Rockstar Capital Corp. enters into letter of intent with First Global Data Corp. in respect of a proposed qualifying transaction

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TORONTO, Nov. 1, 2011 /CNW/ - Rockstar Capital Corp. (TSXV: ROC.P) ("Rockstar") is pleased to announce that it has signed a non-binding letter of intent (the "LOI") with First Global Data Corp., a corporation existing under the laws of Ontario ("First Global"), which outlines the general terms and conditions pursuant to which Rockstar and First Global would be willing to complete a transaction that will result in a reverse take-over of Rockstar by the shareholders of First Global (the "Transaction"). The LOI was negotiated at arm's length and is effective as of October 24, 2011.

The LOI is to be superseded by a definitive merger, amalgamation or share exchange agreement (the "Definitive Agreement") to be signed on or before November 30, 2011 (or such other date as may be mutually agreed in writing between Rockstar and First Global). The Transaction is subject to requisite regulatory approval, including the approval of the TSX Venture Exchange (the "TSXV") and standard closing conditions, including the approval of the directors of each of Rockstar and First Global of the Definitive Agreement and completion of due diligence investigations to the satisfaction of each of Rockstar and First Global, as well as the conditions described below. The legal structure for the Transaction will be confirmed after the parties have considered all applicable tax, securities law and accounting efficiencies, however, it is currently contemplated that the transaction will be structured as a securities exchange.

Rockstar is incorporated under the provisions of the Business Corporations Act (Ontario) with its registered and head office in Toronto, Ontario. It is a capital pool company and intends for the Transaction to constitute its "Qualifying Transaction" as such term is defined in the policies of the TSXV. Rockstar is a "reporting issuer" in the provinces of Ontario, British Columbia and Alberta.

Since the Transaction is not a non-arm's length transaction, Rockstar is not required to obtain shareholder approval for the Transaction. However, Rockstar intends to hold a special meeting of shareholders to approve certain matters ancillary to the Transaction, including a consolidation of its shares.

Trading in the common shares of Rockstar has been halted. It is unlikely that the common shares of Rockstar will resume trading until the Transaction is completed and approved by the TSXV.

Subject to TSXV approval, Rockstar has also agreed to provide to First Global a secured subordinate loan in the principal amount of $225,000 as soon as possible following TSXV approval of same and agreement on standard loan and security documentation acceptable to Rockstar and First Global, each acting reasonably.

Conditions to Transaction

Prior to completion of the Transaction (and as conditions of closing):

  • First Global must complete a subscription receipt financing (the "Offering") for minimum gross proceeds of not less than $3,000,000 at an issue price of $0.50 per unit of First Global. It is expected that the gross proceeds of the Offering will be held in escrow by a third party escrow agent, and the subscription receipts will convert into units of First Global, each consisting of one common share (a "First Global Share") and one-half of one common share purchase warrant (each whole warrant, a "First Global Warrant") of First Global immediately prior to the closing of the Transaction and exchanged into corresponding securities of Rockstar in accordance with the Exchange Ratio (as defined herein). Each First Global Warrant shall entitle the holder thereof to purchase, for a period of 24 months from the closing of the Offering, one First Global Share upon payment of $0.75. Further details regarding the Offering will be included in a subsequent press release once additional details become available.
  • Rockstar shall seek shareholder approval to consolidate (the "Rockstar Consolidation") its existing common shares (each an "Existing Rockstar Share") at a ratio of 0.333 new common shares of Rockstar (each a "Rockstar Share") for every one Existing Rockstar Share.
  • The parties will prepare a filing statement in accordance with the rules of the TSXV, outlining the terms of the Transaction.
  • First Global and Rockstar will enter into a Definitive Agreement in respect to the Transaction on or before November 30, 2011.
  • First Global will obtain the requisite shareholder approvals for the Transaction and any ancillary matters contemplated in the Definitive Agreement.
  • All requisite regulatory approvals relating to the Transaction, including, without limitation, TSXV approval, will have been obtained.

The Proposed Transaction

Pre-Closing Capitalization of Rockstar

As of the date hereof, Rockstar has 9,347,500 Existing Rockstar Shares outstanding and securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 1,119,500 Existing Rockstar Shares at an exercise price of $0.10 per Existing Rockstar Share. Upon completion of the Rockstar Consolidation, Rockstar will have 3,115,833 Rockstar Shares outstanding and securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 373,167 Rockstar Shares at an exercise price of $0.30 per Rockstar Share.

