/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
(All dollar amounts are in Canadian dollars
unless otherwise indicated)
PERTH, Australia, July 23, 2018 /CNW/ - LeadFX Inc. (the
"Company" or "LeadFX") (Toronto Stock Exchange "TSX":
LFX) today announced a proposed "go private" transaction (the
"Arrangement") to be completed by way of a statutory plan of
arrangement (the "Plan of Arrangement") pursuant to section
192 of the Canada Business Corporations Act (the
"CBCA").
If the Arrangement becomes effective, then Sentient Executive GP
III, Limited and Sentient Executive GP IV, Limited (collectively,
"Sentient") and InCoR Energy Materials Limited
("InCoR" and together with Sentient, the "Controlling
Shareholders") will own or have control or direction over 100%
of the Common Shares of the Company ("Common Shares").
Under the Arrangement, among other things, the Common Shares
will be consolidated at the Effective Time (as defined below) on
the basis of five million (5,000,000) pre-consolidation Common
Shares to one (1) post-consolidation Common Share (the
"Consolidation"). In lieu of fractional Common Shares,
shareholders of the Company ("Shareholders"), other than the
Controlling Shareholders, who would otherwise receive less than one
(1) whole post-Consolidation Common Share in exchange for their
pre-Consolidation Common Shares held immediately prior to the
Consolidation will be entitled to receive cash consideration of
$1.00 (the "Cash
Consideration") for each pre-Consolidation Common Share.
The Cash Consideration of $1.00
per pre-Consolidation Common Share represents an implied 24.9%
premium to the volume weighted average trading price of the Common
Shares for the five (5) trading days ended July 23, 2018, a 21.6% premium to the volume
weighted average trading price of the Common Shares for the fifteen
(15) trading days ended July 23, 2018
and a 14.0% premium to the volume weighted average trading price of
the Common Shares for the thirty (30) trading days ended
July 23, 2018. The Arrangement
therefore presents an efficient liquidity mechanism for all
Shareholders at a premium to the recent share price which could not
otherwise be generated from the trading platforms given the
Company's liquidity and capital structure.
The aggregate Cash Consideration required to purchase the
fractional Common Shares resulting from the Consolidation is
$13,330,974. This includes the Common
Shares held by Sentient Executive GP I, Limited & Sentient
(Aust.) Pty Ltd ("Sentient I") and Sentient Executive GP II,
Limited & Sentient Trustees PTC Limited ("Sentient II"),
as each entity holds less than 5,000,000 Common Shares.
To finance the aggregate Cash Consideration payable under the
Arrangement, InCoR has agreed to, at the Effective Date (as defined
below) and after all conditions precedent to completing the
Arrangement have been satisfied, subscribe for 13,330,974
pre-Consolidation Common Shares at a price of $1.00 per Common Share.
In addition to the Consolidation, the Arrangement also provides
for, at the Effective Time: (i) the cancellation of all outstanding
options to acquire Common Shares; (ii) the cancellation of all
unexercised common share purchase warrants to acquire Common
Shares: and (iii) the cancellation of all performance share units
to acquire Common Shares then outstanding, provided, however, that
(a) if the previously issued Stage 3 Warrant to acquire 5,750,000
Common Shares held by InCoR (refer the Umbrella Agreement dated
June 20, 2017, as filed on the
Company's SEDAR profile) has not previously been exercised in
accordance with its terms, then it will deemed to be exercised
without any further action by InCoR and InCoR will be issued
5,750,000 pre-Consolidation Common Shares, and (b) 269,000
performance share units shall be deemed to be unconditionally
vested and exercised, without any further action by the holder(s)
thereof, into 269,000 pre-Consolidation Common Shares.
Special Committee, Valuation and Fairness Opinion
In April 2018, Company management
undertook an informal review of the Company's capital structure to
assess the effect that a small number of individual and
institutional Shareholders would have on future attempts to
rationalize and redirect the Company's activities as it seeks to
finance the construction of a hydrometallurgical facility at the
Paroo Station Lead Mine in Western
Australia. Information collected by management over the
course of prior months and quarters made it increasingly evident
that the Common Shares were very thinly traded, making it difficult
for Shareholders to sell efficiently through the facilities of the
TSX. These issues present significant challenges to the Company's
efforts to raise the additional capital it needs efficiently.
