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TORONTO, May 18 /CNW/ - SARGASSO CAPITAL CORP. (TSXV:SGO.P) (the "Corporation" or the "Resulting Issuer") announced today that further to the completion of the acquisition of
all of the issued and outstanding shares of C2C Industrial Properties
Ltd. ("C2C"), the TSX Venture Exchange Inc. (the "Exchange") has issued its Final Exchange Bulletin regarding the transaction. The
acquisition represents the completion of the Corporation's arm's length
qualifying transaction (the "Qualifying Transaction") pursuant to the policies of the Exchange, as described in the
Corporation's filing statement (the "Filing Statement") dated May 2, 2011. The Filing Statement contains full disclosure
regarding the Qualifying Transaction and the business of C2C. The
Filing Statement is available for review on SEDAR under the
Corporation's profile at www.sedar.com.
About Sargasso Capital Corp.
The Corporation was incorporated pursuant to the provisions of the Business Corporations Act (Ontario) (the "OBCA") on July 30, 2008 and was classified as a capital pool company
pursuant to the policies of the Exchange. On October 7, 2008, the
articles of the Corporation were amended by articles of amendment to
delete provisions restricting the transfer of the Common Shares. The
Corporation's business has been restricted to the identification and
evaluation of potential acquisitions or interests that could lead to
the completion of its Qualifying Transaction under the Exchange's CPC
The Corporation completed its initial public offering of 3,000,000
shares on January 19, 2009 at a price of $0.20 per share for gross
proceeds to the Corporation of $600,000. The shares were listed for
trading on the Exchange on January 23, 2009 under the symbol "SGO.P".
C2C is a private company which was incorporated on March 16, 2011 under
the laws of the Province of Ontario. C2C was incorporated for the
purpose of the Qualifying Transaction. C2C intends to become a real
estate corporation specializing in acquiring, owning and operating
industrial properties across Canada and, if supported by financial and
market conditions, to convert to a real estate investment trust under
the Income Tax Act (Canada).
The Qualifying Transaction
The Corporation entered into an amalgamation agreement (the "Amalgamation Agreement") with C2C and Sargasso Amalco Inc. ("Sargasso Subco"). Pursuant to the Amalgamation Agreement, C2C and Sargasso Subco
agreed to amalgamate (the "Amalgamation") and continue as "C2C Industrial Properties Ltd." ("Amalco"). In addition the Corporation acquired all of the outstanding shares
in the capital of C2C (the "C2C Shares") in exchange for shares in the capital of the Corporation (the "Resulting Issuer Shares").
Prior to the completion of the Qualifying Transaction, C2C completed a
private placement (the "Private Placement") of common shares (the "C2C Common Shares") to raise gross proceeds in the amount of $3,165,005 by issuing
21,100,017 C2C Common Shares at a price of $0.15 per share. The Private
Placement was a non-brokered private placement.
Prior to completion of the Qualifying Transaction, C2C acquired the
lands and premises municipally known as 1300 Fewster Drive,
Mississauga, Ontario from Blue Water Property Investment Inc. for a
purchase price of $1,675,000 subject to customary adjustments. $625,000
of the purchase price was paid in cash and $1,050,000 was paid by the
issuance of 7,000,000 C2C Common Shares at a price of $0.15 per
share. The cash portion of the purchase price was funded from the
proceeds of the Private Placement.
Pursuant to the Amalgamation Agreement, the following occurred at the
effective time of the Amalgamation:
Sargasso SubCo and C2C amalgamated and continued as one corporation
under the OBCA;
Each C2C Share issued and outstanding immediately prior to the
Amalgamation was cancelled and the holders thereof received one fully
paid and non-assessable Resulting Issuer Share for each C2C Share such
that 28,100,017 Resulting Issuer Shares were issued; and
Each share in the capital of Sargasso SubCo issued and outstanding
immediately prior to the Amalgamation becoming effective was exchanged
for one share in the capital of Amalco.
Amalco is a wholly-owned subsidiary of the Resulting Issuer and the
Resulting Issuer will carry on its business subject to the terms of the
Asset Management Agreement described below.
