TORONTO, Feb. 28, 2012 /CNW/ - TriNorth Capital Inc. ("Trinorth" or the "Company") (TSXV: TRT) is pleased to announce today that it has entered into an
employment agreement with Roger Dent to engage him as its new Chief
Investment Officer (CIO), effective upon and subject to the completion
of a non-brokered private placement financing of 5% convertible
unsecured debentures to raise gross proceeds of up to a maximum of $10
million (the "Financing").
The Company also intends to:
deliver the shares of Feronia Inc. ("Feronia") (TSXV: FRN) owned by the Company to a trustee for shareholders of the
Company as a payment on the reduction of the stated capital of Trinorth
common shares (the "Distribution"). The Company currently owns approximately 16 million Feronia shares;
consolidate its existing common shares on the basis of one
post-consolidation share for every 100 pre-consolidation shares (the "Consolidation");
change its name to Egmont Bay Investments Inc. or such other name as is
acceptable to the Company and the TSX Venture Exchange (the "Name Change"); and
appoint three new directors to replace three of the existing directors
on the Company's board of directors (the "Change in Directors").
The Company intends to call an annual and special meeting of
shareholders to be held on May 14, 2012 (the "Meeting") to approve, among other things, the Distribution, Consolidation and
Name Change. TSX Venture Exchange approval is also required for the
Financing, Consolidation and Name Change.
Private Placement Financing of Debentures
The Debentures are being offered by the Company on a non-brokered basis.
The following is a summary of the terms of the Debentures. A copy of the
complete terms of the Debentures may be obtained from the Company.
$1,000 per Debenture
Non-brokered private placement, with a 6% commission
May 15, 2017 (5 years)
5% per annum, payable semi-annually on November 30 and May 31 of each
year, commencing on November 30, 2012. Holders will have the right to
elect to receive common shares in lieu of interest.
The Debentures will be non-voting. A trustee appointed on behalf of the
Debenture holders will be entitled to vote at meetings of shareholders
through a class of voting preferred shares held by the trustee on
behalf of the Debenture holders.
The Debentures will be convertible into fully paid and non-assessable
common shares of the Company at the option of the holder at any time
prior to the close of business on the earlier of Maturity and the
business day immediately preceding the date specified by the Company
for redemption of the Debentures at a conversion price of $1.00 per
share or 1,000 common shares for each $1,000 principal amount of
Debentures, following the 100:1 consolidation. Holders converting their
Debentures will receive accrued and unpaid interest thereon.
The Debentures will not be redeemable by the Company on or before May
14, 2014 (except in limited circumstances). On or after May 15, 2014
and prior to Maturity the Debentures may be redeemed in whole or in
part from time to time at the option of the Company on not more than 60
days and not less than 30 days prior notice, at a price of $1,050 per
Debenture on or after May 15, 2014 and on or before May 14, 2015 and a
price of $1,030 per Debenture on or after May 15, 2015 and on or before
May 14, 2016 and at a price of $1,010 per Debenture on or after May 15,
2016 and before Maturity, plus accrued and unpaid interest.
Eligible for RRSP's, RRIF's, RESP's, and DPSP's.
April 26, 2012
May 15, 2012
Mr. Dent, together with his associates and family members, have agreed
to subscribe, directly or indirectly, for 45% of the Financing.
The Financing is expected to close in escrow on or before April 26,
2012. Proceeds from the Financing, net of commissions and expenses,
will be deposited with and held by an escrow agent. Such proceeds,
together with all interest and other income earned thereon shall be
released from escrow upon satisfaction or waiver of the escrow release
conditions on or before the release deadline of 11:59 p.m. (Toronto
time) on May 21, 2012, unless otherwise agreed by the Company and the
holders of the Debentures. If the escrow release conditions are not
satisfied or waived prior to the release deadline, each holder of
Debentures shall be entitled to the return of his aggregate
subscription price promptly after the release deadline.
Accredited investors with an interest in the Financing should contact
Roger Dent or John Pennal.
