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TORONTO,
Aug. 20, 2014 /CNW/ - 71 Capital
Corp. (the "Corporation") (TSXV-NEX: SVN.H) announced today
that it has entered into a letter of intent (the "Letter of
Intent") whereby the Corporation will acquire all of the issued
and outstanding securities (the "Brightstar Shares") of
Brightstar Seniors' Living Corporation ("Brightstar") in
exchange for the issuance of post-consolidation common shares (as
described below) to the shareholders of Brightstar. The acquisition
of the Brightstar Shares will constitute the Qualifying Transaction
of the Corporation (the "Qualifying Transaction") as such
term is defined in the policies of the TSX Venture Exchange (the
"Exchange").
It is anticipated that the acquisition of the Brightstar Shares
will be effected through the amalgamation of a wholly owned
subsidiary ("SubCo") of the Corporation and
Brightstar. The vendors of the Brightstar Shares are
Alan Chapple of Toronto, Ontario, through his Ontario company Filton Holdings Ltd.,
Elisabeth Blackburn of Toronto, Ontario, through her Ontario company Cru Communications and
Broadcast Productions Inc., James
Buckler of Unionville,
Ontario through his Ontario
company Dardanelles Holdings Ltd., and Lawson Gay of Courtice, Ontario through his company 2153491
Ontario Ltd.
Brightstar is a full service development company that will focus
on developing independent seniors housing projects in the greater
Toronto area and elsewhere. The
Corporation is a capital pool company.
Terms of Qualifying Transaction
Pursuant to the terms of the Letter of Intent, subject to
completion of satisfactory due diligence, a definitive amalgamation
agreement (the "Agreement") and receipt of applicable
approvals, SubCo will amalgamate with Brightstar and the
shareholders of Brightstar will receive post-consolidation shares
(as described below) in the capital of the Corporation in exchange
for their shares of the new amalgamated company.
The Qualifying Transaction is an arm's length transaction.
No insiders of the Corporation own securities in Brightstar and no
insiders of Brightstar own securities in the Corporation. It is
intended that the Corporation will complete a 5(old shares) for 1
(new share) consolidation of its shares and a name change in
connection with the Qualifying Transaction. The
Corporation intends to call a meeting of its shareholders in the
near future in order to approve the consolidation and name
change.
Upon completion of the Qualifying Transaction, Brightstar will
be a wholly owned subsidiary of the Corporation and the Corporation
will be engaged in the business of Brightstar.
Brightstar
Brightstar was founded in March
2008 under the laws of Ontario Brightstar is a private
company engaged in the development of independent seniors housing
projects. Brightstar intends on both developing and building
projects for its own account and entering into joint venture
partnership with faith and/or not for profit groups pursuant to
which Brightstar will supply the sales, marketing and building
expertise and the faith and/or not for profit groups will supply
the land.
Brightstar has had discussions with many faith and not for
profit groups that own valuable but underused real estate.
Brightstar's appeal to these groups is that it provides them with a
way to use their property without having to sell it while at the
same time benefiting both the communities these groups serve as
well as the organizations themselves. Although early
discussions have taken place with these groups no joint venture
agreements have yet been executed. Brightstar is however in
the process of developing its first project in southern
Ontario, less than one hour drive
from Toronto. The project is
called Brookhouse Gate and is located in the centre of the quaint
village of Newcastle, Ontario. It is a 78 unit four storey
condominium project, the appropriate zoning is in place and
construction is anticipated for 2015. Revenue will be recognized
when title to condominium units is transferred to the purchasers of
such units. Expenses will be capitalized until such
time. As at July 31, 2014 the
unaudited financial information of the project includes land and
development costs to date of $2,300,000 with equity of $1,400,000. Total assets are $2,400,000 and total liabilities are $1,000,000. A sales presentation centre is
currently being completed and a marketing program is underway to
obtain condominium unit sales.
Brightstar anticipates earning revenue from its projects in the
following three ways (i) charging a development fee for the
services associated with the development of each project (this fee
will be a percentage of the total cost of each project); (ii)
earning a percentage of the profits from the individual projects
and (iii) earning profits on those projects which are developed for
its own account without a joint venture partner.
Management and Board of Directors of the Resulting
Issuer
Upon completion of the Qualifying Transaction, it is anticipated
that the resulting issuer's Board of Directors will consist of
Alan Chapple, John Blackburn, Jim
Buckler and Lawson Gay.
Additional board members may be named later.
Alan Chapple, PEng. MBA is the
Chairman and CEO of Brightstar Seniors Living Corporation.
Alan Chapple's extensive background
in construction, land development and corporate management has
contributed to his expertise with financial restructuring and
arranging financing for development projects. Mr. Chapple has
an entrepreneurial focus on real estate development and has served
as the Chairman and CEO of publicly traded companies including
Armbro Enterprises Inc., now Aecon Group Inc. He is currently
involved in the development of condominium projects that focus on
the senior demographic.
John Blackburn, PLE, AIHM is the
AIHM is the President of Brightstar Seniors Living Corporation.
John Blackburn is a Professional
Land Economist (PLE) with over 35 years of experience in marketing,
sales and public relations, both in the E.U. and North America. He is the winner of numerous
marketing and public relations awards, including BILD's Top Awards,
2 Grand SAMs, the prestigious Riley
Brethour Award, the Sales & Marketing Manager of the
Year Award, the CHBA Award of Honour, and the Queen Elizabeth II
Diamond Jubilee medal, in recognition of his contributions to
Canada. John is an accredited member of the Institute of
Housing Management and first Vice President of the Board of
Directors of the Association of Ontario Land Economists.