The completion of the Qualifying Transaction contemplated by the
Amalgamation Agreement was subject to the satisfaction of certain
conditions, including obtaining all necessary regulatory approvals,
including the approval of the Exchange and the listing of the Resulting
Issuer Common Shares issued pursuant to the Amalgamation, and other
conditions under the Amalgamation Agreement that are typical for a
three-cornered amalgamation transaction. The approval of the Exchange
was subject to, among other things, the Exchange being satisfied that
after the completion of the Qualifying Transaction, the Corporation
satisfied the Exchange's initial listing requirements for a Tier 2 Real
Estate or Investment Issuer as prescribed by Policy 2.1 of the
Exchange. The acquisition is an arm's length Qualifying Transaction.
The Corporation has granted options to purchase a maximum of 800,000
Common Shares to certain directors and officers at an exercise price of
$0.20 per share having a term expiring October 28, 2013. Prior to or on
the completion of the Qualifying Transaction, the Corporation granted
options to purchase 2,800,000 Resulting Issuer Common Shares to certain
directors, officers, employees, management company employees and
consultants of the Resulting Issuer and its Affiliates. The Resulting
Issuer Options have an exercise price of $0.15 per share and a term of
five years from the date of the grant. One-third of such options vested
upon the completion of the Qualifying Transaction and one-third of such
options will vest upon each of the first and second anniversaries of
the completion of the Qualifying Transaction.
Following the completion of the Qualifying Transaction, the following
securities of the Resulting Issuer are outstanding:
Resulting Issuer Shares After Giving Effect to the Qualifying
Resulting Issuer Shares issued and outstanding
Total issued and outstanding Shares
Resulting Issuer Shares reserved for issuance pursuant to options
Options to directors and officers of the Corporation
Options to directors, officers, employees, management company employees
and consultants of the Resulting Issuer
Sub Total: Shares Under Options and Warrants:
Total Number of Fully Diluted Securities
Pro Forma Consolidated Working Capital
The Resulting Issuer has approximately $3,158,083 in pro forma working
capital based on the interim unaudited financial statements of the
Corporation for the three months ended January 31, 2011 the opening
balance sheet of C2C dated March 16, 2011 after giving effect to the
completion of the Qualifying Transaction. Of this amount, $920,578 was
from the Corporation and $2,237,505 from C2C.
Available Funds and Principal Uses of Funds
The following table sets out information respecting the Resulting
Issuer's sources of cash and intended uses of cash upon completion of
the Qualifying Transaction. The amounts presented are estimates only.
Estimated working capital of Sargasso
Gross proceeds from:
Initial Property Consideration
Total Available Funds
Costs related to the Qualifying Transaction
Costs related to the Private Placement
Costs related to the Initial Property Acquisition:
General and Administrative
The estimated working capital for the Corporation and C2C is as of
January 31, 2011. Costs related to the Qualifying Transaction include
professional fees, listing fees, and printing costs and the general and
administrative expenses represent 12 months of planned expenditures.
Asset Management Agreement
Strathallen Capital Corp. (the "Asset Manager") will provide asset management, administrative and reporting services
to the Resulting Issuer pursuant to the Asset Management Agreement. The
Asset Manager will provide these services through qualified senior
management who are currently employed by the Asset Manager. In
particular, the Asset Manager will provide the services of senior
personnel who will act as the Chief Executive Officer, President,
Chairman and Chief Financial Officer of the Resulting Issuer. These
individuals will devote such amount of time as reasonably necessary to
manage the business of the Resulting Issuer so that it may achieve its
Strathallen Capital Corp. will be the asset manager. The principals of
the Asset Manager have a wide range of experience in the real estate
industry. The Asset Manager specializes in providing creative and
innovative real estate investment solutions. Clients benefit from
direct interaction with a responsive client service team, tailored and
flexible services in addition to institutional grade operations and
Two of the principals of the Asset Manager, David Wright and Brian
Spence, each have more than 30 years of experience in real estate
investment transactions. In their careers, they have been responsible
for investments in excess of $1.5 billion in commercial property. They
have a diverse range of skills including: acquisition, finance,
brokerage, leasing, development and management. In addition, the Asset
Manager is active in all major Canadian Markets where it maintains
relationships with brokers, tenants and other industry participants.
