Provides More than $25 Million
of New Funding in Going Public Transaction
TORONTO,
March 28, 2013 /CNW/ - Longford
Energy Inc. (NEX - LFD.H) ("Longford") and Earth Video Camera Inc.
("UrtheCast") are pleased to announce that they have today entered
into an arrangement agreement (the "Arrangement Agreement")
pursuant to which Longford will acquire all of the issued and
outstanding common shares of UrtheCast in exchange for shares of
Longford (the "RTO").
UrtheCast is a privately held British Columbia corporation that was
incorporated in 2010. UrtheCast is focused on the
commercialization of a high definition streaming video and images
of Earth from space. UrtheCast is at an advanced stage of
implementing its business plan and currently expects to have its
first video cameras installed in space later this year.
Upon completion of the RTO:
- UrtheCast would become a wholly-owned subsidiary of Longford
and the current UrtheCast shareholders would become Longford
shareholders;
- Longford would begin to carry on UrtheCast's business and
change its name to "UrtheCast Corp.";
- UrtheCast's existing senior management team, including
Scott Larson (Co-Founder and
President), Wade Larson (Co-Founder
and Executive Vice-President), Dr. George
Tyc (Co-Founder and Chief Technology Officer), Jeff Rath (Corporate Finance, Mergers &
Acquisitions), Dr. Serguei Bedziouk
(Vice President, Russia Relations) and Issa
Nakhleh (Chief Financial Officer), would continue with the
business as Longford's senior management team; and
- the Longford board of directors would be reconstituted to
include representatives from the existing Longford board and the
existing UrtheCast board, with the new reconstituted board expected
to consist of Ian W. Delaney
(Chairman), Tye W. Burt, William (Mac)
Evans, Richard Holdaway,
Dale Johnson, Wade Larson and Scott
Larson.
Peter H.
Puccetti, Chief Executive Officer of Longford, commented:
"Since the reconstitution of Longford's board last August, we have
reviewed many opportunities in a multitude of sectors to deploy
Longford's cash in a manner designed to create value for our
shareholders. UrtheCast is a perfect fit for Longford, and we
are excited about what we believe is the compelling opportunity it
affords to our shareholders to generate long-term shareholder
value."
Scott Larson,
President and Chief Executive Officer of UrtheCast stated: "This
transaction not only provides us with the capital needed to execute
upon our business plan but adds high calibre directors such as
Ian Delaney and Tye Burt to our
team. I look forward to welcoming our new shareholders as
UrtheCast completes and launches the first High Definition Video
Camera in space."
Transaction Overview
The RTO will be effected by way of a statutory
plan of arrangement pursuant to the Business Corporations
Act (British Columbia).
Under the terms of the arrangement, Longford will acquire all of
the issued and outstanding shares of UrtheCast in exchange for
Longford common shares based on an exchange ratio that will be
determined at the effective time of the arrangement in accordance
with a formula set out in the plan of arrangement. The
exchange ratio will be based on agreed equity valuations of
Longford and UrtheCast immediately prior to the effective time
which, subject to certain adjustments:
- in the case of Longford, is expected to be approximately
$24 million; and
- in the case of UrtheCast, is based upon an equity value for
UrtheCast immediately prior to signing the Arrangement Agreement of
$63.5 million before upward
adjustment for the gross proceeds received by UrtheCast prior to
the effective time from the UrtheCast Financing (described
below).
Longford currently expects that the exchange
ratio under the plan of arrangement will be approximately 13.86
Longford common shares for every UrtheCast share.
Immediately after the completion of the
arrangement, Longford intends to consolidate its outstanding shares
on a 15-for-1 basis. On a pro forma, post-consolidation
basis, Longford expects to have approximately:
- 47 million issued and outstanding common shares, of which
approximately 26% would be held by Longford's shareholders and
approximately 74% would be held by UrtheCast's shareholders;
and
- outstanding stock options and warrants and other equity
compensation arrangements to issue up to an additional 6.1 million
common shares.
