- Cash portion of acquisition price increased to
C$4.00 per share from C$3.57 per share, representing an
additional C$30 million of cash
consideration
- Pala confirms these improved terms are its best and final
offer
- Cash change of control payments reduced by
46%
- Termination fee in the event of a superior proposal
reduced by 50%
- Continued repayment of Cobalt 27 net debt by Pala,
leaving Nickel 28 without corporate debt and funded with
US$5 million in cash
- Shareholders meeting will now take place on October 11, 2019
TORONTO, Oct. 1, 2019 /CNW/ - Cobalt 27 Capital Corp.
(TSXV: KBLT) ("Cobalt 27" or the "Company")
and Pala Investments Limited ("Pala") are pleased to
announce that they have today entered into an amendment (the
"Amendment") to their previously announced arrangement
agreement (as amended, the "New Arrangement Agreement")
which provides for the acquisition by Pala of 100% of Cobalt 27's
issued and outstanding common shares, other than the approximately
19% that Pala already owns.
The New Arrangement Agreement
Following extensive consultations with shareholders of the
Company, Pala and Cobalt 27 have agreed to the following
significant improvements in the New Arrangement Agreement:
- Increased cash consideration to C$4.00 per share from C$3.57 per share, representing an additional
C$30 million of cash consideration to
Cobalt 27 shareholders;
- A reduction in the cash change of control payments for
management under their existing entitlements by US$7.13 million, representing a decrease of 46%;
the balance of the entitlements will instead be satisfied in
4,817,345 shares of Nickel 28 Capital Corp. ("Nickel 28")
calculated based on the implied value per share of Nickel 28 of
C$1.92 per share as described
below;
- A 50% reduction in the termination fee payable to Pala in the
event of a "Superior Proposal", from C$15.5
million to C$7.75 million;
and
- Pala's interest in Nickel 28 to increase from 4.9% to 9.9%,
demonstrating confidence in the ongoing prospects of Nickel
28.
The New Arrangement Agreement continues to provide that Pala
will repay Cobalt 27's net debt, leaving Nickel 28 with no
corporate debt and funding of US$5
million of cash upon closing.
The New Arrangement Agreement provides that Cobalt 27
shareholders will receive total consideration (the
"Consideration") of C$5.92 per
share, comprised of C$4.00 in cash
plus one share of Nickel 28 with an implied value of C$1.92 per share. As previously announced, the
transaction will be carried out under a court-approved statutory
plan of arrangement (the "Arrangement") governed by the
Business Corporations Act (British
Columbia). The implied value of each share of Nickel 28 has
been determined based on the same value of Nickel 28's underlying
assets as of June 17, 2019 as
described in the joint news release dated June 18, 2019 and adjusted to reflect the
additional shares to be issued to Pala, to satisfy the non-cash
portion of the management change of control payments, and in lieu
of a portion of cash payments to advisors.
The Company also notes that the New Arrangement Agreement
delivers greater value to shareholders as compared to the withdrawn
proposal made by a private streaming and royalty company as
disclosed on September 3, 2019. This
results from the fact that there is less dilution to Company
shareholders taking into account Pala's 9.9% ownership interest and
the Nickel 28 shares to be issued to satisfy the management change
of control payments and a portion of the advisor payments, as
compared to the dilution that would have resulted from Pala holding
approximately 19% of the Nickel 28 shares under the withdrawn
proposal.
The Company is also pleased to confirm the following governance
arrangements for Nickel 28:
- Justin Cochrane to serve as CEO
of Nickel 28, as described in Cobalt 27's management information
circular dated August 13, 2019 (the
"Circular");
- Anthony Milewski to continue as a non-executive chairman of the
board of directors of Nickel 28; and
- Nickel 28's board audit, compensation, nomination and
governance committees to be comprised solely of independent
directors.
Stephen Gill, Managing
Partner of Pala commented: "We are pleased to provide
these significantly improved transaction terms to Cobalt 27
shareholders on a best and final basis. We believe that these terms
are responsive to shareholder feedback and fully value the
Company."
Philip Williams, Chairman of
Special Committee of Cobalt 27, commented: "We have responded to
the concerns expressed by shareholders and believe we have
delivered a significantly improved transaction for their benefit,
including immediate liquidity in addition to continued exposure to
our high-quality nickel assets. We are excited about this next
phase for the company, and believe this improved offer provides for
excellent governance of Nickel 28 going forward."
The total consideration of C$5.92
represents a 71% premium to Cobalt 27's unaffected closing price on
the TSX Venture Exchange (the "TSX-V") on June 17, 2019 of C$3.47 and a 50% premium to Cobalt 27's
unaffected 20-day volume weighted average trading price on the
TSX-V of C$3.95 as at the same
date.
Other Matters
The special committee of independent directors of Cobalt 27 (the
"Special Committee") reviewed and oversaw the negotiation of
the amendments reflected in the New Arrangement Agreement. The
Special Committee has obtained a fairness opinion from its
independent financial advisor to the effect that, subject to the
assumptions, qualifications and limitations contained therein, as
at October 1, 2019, the Consideration
is fair, from a financial point of view, to the shareholders of
Cobalt 27 (other than Pala). The Special Committee unanimously
recommended to the board of directors of the Company (the "Board
of Directors") that the New Arrangement Agreement be
approved.
The Board of Directors has obtained a fairness opinion from the
Company's financial advisor to the effect that, subject to the
assumptions, qualifications and limitations contained therein, as
at October 1, 2019, the Consideration
is fair, from a financial point of view, to the shareholders of
Cobalt 27 (other than Pala). The Board of Directors has unanimously
determined, based on, among other things, the recommendation of the
Special Committee and the fairness opinion from the Company's
financial advisor, that the New Arrangement Agreement is in the
best interests of Cobalt 27 and its shareholders and recommends
that Cobalt 27 shareholders vote in favour of the Arrangement. As
previously disclosed, directors and senior officers of Cobalt 27
holding in aggregate approximately 2% of the common shares of
Cobalt 27 on a fully diluted basis have entered into voting and
support agreements with Pala, pursuant to which they have agreed to
vote their shares in favour of the Arrangement.