The Asset Manager will be entitled to an acquisition fee, asset
management fee and reimbursement of reasonable costs and expenses
(excluding personnel costs) that it incurs providing services to the
The acquisition fee is in an amount of 0.5% of the purchase price of any
property acquired by the Resulting Issuer including the initial
property. HST is payable in addition to and is not included in the
The asset management fee is an amount equal to $10,000,000 plus HST. The
Resulting Issuer has the option to pay or satisfy up to 75% of the
asset management fee by the issuance of shares. Any Resulting Issuer
Shares that are issued to the Asset Manager shall be issued pursuant to
prospectus and registration exemptions and subject to approval of the
Exchange and the shareholders under applicable securities laws. The
shares will be issued at a price equal to the weighted average trading
price, not to exceed the "discounted market price" of the shares as set
out in the policies of the Exchange, as at the close of business on the
day immediately preceding the day that the Resulting Issuer announces
its obligation and manner of payment of the fee.
The asset management fee shall be earned on the date that is the
earliest of the date that:
the end of the first financial year of the Resulting Issuer that the
Gross Purchase Price of the Properties equals or exceeds $444,000,000;
an arm's length take-over bid for the Resulting Issuer is completed;
substantiality all of the assets of the Resulting Issuer are sold; and
the Asset Management Agreement is terminated by the Resulting Issuer
other than as a result of default by the Asset Manager.
Interest at a rate equal to bank prime plus 1% will be payable from the
date the asset management fee is earned and is paid.
For these purposes the "Gross Purchase Price of the Properties" means
the aggregate gross purchase price of all the Properties acquired by
the Corporation, including the initial property, plus the cost of all
capital and structural improvements to the Properties which may not be
recovered from tenants. The Gross Purchase Price of the Properties
includes land transfer tax, legal fees, due diligence and other costs
directly attributed to the acquisition of the Properties.
Under the Asset Management Agreement, the Resulting Issuer will
reimburse the Asset Manager for all reasonable expenses associated with
the operation of the Resulting Issuer, including any third party costs
which are reasonably incurred by the Asset Manager on behalf of the
Resulting Issuer, other than personnel costs.
The Asset Management Agreement may be terminated by the Resulting Issuer
at any time upon the occurrence of certain events such as a material
breach by the Asset Manager of its duties and responsibilities under
the Asset Management Agreement, gross negligence, fraud or the
dissolution, liquidation, bankruptcy, insolvency or winding-up of the
A general policy of the Exchange requires that a sponsor be retained to
prepare a sponsor report in compliance with Exchange Policy 2.2. The
Corporation applied to the Exchange and received an exemption from this
Arm's Length Transaction
Since the transaction is arm's length, the Corporation is not required
to obtain shareholder approval. Detailed information regarding the
Qualifying Transaction is contained in the Filing Statement.
Board of Directors and Management
Immediately following completion of the Qualifying Transaction:
the board of directors of the Resulting Issuer is comprised of the
following five individuals: Richard McGraw, Andrew McIntyre, Anthony
(Tony) Pacaud, Brian Spence and David Wright; and
the board of directors of the Resulting Issuer intends to constitute an
Audit Committee and Investment Committee. The Audit Committee is
comprised of Messrs. McGraw, McIntyre and Pacaud. The Investment
Committee is comprised of Messrs. Spence, McIntyre and Pacaud.
The management team of the Resulting Issuer is comprised of the
Christopher Ross - President and Secretary
David Wright - Chief Executive Officer
Laetitia Pacaud - Chief Financial Officer
Profiles of the proposed directors and senior officers of the Resulting
Issuer are as follows:
Richard D. McGraw, Age 65, Director: Mr. McGraw is a director and the Chief Financial Officer of the
Corporation. He has served as President and Chief Executive Officer of
Lochan Orca Group of Companies, private investment companies, since
1972. Mr. McGraw served as president and chief executive officer of
Vitran Corporation Inc., a transportation and logistics services
company from 1983 until 2002, a director from 1987 to present and
chairman since 2002. He has also been a director of Exco Technologies
Limited since 1992 and chairman since 2006. He has also served as a
director of OutdoorPartner Media Corporation since 2004 and chairman
since 2006, and as a director of Feel Good Cars Corporation since 2004
and chairman since 2006. He received a bachelor of commerce from the
University of British Columbia.
Andrew McIntyre, Age 67, Director: Mr. McIntyre has served as Chief Executive Officer and Chairman of
Prism Medical Limited, a company whose shares trade on the Exchange,
since February, 1996. He holds a Bachelor of Arts degree from the
University of Western Ontario and Masters of Arts (Economics) degree
from the University of Toronto. Mr. McIntyre is a designated Chartered
Accountant with the Institute of Chartered Accountants of Ontario.
