LAVAL, QC, Jan 10, 2018 /CNW Telbec/ - Ergoresearch
Ltd. ("ERG" or the "Corporation") (TSXV: ERG), a Quebec-based company in the design and
manufacturing of cutting edge technology for intelligent orthotics,
medical devices and software in the orthopedic industry, has
reached an agreement (the "Combination Agreement") with a
corporation (the "Purchaser") controlled by Sylvain Boucher and Danielle Boucher (together, the "Management
Shareholders") in partnership with Walter Capital Partners Inc.
("Walter Capital"), pursuant to which all of the outstanding shares
of the Corporation will be acquired by the Purchaser by way of
amalgamation for $0.30 per share in
cash (the "Transaction").
"ERG has been pursuing a product development plan over the last
several years, and Sylvain and Danielle
Boucher have chosen Walter Capital as the partner that will
best support the business plan and goal of providing customers with
the most comprehensive suite of products and services," Mr. Boucher
said.
"The Transaction provides compelling value and liquidity to our
shareholders" said François Tellier, Chairman of the Special
Committee of ERG. "Our directors believe this is the best way to
maximize value while providing the Corporation with partners who
share our commitment to customers, employees and the markets we
serve."
Mr. Boucher will continue as President and CEO of ERG, which
will continue to be headquartered in Laval. "I am proud of what our team has
accomplished over the last few years, and I am excited about our
prospects with Walter Capital as our chosen business partner," Mr.
Boucher said.
"Consistent with our investment philosophy of supporting
entrepreneurs, we are excited to team with Sylvain and Danielle Boucher in helping the
Corporation achieve its potential. We look forward to working with
Sylvain and his team to support the execution of their development
plan," said Pierre Fitzgibbon,
Managing Partner at Walter Capital.
The Transaction will be effected by way of an amalgamation of
ERG and a wholly-owned subsidiary of the Purchaser under the
Canada Business Corporations Act (the "Amalgamation").
Pursuant to the Amalgamation, shareholders (other than the
Management Shareholders and dissenting shareholders, if any) will
receive, for each common share of ERG held prior to the
Amalgamation, one redeemable preferred share ("Amalco Redeemable
Preferred Share") of the new corporation resulting from the
Amalgamation ("Amalco") and immediately after their issuance, each
Amalco Redeemable Preferred Share will be redeemed for $0.30 in cash. In connection with the
Transaction, the stock option plan of ERG will be terminated and
the option holders will receive a cash payment equal to the
"in-the-money" value of their options.
The Management Shareholders, who collectively own or exercise
control or direction over 17,544,000 common shares, representing
approximately 24.3% of the issued and outstanding common shares of
the Corporation, have agreed pursuant to a purchaser formation
agreement to transfer, immediately prior to the Amalgamation, a
number of common shares of the Corporation equal to 17,251,450
common shares, representing approximately 23.9% of the issued
outstanding common shares of the Corporation to the Purchaser in
exchange for shares of the Purchaser as part of the Amalgamation.
The balance of their common shares, which are currently held by the
respective RRSP account of the Management Shareholders, will be
exchanged for Amalco Redeemable Preferred Shares.
The Amalgamation is subject to approval by the shareholders of
ERG requiring the approval of (i) two‐thirds of the votes cast by
holders of shares and (ii) a simple majority of the votes cast by
shareholders other than Sylvain
Boucher and Danielle Boucher
and related parties. Further details of the Transaction will
be described in the management proxy circular (the "Circular") to
be mailed to shareholders of the Corporation for a special meeting
of shareholders of the Corporation to be held in the first quarter
of 2018 (the "Meeting"). The Transaction is subject to
customary closing conditions, including approval of the TSX Venture
Exchange.
The $0.30 per‐share cash
consideration represents a premium of 30.4% over the closing price
of the shares on the TSX Venture Exchange on January 9, 2018, the last day of trading prior to
the public announcement of the Transaction and over the
volume‐weighted average price of the shares in the last 30 days of
trading.
The partnership with Walter Capital is the result of a strategic
review process. The Transaction was considered at length
by the board of directors of ERG (the "Board") and has been
approved unanimously by the Board (with interested directors
abstaining) following the favourable recommendation of the special
committee of the Board (the "Special Committee") and following
consultation with the Corporation's and Special Committee's
financial and legal advisors. The Board concluded that the
Transaction is fair to the Shareholders other than the interested
shareholders (the "Public Shareholders"), is in the best interest
of the Corporation and its Public Shareholders and has authorized
the submission of the Transaction to shareholders of the
Corporation for their approval at the Meeting. The members of the
Special Committee and the Board plan to vote all of their common
shares in favour of the Transaction.
In making their respective determinations, the Board and the
Special Committee considered, among other things, a fairness
opinion (the "Fairness Opinion") from Raymond Chabot Grant Thornton & Co. LLP
("RCGT") to the effect that the price of $0.30 to be received by the shareholders under
the Transaction is fair, from a financial point of view, to the
Public Shareholders.