The Amendment and a supplement to the Circular describing the
Amendment and containing other relevant information (the
"Supplement") will be made available under Cobalt 27's
profile at www.sedar.com. A copy of the fairness opinions received
by each of the Special Committee and the Board of Directors
regarding the Consideration will also be included in the
Supplement.
The Arrangement continues to be subject to the same closing
conditions as previously disclosed, including the shareholder and
court approvals as more fully described in the Circular and the
Supplement. The Arrangement is expected to be completed by the end
of October 2019.
The Meeting and Voting Details
The annual general and special meeting of shareholders of Cobalt
27 (the "Meeting") to consider the Arrangement and certain
other matters described in the Circular and Supplement which was
previously scheduled for October 10,
2019, has been postponed and rescheduled to October 11, 2019 at 10:00
a.m. (Toronto time). The
record date of the Meeting will remain August 12, 2019 and the location of the Meeting
will remain the offices of Stikeman Elliott LLP, 5300 Commerce
Court West, 199 Bay Street, Toronto,
Ontario.
Shareholders are encouraged to vote today using the internet,
telephone or facsimile. Shareholders should vote well in advance of
the voting deadline on October 9,
2019 at 10:00 a.m.
(Toronto time).
Shareholders who have questions about the New Arrangement
Agreement or the Arrangement, or need assistance with voting their
shares or changing votes that were previously cast, can contact our
proxy solicitation agent, Kingsdale Advisors:
Kingsdale Advisors
North American Toll-Free Number:
+1.888.518.6554
Outside North America, Banks,
Brokers and Collect Calls: +1.416.867.2272
Email: contactus@kingsdaleadvisors.com
North American Toll-Free Facsimile: +1.888.683.6007
Facsimile: +1.416.867.2271
Advisors and Counsel
Cobalt 27 has engaged Scotiabank and Regent Advisors as its
financial advisors and Stikeman Elliott LLP as its legal advisor in
connection with the Arrangement. The Special Committee engaged TD
Securities Inc. to provide an independent fairness opinion in
connection with the Arrangement.
Pala has engaged Goldman Sachs as its financial advisor and
Torys LLP and White & Case LLP as its legal advisors in
connection with the Arrangement.
Pala has mandated and received financing commitments from
Société Générale and ING Capital LLC as Joint Lead Arrangers for
loan facilities related to the transaction.
About Cobalt 27
Cobalt 27 Capital Corp. is a leading battery metals streaming
company offering exposure to metals integral to key technologies of
the electric vehicle and energy storage markets. Cobalt 27 holds an
8.56% joint venture interest in the long-life, world-class Ramu
mine which currently delivers near-term attributable nickel and
cobalt production. Cobalt 27 also manages a portfolio of 11
royalties. Cobalt 27 also owns physical cobalt and a cobalt stream
on the Voisey's Bay mine.
About Pala
Pala is an investment company focused on the raw materials value
chains that drive the global economy. Pala's team has extensive
experience, with a strong track record of successful investments
and value creation. Pala seeks to assist companies by providing
strategic support and innovative solutions in development, growth
and turnaround situations. Pala invests across all raw materials as
well as the associated businesses critical to building sustainable
value chains for the future, including extraction, processing,
recycling, logistics and technology.
Additional Information
None of the securities to be issued pursuant to the Arrangement
have been or will be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any
state securities laws, and any securities issued in the Arrangement
are anticipated to be issued in reliance upon the exemption from
such registration requirements provided by Section 3(a)(10) of the
U.S. Securities Act and applicable exemptions under state
securities laws. This news release does not constitute an offer to
sell or the solicitation of an offer to buy any securities.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains certain information which constitutes
'forward-looking statements' and 'forward-looking information'
within the meaning of applicable Canadian securities laws. Any
statements that are contained in this news release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward looking statements are often identified by
terms such as "may", "should", "anticipate", "expect", "potential",
"believe", "intend" or the negative of these terms and similar
expressions. Forward-looking statements in this news release
include, but are not limited to statements with respect to: the
anticipated benefits associated with the Arrangement; the business
and assets (including their implied value) of Nickel 28 and its
strategy going forward; the timing for the completion of the
Arrangement; the Consideration to be received by shareholders of
Cobalt 27, which may fluctuate in value due to Nickel 28 common
shares forming part of the Consideration; the composition of the
future management team of Nickel 28 and the satisfaction of closing
conditions under the New Arrangement Agreement. In particular,
there can be no assurance that the Arrangement will be completed.
Readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements involve
known and unknown risks and uncertainties, most of which are beyond
the Company's control. For more details on these and other risk
factors see the Company's most recent Annual Information Form on
file with Canadian securities regulatory authorities on SEDAR at
www.sedar.com under the heading "Risk Factors". Should one or more
of the risks or uncertainties underlying these forward-looking
statements materialize, or should assumptions underlying the
forward-looking statements prove incorrect, actual results,
performance or achievements could vary materially from those
expressed or implied by the forward-looking statements.
The forward-looking statements contained herein are made as of
the date of this release and, other than as required by applicable
securities laws, the Company does not assume any obligation to
update or revise them to reflect new events or circumstances. The
forward-looking statements contained in this release are expressly
qualified by this cautionary statement.
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. No securities regulatory authority has
either approved or disapproved of the contents of this news
release.
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SOURCE Cobalt 27 Capital Corp