Anthony (Tony) Pacaud, Age 70, Director: Mr. Pacaud served as President of Greiner Pacaud Management Associates
from September, 1982 to April, 2007. He also served as Vice-Chairman
and Director of Integrated Asset Management Corp., a company whose
shares previously traded on the Exchange, from June, 1999 to March,
2007 and as Director of Homburg Invest Inc., an Exchange-listed
company, from September, 2007 to December, 2008. Mr. Pacaud holds a
Bachelor of Science degree from Bishop's University and a Bachelor of
Laws degree from Dalhousie University.
Laetitia Pacaud, Age 39, Chief Financial Officer: Ms. Pacaud is Chief Opertaing Officer of Strathallen Capital Corp.,
first appointed in June, 2003. She was employed by Caber Capital Corp.
(CCSW Financial Services) as financial controller between November,
2001 to June, 2003 and KPMG as Senior Accountant from December, 2003 to
September, 2004. Ms. Pacaud holds a Bachelor of Business degree from
Southern Cross University (Lismore, NSW Australia) and is a designated
Chartered Accountant with the Australia Institute of Chartered
Christopher Ross, Age 34, President and Secretary: Mr. Ross has served as Senior Vice President with Strathallen Capital
Corp. since July, 2010. He was a sales associate with CB Richard Ellis
from January, 2005 to June, 2010 and sales manager for Ontario Hardwood
Products from January, 2003 to October, 2004. He was also a portfolio
administrator at Merrill Lynch Investment Management from September,
2000 to October, 2002. Mr. Ross holds a Bachelor of Arts from McGill
University and is currently a Masters of Business Administration
candidate at the Rotman School of Management, University of Toronto.
Mr. Ross is a designated Chartered Financial Analyst and a registered
salesperson with the Real Estate Council of Ontario
Brian Spence, Age 64, Director: Mr. Spence is a Director of Strathallen Capital Corp. and has served in
this role since March, 2003. He was Director of Caber Capital Corp.
from March, 1998 to March 2003. Mr. Spence currently serves as a
director for Prism Medical Limited, a company whose shares trade on the
Exchange. Mr. Spence holds an Honours Business Administration from the
Richard Ivey School of Business, University of Western Ontario. He is a
registered Salesperson with the Real Estate Council of Ontario.
David Wright, Age 59, Chief Executive Officer and Director: Mr. Wright is a Director of Strathallen Capital Corp. since March,
2003. He was previously Director of Caber Capital Corp. from March,
1998 to March 2003. Mr. Wright was also a director for Gulf & Pacific
Equities Corporation, a corporation listed on the Exchange, from April,
1998 to December, 2006. Mr. Wright holds a Bachelor of Arts and a
Master of Business Administration from York University. He is a
registered Broker with the Real Estate Council of Ontario.
Completion of the Qualifying Transaction is subject to a number of
conditions, including but not limited to, Exchange acceptance and if
applicable pursuant to Exchange Requirements, majority and 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 closed as completed or at all.
Exchange approval requires, among other things, satisfaction by the
Resulting Issuer of the initial listing requirements, including
adequate financial resources and working capital, sponsorship,
background review of the proposed directors, officers and insiders and
share distribution. The Corporation believes that the initial listing
requirements will be satisfied or waived.
Investors are cautioned that, except as disclosed in the Filing
Statement, 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.
All information contained in this news release with respect to the
Corporation and C2C was supplied by the Corporation and C2C,
respectively, for inclusion herein, and with respect to such
information, the Corporation and its board of directors and officers
have relied on C2C.
All of the Corporation's public disclosure filings may be accessed via www.sedar.com and readers are urged to review these materials.
The TSX Venture Exchange Inc. has in no way passed upon the merits of
the proposed transaction and has neither approved nor disapproved of
the contents of this press release. Neither TSX Venture Exchange Inc.
nor its Regulation Services Provider (as that term is defined in the
policies of TSX Venture Exchange Inc.) accepts responsibility for the
adequacy or accuracy of this press release.
SOURCE Sargasso Capital Corporation
For further information:
Richard D. McGraw, President, Chief Executive Officer, Chief Financial Officer and Secretary
Telephone: (416) 944-2700