On May 10, 2018, a special
committee of independent directors (the "Special Committee")
was appointed by the board of directors of the Company (the
"Board") to consider and evaluate a potential "go-private"
transaction, the effect of which, among other things, would be that
the Controlling Shareholders would become the sole Shareholders,
the Common Shares would be delisted from the TSX and the Company
would, following the Arrangement, apply to cease to be a reporting
issuer (or the equivalent) in any jurisdiction of Canada.
The Special Committee was comprised of two (2) independent
directors (Mr. David Warner and Mr.
Stephen Dennis), and was mandated,
among other things, to (i) oversee and supervise the process
carried out by the Company in negotiating the Arrangement (ii)
review and consider the terms and conditions of the Arrangement and
(iii) advise the Board with respect to any recommendation that the
Board should make to Shareholders. The Arrangement constitutes a
"business combination" for the purposes of Multilateral Instrument
61-101 – Protection of Minority Securityholders in Special
Transactions ("MI 61- 101").
MI 61-101 provides that, unless exempted, an issuer proposing to
carry out a transaction such as the Arrangement is required to: (i)
engage an independent valuator to prepare a valuation of the
affected securities (and any non-cash consideration being offered
therefore) and provide to the holders of the affected securities a
summary of such valuation; and (ii) obtain the approval of a
majority of the "minority" shareholders (as that term is used in MI
61-101) unless an exemption is available or discretionary relief is
granted by applicable securities regulatory authorities.
The Company appointed INFOR Financial Inc. ("INFOR
Financial") to prepare a Valuation and Fairness Opinion in
accordance with the formal valuation requirements of MI 61-101.
INFOR Financial determined that, subject to the assumptions,
limitations and qualifications set out in its report, the Cash
Consideration is fair, from a financial point of view, to the
Shareholders (other than the Controlling Shareholders).
Pursuant to Section 4.6(1)(a) of MI 61-101, an exemption from
the minority approval requirement is available if "interested
parties" (as that term is used in MI 61-101) beneficially own 90%
or more of the affected securities at the time the business
combination is agreed to and an enforceable appraisal right or
substantially equivalent right is made available to minority
Shareholders. The Controlling Shareholders and their affiliates are
"interested parties" within the meaning of MI 61-101 and
beneficially own more than 90% of the pre-Consolidation Common
Shares. Accordingly, an exemption from the minority approval
requirement in connection with the adoption of the Arrangement
Resolution (as defined below) is available and will be relied
upon.
Following consideration of the surrounding circumstances,
including the Valuation and Fairness Opinion, the Special Committee
has concluded that the Arrangement is fair to the Shareholders and
in the best interests of the Shareholders and LeadFX.
Accordingly, the Special Committee unanimously recommended that
the Board approve the Arrangement and the implementation of the
Plan of Arrangement, subject to the receipt of all required
Shareholder, court and other regulatory approvals, including
approval of the TSX. Following an extensive review of the terms of
the Arrangement, the Plan of Arrangement, the Valuation and
Fairness Opinion and the recommendation of the Special Committee,
the Board has unanimously (with three interested directors
abstaining) approved the Arrangement and the related Plan of
Arrangement, having determined that the Arrangement is in the best
interests of the Company. The Board recommends that all
Shareholders vote in favour of the Arrangement Resolution (as
defined below).