Pre-Closing Capitalization of First Global

As of the date hereof, First Global has (a) 34,500,831 First Global Shares issued and outstanding, (b) securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 16,422,929 First Global Shares, and (c) an obligation to issue an aggregate of 1,216,799 Class B shares (the "Class B Shares") upon closing of a previously executed acquisition agreement.  The Class B Shares will not be acquired by Rockstar pursuant to the Transaction and, in certain circumstances, are redeemable by First Global at a redemption price of US$1.00 per Class B Share.

Of the 16,422,929 First Global Shares issuable on the exercise of options, warrants or other rights to acquire securities, an aggregate of 14,573,883 First Global Shares will be issued, on the closing of the Transaction, to Fundeco Inc. ("Fundeco"), a company controlled by a director of First Global in exchange for the cancellation of debt owing to such company in the aggregate amount of $3,643,470.66 (the "Debt Conversion").

Terms of the Transaction

Rockstar proposes to acquire all of the First Global Shares pursuant to the terms of a Definitive Agreement. It is expected that each shareholder of First Global will receive one Rockstar Share (on a post-consolidation basis) for each First Global Share held (the "Exchange Ratio") resulting in the Rockstar Shareholders holding approximately 5% of the common shares of the combined entity (the "Resulting Issuer") and the former First Global Shareholders holding approximately 95% of the common shares of the Resulting Issuer upon completion of the Transaction (immediately prior to giving effect to the Offering). In addition, all securities exercisable or exchangeable for, or convertible into, First Global Shares will be exercisable into Rockstar Shares on the same terms and conditions as the currently outstanding First Global securities.

About First Global

First Global is an Ontario company incorporated in 1986. The company has offices in Canada, the United States and the Philippines with its head office located in Toronto, Ontario. First Global is a financial services technology company that facilitates the movement of money both domestically and internationally in compliance with all applicable regulation and legislation. First Global's technology platforms and extensive network of international partners gives it the means to transfer money, facilitate payments and provide a variety of other financial services domestically and internationally in a fast, secure and compliant manner.

In addition to First Global's core business of international money remittance, it also provides mobile payment solutions and banking technology for both mobile and online applications. First Global's strategy involves enabling key partners, including banks and telecommunications companies, to monetize their infrastructure and consumer base through use of its mobile ready, unified and compliant global financial services technology platform and network.

The controlling shareholders of First Global are Andre Itwaru, Nayeem Alli and Manny Bettencourt, who in the aggregate, together with their associates, currently own or control approximately 45% of the issued and outstanding securities of First Global.

Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will be renamed "First Global Data Corp.".

Financial Information Concerning First Global

The table below sets out certain selected financial information regarding First Global as at, and for the 6 months ended, June 30, 2011 (unaudited), and as at and for the 12 months ended December 31, 2010 (audited).  The selected information was prepared in accordance with International Financial Reporting Standards (IFRS).

Balance Sheet   As at June 30, 2011
(USD$)
(unaudited)
  As at December 31, 2010
(USD$)
(unaudited)
         
Current Assets   $2,227,921   $2,469,387
         
Non-Current Assets   $5,385,229   $1,273,163
         
Total Assets   $7,613,150   $3,742,550
         
Current liabilities   $4,046,656   $2,389,466
         
Non-Current Liabilities   $664,696   $173,406
         
Total Liabilities   $4,711,352   $2,562,872
         
Shareholders' equity   $2,901,798   $1,179,678
         
Total liabilities and equity   $7,613,150   $3,742,550
         
Statement of Comprehensive Income   For the six months ended June 30, 2011
(USD$)
(unaudited)
  For the year ended December 31, 2010
(USD$)
(unaudited)
         
Sales   $726,641   $40,962
         
Gross Profit   $257,108   12,616
         
Net Loss for the Period   ($765,365)   ($2,321,280)

Transfer Within Escrow

In connection with the Transaction, the principals of Rockstar have agreed to sell up to 1,875,000 seed shares issued during Rockstar's seed financing (the "Seed Shares") to certain directors of First Global, or affiliates thereof, at a sale price of $0.10 per share for aggregate consideration of up to $187,500.  The sale of the Seed Shares is subject to a number of conditions including (i) obtaining the approval of the TSXV, (ii) the closing of the Transaction, and (iii) the purchasers of such Seed Shares agreeing to be bound by and to assume the relevant seed share resale restrictions of the TSXV.

Insiders, Officers and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the board of directors of the Resulting Issuer shall be comprised of: Andre Itwaru, Manny Bettencourt, Nayeem Alli, Mahendra Naik, and Dr. Naresh Singh.  In addition, it is expected that the officers of the Resulting Issuer shall be Andre Itwaru (President and Chief Executive Officer), Manny Bettencourt (Chief Financial Officer) and Nayeem Alli (Chief Strategy Officer).