Proceeds raised under the Financing will be used to fund the Company's
investments as well as general and administrative expenses. The
Company's investment objective is to provide long-term capital growth
by investing primarily in equity-related securities of Canadian
emerging and established companies having superior prospects for future
growth or capital appreciation. The Company's board of directors is
responsible for setting the investment guidelines and policies of the
Company, and may amend such investment guidelines from time to time as
appropriate. The Company's CIO will have authority to manage and make
investments on behalf of the Company in accordance with the investment
guidelines. It is expected that the Company's investments will consist
primarily of smaller capitalization stocks, with the intent of
participating early in these emerging opportunities. The Company may
allocate a portion of its assets to private companies where
appropriate. However, it is expected that the majority of the Company's
assets will be invested in securities traded publicly on major stock
exchanges or over-the-counter. Assets may also be invested in other
securities, which may include warrants as well as money market and
fixed income securities if, in the opinion of the CIO, such investment
is prudent given the prospects for return and the risk factors
associated with investment in equity securities at any given time. The
Company anticipates being a passive investor in most or all of its
portfolio investments. However, the Company may on occasion take an
active role in certain investments.
New Chief Investment Officer
Subject to completion of the Financing, the Company will internalize its
investment management by engaging Mr. Dent as Chief Investment Officer.
Pursuant to the terms of an employment agreement entered into between
the Company and Mr. Dent, Mr. Dent will join Trinorth on an exclusive
It is anticipated that his investment approach will be similar to the
approach of the funds previously managed by Mr. Dent. He takes a
bottom-up approach to investing, with a focus on undiscovered
opportunities. He favours earnings turnarounds, hidden assets,
undervalued small cap companies and early stage companies. Investments
would typically be considered in all industry sectors and would not be
limited to the resource sector. All investment decisions will be made
in accordance with the Company's investment guidelines as determined by
the Company's board of directors from time to time.
"I am strongly looking forward to joining Trinorth. In my opinion,
Trinorth is an extremely attractive platform for small cap investment.
The Company has a very large tax loss carry-forward position that we
will be able to use to shelter our investors' gains for an extended
period of time. Post-financing, we expect to have a stable pool of
funding which will permit us to fully focus on our investments and not
have investment decisions negatively impacted by short-term inflows and
outflows of funds. We also plan on running the Company with a tight
cost structure. I expect to make a large personal investment in
Trinorth and I hope to see this investment and the investments of those
who participate in this financing round grow on a tax-deferred basis
over the long term" said Mr. Dent.
Mr. Dent advised the Matrix Strategic Small Cap Fund starting in 2003.
He was the portfolio manager of the Matrix Small Companies Fund from
its inception in September 2004. He resigned from these positions
effective May, 2011 in order to pursue the opportunity at Trinorth.
According to Globefund.ca, a $10,000 investment in the Matrix Small Cap
Fund in January 2003, when Mr. Dent began advising the fund, had grown
to a value of over $51,000 on April 30, 2011 (after all fees and
expenses). A similar $10,000 investment in the TSX Total Return Index
would have a value of under $26,000. The fund is up 38.0% in the 12
months ending April 30, 2011 and is up 20.4% on a year-to-date basis as
of the same date. Similarly, a $10,000 investment on the day of the
creation of the Matrix Small Companies Fund would have had a value of
$24,876 on April 30, 2011 (after all fees and expenses). In comparison,
an investment in the TSX Total Return Index would have a value of
$19,057. The fund was up 66.6% in the 12 months ending April 30, 2011
and is up 28.4% on a year-to-date basis as of the same date.
The employment agreement with Mr. Dent has an initial term of five years
and may be terminated by the Company after the initial term on 120 days
notice. As Chief Investment Officer, Mr. Dent will make all investment
decisions in accordance with the Company's investment guidelines. In
consideration for his services, Mr. Dent will receive an annual base
fee equal to 2% of the average monthly net asset value of the Company
and an annual performance fee equal to 20% of the excess in the net
asset value on the last day in a calendar year (adjusted for treasury
offerings, dividends and returns of capital in that year) over a
benchmark net asset value increased by a "hurdle" of 8%.
Distribution of Feronia Shares
Trinorth intends to:
reduce the stated capital of Trinorth common shares by an amount equal
to the fair market value on the Distribution record date of the shares
of Feronia held by Trinorth; and
distribute such common shares of Feronia held by Trinorth to its
shareholders of record as at May 11, 2012 (the Distribution record
date) as a payment on the reduction of the stated capital of the
Trinorth common shares, on a pro rata basis (assuming Trinorth owns 16
million Feronia shares this is approximately one Feronia share for
every 9.375 Trinorth common shares on a pre-Consolidation basis).