Conditions to implementing the Arrangement
Closing of the Arrangement will occur as soon as reasonably
practicable following the receipt of the Final Order (as referred
to below), or such later date as the parties may agree (the
"Effective Date"). The implementation of the Arrangement is
conditional upon the satisfaction, on or before the effective time
of the Arrangement (the "Effective Time") on the Effective
Date, of the following conditions precedent:
1. Approval of not less than 66⅔%
of Shareholders at a special meeting of the Shareholders to
be held no later than October 15,
2018 ("Arrangement Resolution");
2. Interim and Final Orders
shall have been obtained in form and substance satisfactory to the
parties, acting reasonably, and shall not have been set aside or
modified in a manner unacceptable to the parties, acting
reasonably, on appeal or otherwise;
3. the Final Order shall have been
granted by October 31, 2018 and no
earlier than October 5, 2018;
4. the Arrangement shall have
resulted in the number of Securityholders being reduced to the
Controlling Shareholders and their affiliates such that the Company
can successfully apply for a decision under applicable Canadian
securities legislation that it is not a reporting issuer in any
jurisdiction of Canada;
5. all regulatory approvals,
including the approval of the TSX, will have been received by the
Company;
6. there shall not be in
force any law and no governmental authority shall have issued any
order or decree restraining or prohibiting the completion of the
Arrangement; and
7. there shall not be in force any
order or decree restraining or enjoining or materially modifying or
imposing material conditions on the implementation of the
Arrangement and there shall be no proceeding, whether of a judicial
or administrative nature or otherwise brought by a governmental
entity that relates to or results from the Arrangement that would,
if successful, result in an order or ruling that would preclude
completion of, or materially modify or impose material conditions
under the Arrangement.
Meeting
The Company anticipates calling a special meeting of the
Shareholders to be held at 10:00 a.m.
on October 3, 2018, in Toronto, Ontario to consider the Arrangement
Resolution (the "Meeting"). The record date to receive
notice of and vote at the Meeting is expected to be on or around
August 7, 2018.
Sentient (inclusive of Sentient I and Sentient II) has advised
the Company that it intends to vote for the Arrangement Resolution.
The votes attached to the Common Shares held by the Controlling
Shareholders, Sentient I and Sentient II are sufficient to adopt
the Arrangement Resolution and they are therefore in a position to
have the Arrangement approved.
Minority Shareholders will be entitled to dissent and be paid
the fair value of their Common Shares in accordance with and
subject to strict compliance with section 190 of the CBCA, which
constitutes an enforceable appraisal remedy for the purposes of MI
61-101.
Full details of the Arrangement, the Plan of Arrangement, the
dissent rights and the Meeting, and a copy of the Valuation and
Fairness Opinion will be included in a Management Information
Circular which the Company will mail to Shareholders and which will
be posted on LeadFX's SEDAR profile at www.sedar.com.
Forward looking statements
This news release may contain "forward-looking statements"
within the meaning of applicable Canadian securities laws. Examples
of forward-looking information in this news release includes but is
not limited to statements and information concerning the
Arrangement and Plan of Arrangement; the Meeting of the
Shareholders; any future intentions of the Company to de-list the
Common Shares from the TSX and cease to be a reporting issuer in
the applicable provinces of Canada. Forward-looking statements are
often, but not always, identified by the use of words such as
''seek'', ''anticipate'', ''contemplate'', ''target'', ''believe'',
''plan'', ''estimate'', ''expect'', and ''intend'' and statements
that an event or result ''may'', ''will'', ''can'', ''should'',
''could'' or ''might'' occur or be achieved and other similar
expressions. Forward-looking information by its nature requires
assumptions and involves known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking information, and readers are cautioned not to place
undue reliance on such information. These statements are based on
expectations, estimates and projections as at the date of this news
release and are subject to a number of risks and uncertainties.
Should one or more of these risks or uncertainties materialize, or
should assumptions underlying the forward-looking information prove
incorrect, actual results, performance or achievement may vary
materially from those expressed or implied by the forward-looking
information contained in this news release. These risk factors
should be carefully considered and readers are cautioned not to
place undue reliance on forward-looking information, which is
current only as of the date of this news release. All subsequent
forward-looking information attributable to LeadFX herein is
expressly qualified in its entirety by the cautionary statements
contained in or referred to herein. LeadFX does not undertake any
obligation to release publicly any revisions to this
forward-looking information to reflect events or circumstances that
occur after the date of this news release or to reflect the
occurrence of unanticipated events, except as may be required under
applicable securities laws.
SOURCE LeadFX Inc.