Following completion of the Transaction, the Offering (assuming gross proceeds of $3 million) and the Debt Conversion, it is anticipated that the following persons will exercise direction or control over more than 10% of the issued and outstanding shares of the Resulting Issuer: Andre Itwaru (10.9%), Manny Bettencourt (11.0%) and Fundeco (26.0%).  Fundeco is controlled by Mahendra Naik.

The following sets outs the names and backgrounds of all persons who are expected to be considered insiders of the Resulting Issuer.

Andre Itwaru, President, Chief Executive Officer and Director

Mr. Itwaru is a seasoned senior executive with more than 20 years of experience in the financial services technology and telecommunications industries. He has held senior management and executive level positions along with various directorships at small to medium sized businesses and large global organizations, including successful tenures at Sprint Canada, AT&T Canada Corp. and AT&T Solutions. Mr. Itwaru was formerly Chairman and President of Navaho Networks, President and a director of Global Managed Networks, and Chairman and President of The Academy of Teaching and Training, and is currently a director of several private companies.

Manny Bettencourt, Chief Financial Officer and Director

Mr. Bettencourt began his career at KPMG LLP and is a graduate of the University of Toronto. Prior to becoming Chief Financial Officer for First Global, Mr. Bettencourt was First Global's Chief Operating Officer and Chief Technical Officer.  Mr. Bettencourt is a Chartered Accountant and has previously served as Chief Financial Officer and as a senior executive for a number of Canadian companies in the information, technology and telecommunications space. He served as Chief Financial Officer for Navaho Networks, a leading payments company, was Chief Financial Officer at AT&T Solutions Canada and was the Senior Financial Officer of other smaller companies.  In addition, Mr. Bettencourt serves as a director for two not-for-profit organizations.

Nayeem Alli, Chief Strategy Officer and Director

Mr. Alli has held senior management positions in both global and start-up organizations. Prior to joining First Global, Mr. Alli spent 18 years working with various business units of AT&T.  In his most recent position, Mr. Alli served as Director, Corporate Planning, Strategy and Business Analysis and Director, Financial Planning and Modeling for AT&T Canada Corp. where he was responsible for developing annual financial plans, contributing to the company's overall strategic direction and managing a $1.6 billion budget.

Mahendra Naik, Director

Mr. Naik is a Chartered Accountant and Chairman of Fortune Minerals, a Toronto Stock Exchange ("TSX") listed diversified resource company, and Chief Financial Officer of Fundeco, a private investment company. Mr. Naik is also a founding director of IAMGOLD Corporation, a TSX and New York Stock Exchange listed mid-tier gold mining company. As former Chief Financial Officer, Mr. Naik led negotiations for the Sadiola mine and Yatela mine joint ventures with Anglo American and was responsible for raising more than US$550 million in project debt and equity financings. Mr. Naik is also a director of several private companies.

Dr. Naresh Singh, Director

Dr. Singh has had a distinguished career in international development that has included work in more than 40 countries and is currently Director General of Strategic Planning and Operations at the Canadian Partnership Branch (CPB) at the Canadian International Development Agency (CIDA) where he was Acting Vice-President (2009-2010). He was Executive Director of the U.N. Commission on Legal Empowerment of the Poor (2006 to 2008), which was co-chaired by Madeleine Albright and Hernando de Soto, and hosted by the United Nations Development Programme (UNDP).

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. Rockstar is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, there is no assurance that Rockstar will ultimately obtain this exemption. Rockstar intends to include any additional information regarding sponsorship in a subsequent press release.

Further Information

All information contained in this news release with respect to Rockstar and First Global was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, majority of the minority shareholder approval. Where applicable, 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 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 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.

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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation.  Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Offering; future exploration and testing; use of funds; and the business and operations of the Resulting Issuer after the proposed transaction.  Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of current exploration and testing. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.  Rockstar and First Global disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE Rockstar Capital Corp.

For further information:

For further information regarding the Transaction, please contact:

Jesse Kaplan, Chief Executive Officer and Corporate Secretary, Rockstar Capital Corp.

Telephone: 647-638-8740
Facsimile: 1-866-297-8750
Email: jkaplan@plazacorp.com

Andre Itwaru, Chairman, President and Chief Executive Officer, First Global Data Corp.

Telephone: 416-504-3813
Facsimile: 416-504-7092
Email: aitwaru@firstglobaldata.com

Profil de l'entreprise

Rockstar Capital Corp.

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