OTTAWA,
May 2, 2012 /CNW/ - Seprotech Systems
Incorporated (TSXV: SET) ("Seprotech") and WESA Group Inc. ("WESA")
today announced that they have entered into a non-binding letter of
intent under which Seprotech will acquire 100% of privately-held
WESA in a reverse takeover (the "Transaction"). Upon completion of
the Transaction, the combined entity (the "Resulting Issuer") is
expected to be a leading provider of earth sciences, water
resources and environmental engineering services, and
wastewater/water treatment systems. The intent is to build an
integrated Product and Service organization that provides
intelligent solutions to complex environmental problems both in
Canada and abroad.
According to Seprotech's CEO, Harry Marshall, "this combination takes
Seprotech immediately to a new level of capabilities - financial,
technical and customer reach. WESA's size and revenue base will
provide financial strength, their network of offices and extensive
client base will provide a new platform for enhancing our
visibility in the marketplace, and their team of some 125
engineering, professional and project staff will provide welcome
support to our technical and project management team."
WESA's CEO, Roger
Woeller stated, "the synergy between the two companies is
striking - each company has personnel who have previously worked at
the other, we share similar customer sectors from mining to
land developers to municipalities, our geographic reaches are
similar and we are already collaborating on a number of projects
together. Combined, we are able to provide our clients with a much
broader spectrum of professional services and complete systems to
solve their problems. We see Seprotech's public company status and
their current base of business in the water industry as a platform
for much more rapid growth than we otherwise could have achieved
alone."
CEO of the Resulting Issuer, William Touzel explained that: "our plan is to
operate in two distinct divisions. We will combine the operations
of our WESAtech subsidiary, which was previously run by
Harry Marshall, who is now CEO of
Seprotech, into Seprotech's operation to form a unified technology
systems division, and WESA's environmental consulting division will
continue to provide independent professional services to our
clients."
Information Concerning WESA
WESA was founded in 1978 under the laws of
Ontario. WESA is a professional
services company focussed on environmental earth sciences, water
resources, waste management, occupational health, safety and
hygiene and renewable energy needs of industry and all levels of
government. WESAtech, a wholly-owned subsidiary, supplies turn-key
water treatment systems to industry, and in particular the mining
sector. More information can be obtained at www.wesa.ca
Selected WESA Financial Information (000s -
Unaudited)
|
2011 |
2010 |
2009 |
Revenue |
$22,554 |
$20,417 |
$22,649 |
Gross Margin |
$4,464 |
$4,496 |
$4,437 |
Operating Income |
$1,108 |
$1,359 |
$1,260 |
Net Income |
$157 |
$230 |
$566 |
Total Assets |
$12,447 |
$13,207 |
$11,492 |
Total Liabilities |
$6,829 |
$7,883 |
$6,445 |
Shareholder Equity |
$5,480 |
$5,199 |
$4,969 |
WESA Insiders
Name |
Capacity |
Residence |
Roger M. Woeller |
CEO, Director |
Ontario |
William M. Touzel |
President, CFO & Director |
Ontario |
Harry J. Marshall |
Director |
Ontario |
Wayne L. Ingham |
Director |
Ontario |
Francois A. Richard |
Director |
Quebec |
Andre Y. D'Astous |
Director |
Quebec |
C. Ronald Donaldson |
Director |
Ontario |
Nell van Walsum |
Director |
Quebec |
David W. Hopper |
Director |
Ontario |
10% Shareholders
Roger M. Woeller
and spouse beneficially own approximately 20.9% of WESA;
C. Ronald Donaldson and spouse
beneficially own approximately 12.54% of WESA, and Nell van Walsum and Andre Y. D'Astous
beneficially own approximately 12.54% of WESA.
Existing Relationships
William B.
Touzel, a Director of Seprotech, is also President of WESA,
and is beneficial owner of 52,500 common shares of WESA,
representing approximately 8.6% of the issued and outstanding
common shares.
Harry J.
Marshall, a director and officer of Seprotech, is a director
of WESA, but does not own any shares of WESA.
Transaction Summary
The Transaction is an arm's length transaction
and will constitute a reverse-takeover pursuant to the policies of
the TSX Venture Exchange ("TSX.V"). Completion of the Transaction
("Closing") is subject to the entering into by Seprotech and WESA
of a definitive share exchange agreement, and to several
conditions, including, but not limited to the approval of a simple
majority of Seprotech shareholders. Seprotech intends to convene a
special meeting of shareholders (the "Meeting") to seek such
shareholder approval as soon as possible following the signing of a
definitive share exchange agreement and receipt of all required
TSX.V approvals. The other conditions are summarized below.
Seprotech currently has issued and outstanding
62,921,926 common shares, and 6,230,000 options to purchase
Seprotech common shares, at prices ranging between $0.10 and $0.26 per share.
At the Meeting, Seprotech also intends to seek
the approval of its shareholders to consolidate its common shares
on a 1 for 10 basis (the "Consolidation"). Assuming completion of
the Consolidation, Seprotech would have issued and outstanding,
immediately prior to Closing (i) 6,292,193 post-consolidation
Seprotech common shares and (ii) options to purchase 623,000 common
shares, each exercisable at a price of from $1.00 - $2.60 per share.
It is currently contemplated that the
Transaction will be completed by way of a share exchange agreement
pursuant to which Seprotech will acquire all of the issued and
outstanding shares of WESA in consideration for the issuance to
WESA of 14,157,433 post-consolidation shares of Seprotech, each at
a deemed value of approx. $0.664 per
share for aggregate consideration of $9,400,000. Upon Closing, WESA will become a
wholly-owned subsidiary of Seprotech and WESA will control
approximately 69.23 % of the Seprotech common shares of the
Resulting Issuer.
