that Valiant will acquire Convalo by way of plan of arrangement or business combination, which will result in the Convalo shareholders holding the majority of outstanding shares of the resulting issuer.
Valiant and Convalo act at arm’s length. As a consequence, Valiant will not be required to seek shareholder approval to the proposed transaction, but will prepare and SEDAR file a filing statement, in the form prescribed by the TSX Venture Exchange, offering prospectus-level disclosure of Convalo and the proposed transaction.
As currently contemplated, the proposed transaction will result in Valiant issuing up to 55 million Valiant postconsolidated shares in exchange for all outstanding Convalo shares, being 25 million Valiant shares for the presently outstanding 25 million Convalo shares, and additional Valiant shares, on a one-for-one basis, for new Convalo shares issued pursuant to the Convalo financing referred to as follows.
The letter of intent contemplates the negotiation of a formal agreement, which will be subject to a number of conditions precedent, including:
- Each party being satisfied with the results of its due diligence review of the other;
- Completion of an audit of the financial statements of Convalo;
- The approval of the TSX-V;
- Completion of a private placement by Convalo to raise between $1-million and $5-million;
- The consolidation of Valiant’s outstanding common shares on the basis of one new share for every two outstanding shares;
- The approval by the board of directors of both Convalo and Valiant of the terms of the proposed transaction and the exchange ratio;
- The resignation of the directors and officers of Valiant, and the appointment of Convalo’s representatives;
- The change of the company’s name.
Leede Financial Markets Inc. has agreed, subject to completion of satisfactory due diligence, to act as sponsor of the company in connection with transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion. Leede Financial Markets will receive a sponsorship fee and reimbursement of expenses.
There is a finder’s fee payable to an arm’s-length party in the amount of $25,000 in connection with the qualifying transaction.