The RTO has been unanimously approved by the
board of directors of both Longford and UrtheCast. Completion
of the RTO is expected to occur in or about June 2013 and is conditional upon, among other
things, receipt of all required court, stock exchange and
shareholder approvals, including the shareholders of both Longford
and UrtheCast.
The RTO is an arm's length transaction for
Longford.
Support Agreements
Shareholders of UrtheCast who collectively own
approximately 63% of UrtheCast's issued and outstanding shares have
entered into support agreements with Longford and UrtheCast
pursuant to which they have agreed to vote in favour of the
arrangement.
Goodwood Inc. and Salida Capital LP, who
collectively exercise control over approximately 32% of Longford's
issued and outstanding shares, have entered into support agreements
with Longford and UrtheCast pursuant to which they have agreed to
vote in favour of the transactions to be considered by Longford
shareholders relating to the arrangement.
Shareholder Meetings
Longford will be calling a meeting of its
shareholders to seek approval of, among other things, the issuance
of its shares pursuant to the arrangement and the adoption of new
equity based compensation arrangements upon completion of the
arrangement. Longford will issue a further press release when
it mails a management information circular in respect of its
shareholders' meeting.
UrtheCast will also be calling a meeting of its
shareholders to seek approval of the arrangement.
UrtheCast Financing
Under the Arrangement Agreement, UrtheCast is
permitted to raise additional capital by way of one or more private
placements of its common shares prior to the completion of the
arrangement (the "UrtheCast Financing"). Concurrently with
the execution of the Arrangement Agreement, UrtheCast completed an
initial tranche of the UrtheCast Financing by issuing approximately
$5.6 million of common shares to a
group of investors that included Longford. If the arrangement
is not completed, the investors (including Longford) in this
initial tranche will have certain rights to require UrtheCast to
repurchase their shares and, in certain circumstances, to appoint
one member of UrtheCast's board of directors. The Arrangement
Agreement provides UrtheCast with the flexibility to issue up to an
additional $14.4 million of common
shares under the UrtheCast Financing. Canaccord Genuity
Corp., Cormark Securities Inc. and Clarus Securities Inc. are
acting as agents to UrtheCast for the UrtheCast Financing
Sponsorship and Trading Halt
Canaccord Genuity Corp. has been retained to act
as sponsor of the RTO.
In accordance with the policies of the TSX
Venture Exchange, trading in the shares of Longford has been
halted. The length of time that such halt will continue
remains to be determined.
Forward-Looking Statements
This release contains certain "forward looking
statements" and certain "forward-looking information" as defined
under applicable Canadian securities laws. Forward-looking
statements and information can generally be identified by the use
of forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans"
or similar terminology. Forward-looking statements and information
include, but are not limited to, statements with respect to the
transactions contemplated under the arrangement agreement and RTO,
the UrtheCast financing and receipt of the requisite regulatory,
court and shareholder approvals in respect thereof. Forward-looking
statements and information are subject to various known and unknown
risks and uncertainties, many of which are beyond the ability of
Longford to control or predict, that may cause Longford's actual
results, performance or achievements may be materially different
from those expressed or implied thereby, and are developed based on
assumptions about such risks, uncertainties and other factors set
out here in, including but not limited to: the risk that the RTO
will not be approved by the applicable stock exchange, the court or
the shareholders of Longford and/or UrtheCast, as applicable; risks
and uncertainties related to the arrangement not being completed in
the event that the conditions precedent thereto are not satisfied
and other related risks and uncertainties. Longford undertakes no
obligation to update forward-looking information except as required
by applicable law. Such forward-looking information represents
management's best judgment based on information currently
available. No forward-looking statement can be guaranteed and
actual future results may vary materially. Accordingly, readers are
advised not to place undue reliance on forward-looking statements
or information.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Longford Energy Inc.