VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 31, 2016) - Kobex Capital Corp. (TSX VENTURE:KXM)(OTCQB:KBXMF) (the "Company" or "Kobex") announced today that it intends to initiate a substantial issuer bid (the "Substantial Issuer Bid") pursuant to which it will offer to repurchase for cash and cancellation up to 85% of its issued and outstanding common shares (the "Kobex Shares"), subject to any applicable regulatory, TSX Venture Exchange ("TSX-V") or other approvals.
The Substantial Issuer Bid is being proposed pursuant to a binding letter of intent (the "LOI") entered into between Kobex and Kingsway Financial Services Inc. ("KFSI") under which two alternative courses of action relating to Kobex will be made available to the shareholders of Kobex (the "Kobex Shareholders") for their consideration.
The board of directors (the "Board") and management of Kobex have not taken lightly the trust placed in them by Kobex Shareholders and the additional vote of confidence provided to them at the special meeting of Kobex Shareholders held in mid-November 2015 (the "Special Meeting"). Following the Special Meeting, the Board announced that it had set a deadline of March 31, 2016 to identify a strategic transaction or distribute the Company's cash resources back to the Kobex Shareholders. While the Board has explored, evaluated and/or engaged in discussions or negotiations in respect of numerous potential strategic opportunities with a view to maximizing shareholder value, no opportunity has been identified by the Board or proposal made to the Board, which it judged would lead to a transaction advantageous to, and in the best interest of, the Kobex Shareholders.
Consistent with its previous announcement, the Board also considered proceeding with the dissolution of the Company and the distribution of its assets to the Kobex Shareholders. KFSI, one of the largest shareholders of Kobex, expressed its interest in remaining a shareholder of Kobex. The Board therefore determined that it would be in the best interest of the Company and all of the Kobex Shareholders to provide each Kobex Shareholder with the following alternatives: either (a) liquidate its investment by tendering into the Substantial Issuer Bid; or (b) maintain its investment in a rebranded Kobex, which would have, among other things, a new name, a new board and management, and a revised shareholder composition in which KFSI would be the largest holder. The foregoing would be subject to the approval of the Kobex Shareholders at the Shareholders' Meeting (as defined below).
Substantial Issuer Bid
The Substantial Issuer Bid will proceed at a price per Kobex Share to be determined by the Board that is expected to be approximately $0.655, being the anticipated cash value of Kobex per Kobex Share (after taking into account all expenses anticipated to be incurred by Kobex in carrying out the Substantial Issuer Bid, the Shareholders' Meeting, and other expenses in the normal course business until the end of June 2016).
The intent is to have any Kobex Shares tendered under the Substantial Issuer Bid taken-up and paid for prior to the Shareholders' Meeting.
The Substantial Issuer Bid will not be conditional on the completion of the other transactions contemplated by the LOI. Further information will be made available in due course as to the timing and terms of the Substantial Issuer Bid, including through the mailing of an issuer bid circular.
Agreements with KFSI
Kobex has entered into the LOI and other related agreements with KFSI pursuant to which, among other things:
- a new slate of directors for Kobex, including Edward H. Benford, John T. Fitzgerald, Andrew McIntyre, R. Michael Powell, and Larry G. Swets, Jr., will be proposed for election at the Shareholders' Meeting;
- a change of name from "Kobex Capital Corp." to "Itasca Capital Ltd." will be proposed for approval at the Shareholders' Meeting;
- a management services agreement with KFSI will be proposed for approval at the Shareholders' Meeting pursuant to which KFSI will provide management services for a fee of one dollar per annum; and
- KFSI has irrevocably agreed (i) not to tender any of the Kobex Shares owned, controlled or directed by it or its affiliates to the Substantial Issuer Bid, and (ii) to vote all Kobex Shares owned, controlled or directed by it or its affiliates in favour of all of the resolutions to be considered at the Shareholders' Meeting.
As of the date hereof 14.95% of the issued and outstanding Kobex Shares are owned, controlled or directed by KFSI or its affiliates.
Agreements with Sprott
Kobex has also entered into an agreement with certain affiliates of Sprott Inc. (collectively, "Sprott") pursuant to which, among other things, Sprott has irrevocably agreed (i) to tender all Kobex Shares owned, controlled or directed by Sprott to the Substantial Issuer Bid, and (ii) to vote all Kobex Shares owned, controlled or directed by Sprott in favour of all of the resolutions to be considered at the Shareholders' Meeting.
As of the date hereof, 17.4% of the issued and outstanding Kobex Shares are owned, controlled or directed by Sprott.
Shareholders' Meeting
An annual and special meeting of shareholders of the Company is expected to be held on or before June 9, 2016 (the "Shareholders' Meeting").
Further information will be made available in due course as to the timing and business of the Shareholders' Meeting, including through the mailing of a management information circular of the Company.
Kobex Advisors
The Board has retained Haywood Securities Inc. as its financial advisor and independent valuator as required by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. Stikeman Elliott LLP is acting as legal counsel to Kobex.
Forward-Looking Statements
Certain statements contained in this news release may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any anticipated results, performance or achievements expressed or implied by such forward-looking statements. The use of any of the words "anticipate", "continue", "expect", "may", "will", "would", "project", "should", "believe", "plan" and "intends" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements may relate to Kobex's management's expectations, estimates and analysis with respect to its business strategy.
Forward-looking statements are based on certain factors and assumptions regarding, among other things, market acceptance of Kobex's corporate strategy and corporate endeavours; statements with respect to potential transactions and other strategic opportunities; statements with respect to the Substantial Issuer Bid and the Special Meeting; statements with respect to the LOI and related transactions and agreements; and statements with respect to the success of Kobex's announced corporate strategy and future transactions. There can be no assurance that these assumptions will prove to be correct. Readers are cautioned that forward-looking statements included in this news release are not guarantees of future performance, and are also cautioned not to place undue reliance on forward-looking statements which involve known and unknown material risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any anticipated results, performance or achievements expressed or implied in such forward-looking statements. These statements speak only as of the date of this news release. Kobex undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities law.
All of the forward-looking statements made in this news release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the anticipated results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Kobex.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.