In connection with the Transaction, Sylvain and Danielle Boucher and Holding PROTEOR
S.A. ("PROTEOR"), who hold in aggregate 33,709,683 common shares
representing approximately 47.7% of the issued and outstanding
common shares of the Corporation, have entered into voting and
support agreements with the Purchaser (the "Voting Support
Agreements"), pursuant to which they have agreed to vote all of
their common shares in favour of the Transaction, subject to the
right to terminate the Voting Support Agreements in certain
circumstances, including, in the case of PROTEOR, the termination
of the Combination Agreement.
Pursuant to the Combination Agreement, the Corporation has
agreed not to solicit competing acquisition proposals for the
Corporation, subject to customary "fiduciary out" provisions which
entitle the Corporation to consider and accept a superior proposal,
subject to the right of Walter Capital to match the superior
proposal, and the payment to Walter Capital of a termination fee of
$650,000.
A copy of the Combination Agreement, the Voting Support
Agreements, the Circular and certain related documents will be
filed with the Canadian Securities Administrators and may be viewed
in due course on SEDAR at www.sedar.com.
Shareholders should consult their own tax and investment
advisors with respect to the Transaction, details of which will be
contained in the Circular.
About Ergoresearch Ltd.
Ergoresearch is a Canadian company that designs and manufactures
cutting edge technologies for the orthopedic industry. The
Corporation is a trend-setter in creating custom orthotics and
speciality orthotics for the orthopedics market and holds a
portfolio of patents in the orthopedics field and in human bionics.
The mission of our banner "Équilibre orthèses et biomécanique" is
to keep people active and moving. "ÉQUILIBRE", driven by its
proprietary technologies and the expertise of its professionals,
offers a range of products, treatments and services in order to
relieve pain, restore motor function and optimize performance.
Additional information on the Corporation can be found on the
ERG website at www.ergoresearch.com and on the SEDAR website
at www.sedar.com.
About Walter Capital Partners
Walter Capital Partners is a private equity firm and part of
Walter Financial and the Walter Group. Walter Capital invests
capital and know-how in established small and medium-sized
businesses to help accelerate their growth. Drawing on the
entrepreneurial values of the Walter Group and the business
leadership expertise of its Managing Partners, Walter Capital
offers solutions that are above and beyond purely financial
transactions. Headquartered in Montreal, Walter Capital provides a solid
international network.
Forward‐Looking Information
This press release contains "forward-looking information" within
the meaning of applicable Canadian securities legislation.
Forward-looking information is identified by the use of terms and
phrases such as "may", "would", "should", "could", "expect",
"intend", "estimate", "outlook", "target", "goal", "guidance",
"anticipate", "plan", "foresee", "believe", or "continue", the
negative of these terms and similar terminology, including
references to assumptions, although not all forward-looking
information contains these terms and phrases. Such forward-looking
information includes, but is not limited to, statements relating to
the anticipated benefits of the proposed Transaction for ERG, the
Purchaser and its respective shareholders, shareholder approvals
and the anticipated timing of the special meeting of shareholders
of ERG and of the completion of the proposed Transaction.
Forward-looking information is subject to a number of risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from those that are
disclosed in or implied by such forward-looking information. These
risks and uncertainties include, but are not limited to, the
failure of the parties to obtain the necessary shareholder
approvals or to otherwise satisfy the conditions to the completion
of the Transaction; failure of the parties to obtain such approvals
or satisfy such conditions in a timely manner; significant
Transaction costs or unknown liabilities; failure to realize the
expected benefits of the Transaction; and general economic
conditions. Failure of the parties to satisfy the conditions to the
completion of the Transaction or to complete the Transaction, may
result in the Transaction not being completed on the proposed
terms, or at all. In addition, if the Transaction is not completed,
and ERG continues as a publicly-traded entity, there are risks that
the announcement of the proposed Transaction and the dedication of
substantial resources of ERG to the completion of the Transaction
could have an impact on its business and strategic relationships,
operating results and activities in general, and could have a
material adverse effect on its current and future operations,
financial condition and prospects. Furthermore, the failure of ERG
to comply with the terms of the Combination Agreement may, in
certain circumstances, result in it being required to pay a fee to
the Purchaser, the result of which could have a material adverse
effect on its financial position and results of operations and its
ability to fund growth prospects and current operations.
Consequently, all of the forward-looking information contained
herein is qualified by the foregoing cautionary statements, and
there can be no guarantee that the results or developments that we
anticipate will be realized or, even if substantially realized,
that they will have the expected consequences or effects on our
business, financial condition or results of operation. Unless
otherwise noted or the context otherwise indicates, the
forward-looking information contained herein is provided as of the
date hereof, and we do not undertake to update or amend such
forward-looking information whether as a result of new information,
future events or otherwise, except as may be required by applicable
law.
This announcement is for informational purposes only and does
not constitute an offer to purchase or a solicitation of an offer
to sell ERG common shares. All figures are in Canadian dollars,
unless otherwise specified.
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 release.
SOURCE Ergoresearch Ltd