CSE: KRI
TORONTO, March 22, 2017 /CNW/ - Khan Resources Inc.
("Khan" or the "Company") (CSE: KRI) announces that it has entered into a definitive agreement (the "Arrangement
Agreement") with Arden Holdings Ltd., (" Arden ") a private Turks and Caicos company
and Arden's wholly-owned subsidiary ("Arden BidCo") whereby Arden BidCo has agreed to
acquire all of Khan's outstanding shares by way of plan of arrangement (the "Arrangement"). Under the Arrangement,
Khan's shareholders will receive cash of C$0.05 per share. The transaction is subject to Khan
shareholder approval, court approval and other customary closing conditions.
The annual and special meeting of shareholders (the "Meeting") to vote on the Arrangement and other matters will be
held on May 5, 2017. The record date for determining shareholders entitled to receive notice
of and vote at the Meeting has been set as April 5, 2017. Based on the recommendation of a
special committee formed for the purpose of considering the proposed Arrangement, and advice from its advisors, Khan's Board of
Directors recommends that shareholders vote in favour of the Arrangement at the Meeting. Blair Franklin Capital Partners
Inc., the financial advisor to the Company has provided an oral opinion that the consideration to be offered under the
Arrangement is fair, from a financial point of view, to Khan's shareholders.
The Company is currently in the process of liquidation, as approved by 99.9% of the common shares voted at a meeting of
shareholders held November 10, 2016 (the "Liquidation Approval"). On November 29, 2016, the Company made an interim distribution to shareholders of $0.85 per share, by way of a return of capital. Following the interim distribution, the Company has been
pursuing the liquidation, including the orderly winding up of its one remaining subsidiary, Khan Netherlands BV ("Khan
Netherlands "). As previously announced, Khan Netherlands received a preliminary tax
assessment from the Dutch tax authority in the amount of €11.4 million (later amended to €3.3 million). Khan Netherlands
has formally disputed the assessment, and proposes to file a tax return on the basis of no taxes being payable. If the
Dutch tax authority continues to assert that Dutch tax is payable by Khan Netherlands in connection with its share of the
settlement proceeds received from the Government of Mongolia, the matter could take a
significant amount of time and resources to resolve. This would further delay the completion of the liquidation of the
Company and impact the amount and timing of the final distribution of the Company's remaining cash to the shareholders.
The Management Information Circular for the November 10, 2016 shareholders meeting disclosed
that the amount of funds available for distribution to shareholders would depend upon a number of factors and would be in the
range of $0.01 to $0.08 per share with distribution occurring after receipt of tax clearances
estimated to be obtained in 2018. Under the Liquidation Approval, the Board of Directors of Khan was authorized not to
proceed with the liquidation of the Company in its current form if it determines in its discretion that doing so is no longer in
the best interests of the Company or its shareholders. The Board has considered the alternatives available to the Company
and has determined that in light of the Netherlands tax dispute and the fact that the
Arrangement provides an opportunity for shareholders to receive a certain amount of cash now for their shares, the Arrangement is
in the best interest of the Company and its shareholders. If the required shareholder approval is not obtained at the
meeting, the Board will continue to proceed with the liquidation of the Company currently underway.
The Arrangement Agreement is subject to certain customary conditions, including court approval and the approval of not less
than two-thirds of the votes cast at a meeting of shareholders to consider the Arrangement, and the satisfaction of certain other
customary conditions. The Arrangement Agreement provides for, among other things, customary Board support and
non-solicitation covenants subject to customary "fiduciary out" provisions and a right in favour of Arden to match any superior proposal. The Arrangement Agreement also provides for a termination
fee of $175,000 payable by Khan to Arden if the Arrangement is not
completed in certain circumstances. An equally valued reverse-termination fee is payable by Arden to Khan if the transaction is not completed in certain circumstances.
Directors, officers and major shareholders holding approximately 38.9% of the 90,166,482 issued and outstanding Khan common
shares, have indicated their support of the Arrangement and their intention to vote in favour of the Arrangement.
Mr. Grant Edey, Chairman and CEO of Khan, commented "We believe that this offer gives the
opportunity to all shareholders to sell their Khan shares at a fair price in the near term rather than holding the shares for a
distribution of the remaining funds after the completion of an uncertain liquidation process in terms of time and
cost."
The terms and conditions of the Arrangement Agreement will be summarized in the Company's management information circular
which will be filed with the Canadian securities regulators and will be available under Khan's profile on SEDAR at www.sedar.com and on Khan's website at www.khanresources.com.
Forward-Looking Statements and Information
This press release may contain forward-looking statements and forward-looking information. Forward-looking statements
and information are characterized by words such as "will", "plan", "expect", "project", "intend", "believe", "anticipate",
"forecast", "schedule", "estimate" and similar expressions, or statements that certain events or conditions "may" or "will"
occur, including statements and information related to the Arrangement and the completion thereof. Forward-looking
statements and information are not historical facts and are based upon a number of estimates and assumptions and are inherently
subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties,
contingencies and other factors, including satisfaction of certain conditions precedent to the Arrangement, that the Arrangement
will be completed on the terms set out in the Arrangement Agreement, the impact of international, Netherlands, and Canadian laws, trade agreements, treaties and regulatory requirements on Khan's business,
operations and capital structure, regulatory uncertainty and obtaining governmental and regulatory approvals, legislative,
political, social, regulatory and economic developments or changes in jurisdictions in which Khan carries on business, changes in
market conditions, changes or disruptions in the securities markets and market fluctuations in prices for Khan securities, the
existence of third parties interested in purchasing some or all of the common shares or Khan's assets, the method of funding and
availability of any potential alternative strategic transactions involving Khan or its assets, including those transactions that
may produce strategic value to shareholders, fluctuations in currency exchange rates and interest rates, including fluctuations
in the value of the United States dollar and the Canadian dollar, changes in national and local
government legislation, taxation, controls, regulations and political or economic developments in Canada and the Netherlands and any other jurisdiction in which the Company
may carry on business, political instability, insurrection, war or terrorism, hostilities and the occurrence of natural
disasters; requirements for additional capital; environmental risks, the need to comply with national and international laws,
regulations, treaties or other similar requirements. In addition, a number of other factors could cause actual results to differ
materially from the results discussed in such statements and information, and there is no assurance that actual results will be
consistent with them. Many of these risks, uncertainties and contingencies can affect the Company's actual results, performance,
events or achievements and could cause actual performance, actions, events or results to differ materially from those expressed
or implied in any forward-looking information. All of the forward-looking information in this press release is qualified by
these cautionary statements. There can be no assurance that forward-looking information will prove to be accurate, as
actual results and future events could differ materially from those anticipated in such statements containing forward-looking
information. Accordingly, readers should not place undue reliance on forward-looking information. For further details,
reference is made to the risk factors discussed or referred to in Khan's annual and interim management's discussion and analyses
and Annual Information Form on file with the Canadian securities regulatory authorities and available on SEDAR at www.sedar.com. Such forward-looking statements and information are
made or given as at the date of this news release, and Khan assumes no obligation to update or revise them, either publicly or
otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.
SOURCE Khan Resources Inc.
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