Jim Buckler, BSc, CPA, CA is the
Executive Vice President and CFO of Brightstar Seniors Living
Corporation. Jim Buckler has an
extensive background in the acquisition, development and sale of
commercial, industrial and residential real estate with over 35
years of experience in financing, accounting, taxation and
financial reporting. He worked with Mr. Chapple as the
Vice-President of Finance at Armbro. As well he played a
senior financial role in the infrastructure development of Highway
407. He is a member of the Institute of Chartered Accountants of
Ontario and the South Carolina Board of Accountancy.
Lawson Gay is the President of
Gay Company Ltd. Lawson Gay is
Founder and President of HL Gay Family Homes and President of Gay
Company Ltd. Gay Company is a family owned company that has
been owned and operated by successive generations since the late
1800s, building all types of industrial, commercial, institutional
and residential projects. He is a member of the Greater Oshawa Chamber of Commerce and Past
President of the Durham Construction Association.
Sponsorship of Qualifying Transaction
Sponsorship of a qualifying transaction of a capital pool
company is required by the Exchange unless exempt in accordance
with the Exchange policies. The Corporation is currently reviewing
the requirements for sponsorship and may apply for exemption from
sponsorship requirements pursuant to the policies of the Exchange,
however there is no assurance that the Corporation will ultimately
obtain this exemption.
Proforma Capital Structure
As a condition to the completion of the Qualifying Transaction,
Brightstar will complete a private placement (the "Private
Placement") for minimum gross proceeds of $500,000 and maximum proceeds of up to
$1,500,000. The Private Placement
will be completed through the issuance of subscription receipts
("Subscription Receipts") Each Subscription Receipt will
automatically convert, for no additional consideration, into one
common share in the capital of Brightstar immediately prior to the
completion of the Amalgamation (the "Release Date").
The gross proceeds of the offering of Subscription Receipts will be
placed into escrow with a third party escrow agent. The
proceeds will be released to Brightstar on the Release Date.
If the Release Date does not occur before December 31, 2014 the proceeds will be returned
to the investors without deduction. The purchase price for each
Subscription Receipt will be $0.25 or
such other amount as may be negotiated between Brightstar and arm's
length investors.
The Corporation currently has 4,411,271 common shares issued and
outstanding. The shares will be consolidated on the basis of 5 old
shares for each 1 new share, resulting in 882,260 new shares prior
to the amalgamation. Brightstar shareholders will be issued
18,000,000 post-consolidation shares. New investors will be issued
6,000,000 post-consolidation shares assuming the maximum Private
Placement is achieved.
Following completion of the amalgamation, shareholders of the
Corporation will hold equity interests equal to approximately 4% of
the combined entity (assuming the maximum financing) with the
remaining equity interests being held by shareholders of Brightstar
and new investors participating in the Private Placement. The
relative valuations of the Corporation and Brightstar will be
adjusted to the extent that the pricing of the Private Placement is
adjusted from that set forth in this press release.
In accordance with Exchange policy, the Corporation's shares are
currently halted from trading and will remain so until the
completion of the Qualifying Transaction.
Termination
The letter of intent will terminate (i) on the mutual consent of
both the Corporation and Brightstar, (ii) if the Corporation is not
satisfied with its due diligence review of Brightstar at
5:00 p.m. (Toronto time), on or before September 30, 2014, (iii)if a Definitive
Agreement is not executed on or before 5:00
p.m. (Toronto time) on
October 31, 2014.
Description of Significant Conditions to
Closing
Completion of the Qualifying Transaction is subject to a
number of conditions including but not limited to, due diligence,
Exchange acceptance and if required by Exchange policies and
shareholder approval. Where applicable, the Qualifying Transaction
cannot close until the required shareholder approval is
obtained. There can be no assurance that the Qualifying
Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
management information circular or filing statement to be prepared
in connection with the Qualifying Transaction, any information
released or received with respect to the Qualifying Transaction may
not be accurate or complete and should not be relied upon. Trading
in the securities of a capital pool company should be considered
highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the proposed transaction and has neither approved nor
disapproved the contents of this press release.
The Corporation will make a subsequent news release with
information on sponsorship and summary financial information in
accordance with Exchange policy.
Cautionary Statements
This news release contains "forward-looking statements"
within the meaning of applicable securities laws relating to the
proposal to complete the Qualifying Transaction and associated
transactions, including statements regarding the terms and
conditions of the Qualifying Transaction and associated
transactions. Readers are cautioned not to place undue
reliance on forward-looking statements. Actual results and
developments may differ materially from those contemplated by these
statements depending on, among other things, the risks that the
parties will not proceed with the Qualifying Transaction and
associated transactions, that the ultimate terms of the Qualifying
Transaction and associated transactions will differ from those that
currently are contemplated, and that the Qualifying Transaction and
associated transactions will not be successfully completed for any
reason (including the failure to obtain the required approvals or
clearances from regulatory authorities). The statements in this
news release are made as of the date of this release. The
Corporation undertakes no obligation to comment on analyses,
expectations or statements made by third parties in respect of the
Corporation, Brightstar, or their respective financial or operating
results or (as applicable), their securities.
Neither 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 71 Capital Corp.