As the Distribution involves substantially all of the Company's assets
under applicable corporate laws, it is subject to shareholders'
In addition, as substantially all of the Company's assets will be
distributed under the Distribution, the Company will have to raise,
from the Financing, the minimum net proceeds required to maintain its
Tier 1 listing on the TSX Venture Exchange or its listing may be moved
to Tier 2 or to the NEX in accordance with TSXV Policy.
All of the Feronia shares to be distributed are subject to a voluntary
lock-up agreement between Cormark Securities Inc. ("Cormark") and certain Feronia shareholders including Trinorth, which restricts
Trinorth's ability to sell its Feronia shares until March 31, 2013,
except with Cormark's prior written consent. Accordingly, subject to
shareholders' approval, Trinorth intends to deliver the Feronia shares
to a trustee to hold such shares on behalf of Trinorth shareholders
until expiry (or early termination with the consent of Cormark) of the
Subject to shareholders' approval, the Company intends to amend its
articles to consolidate its common shares on the basis of one
post-consolidation common share for every 100 pre-consolidation common
Subject to shareholders' approval, the Company intends to amend its
articles to change its name to "Egmont Bay Investments Inc." or to such
other name as is acceptable to Trinorth and the TSXV.
Change of Directors and CFO
On completion of the Financing, all of the existing directors of the
Company except for John Pennal and Wesley Hall, namely Ravi Sood, Amar
Bhalla, and Riyaz Lalani, have agreed to resign from the Company's
board of directors and be replaced by Roger Dent, Andrew Moor, and
William Shaw. John Anderson will resign as the Company's Chief Financial Officer and
he will be replaced by David Berman. The biographies of the proposed
directors and the Chief Financial Officer will be included in the
management information circular for the Meeting.
This press release contains forward-looking statements regarding future
growth, results of operations, performance, business prospects and
opportunities involving the Company. Words such as "expects",
"anticipates", "intends", "plans", "believes", "estimates", or similar
expressions, are forward-looking statements within the meaning of
securities laws. Forward-looking statements include, without
limitation, the information concerning possible or assumed future
results of operations of the Company. These statements are not
historical facts but instead represent only management's and the
board's expectations, estimates and projections regarding future
events. These statements are not guarantees of future performance and
involve known and unknown risks, assumptions, uncertainties, and other
factors that may cause actual results or events to differ materially
from what is expressed, implied or forecasted in such forward-looking
statements. In addition to the factors the Company currently believes
to be material such as, but not limited to, its ability to achieve its
investment objectives, its dependence on the efforts of management,
risks associated with fluctuations in net asset value and valuation of
the Company's portfolio, its ability to operate on a profitable basis,
changes in interest rates, evaluation of its provision for income and
related taxes, and other factors, such as general, economic and
business conditions and opportunities available to or pursued by the
Company, not currently viewed as material could cause actual results to
differ materially from those described in the forward-looking
statements. Although the Company has attempted to identify important
risks and factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements,
there may be other factors and risks that cause actions, events or
results not to be anticipated, estimated or intended. Accordingly,
shareholders should not place any undue reliance on forward-looking
statements as such information may not be appropriate for other
purposes. The Company does not undertake any obligation to update or
release any revisions to these forward-looking statements to reflect
events or circumstances after the date of this press release except as
required by applicable law.
Acceptance and completion of the Financing is subject to the
satisfaction of a number of conditions, including but not limited to,
TSX Venture Exchange acceptance and approval by shareholders.
Acceptance and implementation of the Distribution, Consolidation and
Name Change are also subject to the satisfaction of a number of
conditions, including but not limited to, approval by shareholders.
There can be no assurance that the Financing or any of the other
related transactions described herein will be completed as proposed or
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
has in any way passed upon the merits of the proposed transactions and
neither of the foregoing entities has approved or disapproved of the
contents of this press release.
SOURCE TriNorth Capital Inc.
For further information:
John Pennal, President, Chief Executive Officer and Director