Pursuant to the LOI, WESA has agreed to provide
to Seprotech a secured credit facility of up to $2,000,000 to be available at the sole discretion
of WESA upon the approval of the TSX.V and completion of
documentation.
Management and Board of Directors of
Resulting Issuer
Effective upon Closing, the board of directors
of the Resulting Issuer will consist of five members, comprising
the CEO, one to be nominated by each of WESA and Seprotech, and two
independent directors to be jointly nominated.
The Chief Executive Officer of the Resulting
Issuer will be William M. Touzel,
who is presently President of WESA; the Chief Financial Officer
will be Ian. W. Malone, presently Chief Financial Officer of
Seprotech. The other senior management of both companies will
continue to play active roles in the combined entity.
Conditions to the Transaction
The proposed Transaction is subject to a number
of terms and conditions including the parties entering into a
definitive agreement with respect to the Transaction (such
agreement to include representations, warranties, conditions and
covenants typical for a transaction of this type), the completion
of satisfactory due diligence investigations, the approval of the
directors and shareholders of each of Seprotech and WESA, the
approval of the TSX.V and other relevant regulatory
authorities, and various other customary conditions that must be
satisfied prior to closing, which is expected to take place no
later than August 31, 2012.
Seprotech also advises that its debenture in a
principal amount of $705,000 matured
on April 30, 2012. In light of the
proposed Transaction, the Company will ask its debenture holders to
agree to the conversion of 50% of the debenture to common shares of
the Company at a deemed (pre-consolidation) price of $0.10 per share, subject to the approval of the
TSX.V; and to the repayment over 12 months of the remaining 50% of
the debenture in equal monthly payments commencing May 15, 2012. It is expected that this, or a
comparable arrangement acceptable to both Seprotech and WESA, will
be completed prior to completion of the proposed Transaction.
Other Information
Trading in Seprotech common shares will remain
halted pending the satisfaction of all applicable requirements of
the TSX.V. There can be no assurance that trading in Seprotech
common shares will resume prior to the completion of the
Transaction. Further details concerning the Transaction, WESA
(including additional financial information) and other matters will
be announced when a definitive agreement is reached.
Seprotech will engage a sponsor in connection
with the Transaction if required in accordance with applicable
TSX.V policies.
About Seprotech
Seprotech is a provider of engineered water and
wastewater treatment solutions to the municipal/land development,
resource sector and military market place, including Reverse
Osmosis water purification systems, ROTORDISK® biological sewage
treatment package plants and CrystalBlueâ„¢ membrane-based water
recycling systems. More information can be obtained at
www.seprotech.com
Forward-looking Statements
This news release contains certain "forward
looking statements" within the meaning of applicable securities
laws. Seprotech has made numerous assumptions regarding, among
other things, the ability of Seprotech and WESA to satisfy all the
closing conditions to complete the Transaction. Readers are
cautioned that the plans, intentions or expectations disclosed in
any forward-looking statements and underlying assumptions may not
be achieved and that they should not place undue reliance on any
forward-looking statement, each of which is expressly qualified in
its entirety by this cautionary statement.
Although the Company believes that the
expectations conveyed by the forward-looking information are
reasonable based on information currently available to it, these
statements are not guarantees and involve a number of risks,
uncertainties and assumptions, both known and unknown. The results
or events depicted in these forward-looking statements may differ
materially from actual results or events. Many factors could cause
results to differ materially from those stated including, but not
limited to: the Transaction may not be completed upon the terms
contemplated herein, or at all; the possibility of not satisfying
all of the closing conditions to complete the Transaction; the
possibility that Seprotech's shareholders do not approve the
Transaction at the special meeting of shareholders; difficulties or
delays in obtaining regulatory approvals; the ability of WESA or
Seprotech to retain existing customer contracts; risks related to
integration of acquisitions; and the ability to retain and obtain
qualified staff as well as various other factors which are
discussed in Seprotech's filings with applicable securities
regulatory authorities at www.sedar.com
Any forward-looking statement speaks only as of
the date of this news release and, except as may be required by
applicable securities laws, Seprotech disclaims any intent or
obligation to update any forward-looking statement, whether as a
result of new information, future events or results or
otherwise.
All information contained in this press
release relating to WESA was provided by WESA for inclusion herein.
Seprotech has not independently verified such information and shall
bear no liability for any misrepresentation contained
herein.
Completion of the Transaction is subject to a
number of conditions, including, but not limited to, acceptance by
the TSX.V and disinterested shareholder approval. The Transaction
cannot close until the required shareholder approval is obtained.
There can be no assurance that the Transaction will be completed as
proposed or at all.
Investors are cautioned that, except as
disclosed in the management information circular or filing
statement, as applicable, of Seprotech to be prepared in connection
with the Transaction, any information released or received with
respect to the Transaction may not be accurate or complete and
should not be relied upon. Trading in the securities of Seprotech
should be considered to be highly speculative.
The TSX.V has in no way passed upon the
merits of the proposed Transaction, and
neither TSX.V nor its Regulation Services Provider (as that term is
defined in the policies of the TSX.V) accepts responsibility for
the adequacy or accuracy of this release. The TSX.V has neither
approved nor disapproved of the information contained herein.
SOURCE Seprotech Systems Incorporated