CMQ announces approval by board of going private transaction

CALGARY, May 23, 2014 /CNW/ - CMQ Resources Inc. (TSXV:NV) ("CMQ") announces today that the independent members of its board of directors have approved a going private transaction to be completed by consolidating CMQ common shares on the basis of 1 post-consolidated common share for each 21,000,000 pre-consolidated common shares (the "Consolidation"). The Consolidation is subject to required shareholder approvals at an upcoming annual and special meeting of shareholders of CMQ expected to be held on or about June 30, 2014 (the "Meeting").

The Consolidation will result in all of the shareholders of CMQ (except for Matco Investments Ltd. ("Matco")) holding a fractional interest in the post-consolidated common shares of CMQ. As fractional shares will not be issued, each shareholder of CMQ will receive a cash payment in an amount to be confirmed by an independent third party valuator for each pre-consolidated common share held immediately prior to the Consolidation in lieu of certificates for fractional post-consolidated common shares (the "Consideration"). There are currently 44,188,682 common shares of CMQ issued and outstanding. After completion of the Consolidation, Matco will be the sole shareholder of CMQ holding one (1) common share. Matco, which is controlled by Mr. Ron Mathison, a current director of CMQ, currently holds 21,989,833 common shares of CMQ, representing 49.77% of the total common shares of CMQ and Mr. Mathison holds an additional 104,308 common shares personally.

The Consolidation is subject to approval of 66 2/3% of the common shares voted at the Meeting as well as the approval of a majority of the votes cast by minority shareholders at the Meeting pursuant to the requirements of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions.

The independent members of the board of directors of CMQ expect to review the Consolidation, fix the Consideration based on the third party valuation to be received and to confirm the fairness of the Consideration.  

Subject to the approval of the Consolidation at the Meeting and the acceptance of the TSX Venture Exchange, CMQ will file articles of amendment to effect the Consolidation. Once the Consolidation is completed, CMQ intends to apply to have its common shares delisted from the TSX Venture Exchange and intends to apply to cease to be a reporting issuer with the applicable securities regulatory authorities.

CMQ wishes to complete the going-private transaction in order to eliminate the financial burden of continuing as a reporting issuer and resolve its current financial difficulties. CMQ believes that the anticipated time, costs and regulatory requirements that would be entailed in meeting the legal obligations to public shareholders cannot be justified in view of CMQ's present circumstances, including financial condition and very low trading volumes.  As at May 23, 2014, 2014 CMQ was indebted to Matco and its affiliates in the aggregate amount of $9,035,000, comprised of: (i) $4,000,000 represented by outstanding debentures plus accrued interest thereon of $784,000; (ii) $1,000,000 in respect of previous secured advances; (iii) $2,700,000 unsecured advances; and (iv) aggregate accrued interest on secured and unsecured advances of $551,000.  As previously disclosed, CMQ has received a notice from Matco of its intention to enforce its security and has been engaged in discussions with Matco in an effort to attempt to negotiate the potential further forbearance of enforcement on its indebtedness and additional financing required in connection with its existing projects.  In the event that the Consolidation is not approved or completed and no such additional forbearance or financing from Matco can be obtained, CMQ expects that it will be unable to continue its operations and to operate as a going concern. 

Further information on the terms and conditions of the Consolidation shall be provided to the shareholders in the management information circular for the Meeting, which will also be available on SEDAR at www.sedar.com.

Additionally, CMQ has filed its 2014 Q1 consolidated financial statements and MD&A on SEDAR at www.sedar.com.

Forward-Looking Statements

This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws, including with respect to the approval and completion of the Consolidation, CMQ's ability to obtain forbearance or additional financing, viability as a future going concern and the obtaining of a valuation. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements typically contain statements with words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "intend", "may", "will", "shall", "project", "would", "should", or similar words suggesting future outcomes.

Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to CMQ and shareholders. Forward-looking statements are based on management's current beliefs as well as assumptions made by, and information currently available to, management. Though management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that forward-looking statements will not be achieved. The forward-looking statements contained in this press release are made as of the date hereof and CMQ does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

SOURCE CMQ Resources Inc.