Provides More than $25 Million of New Funding in Going Public
TORONTO, March 28, 2013 /CNW/ - Longford Energy Inc. (NEX - LFD.H)
("Longford") and Earth Video Camera Inc. ("UrtheCast") are pleased to
announce that they have today entered into an arrangement agreement
(the "Arrangement Agreement") pursuant to which Longford will acquire
all of the issued and outstanding common shares of UrtheCast in
exchange for shares of Longford (the "RTO").
UrtheCast is a privately held British Columbia corporation that was
incorporated in 2010. UrtheCast is focused on the commercialization of
a high definition streaming video and images of Earth from space.
UrtheCast is at an advanced stage of implementing its business plan and
currently expects to have its first video cameras installed in space
later this year.
Upon completion of the RTO:
UrtheCast would become a wholly-owned subsidiary of Longford and the
current UrtheCast shareholders would become Longford shareholders;
Longford would begin to carry on UrtheCast's business and change its
name to "UrtheCast Corp.";
UrtheCast's existing senior management team, including Scott Larson
(Co-Founder and President), Wade Larson (Co-Founder and Executive
Vice-President), Dr. George Tyc (Co-Founder and Chief Technology
Officer), Jeff Rath (Corporate Finance, Mergers & Acquisitions), Dr.
Serguei Bedziouk (Vice President, Russia Relations) and Issa Nakhleh
(Chief Financial Officer), would continue with the business as
Longford's senior management team; and
the Longford board of directors would be reconstituted to include
representatives from the existing Longford board and the existing
UrtheCast board, with the new reconstituted board expected to consist
of Ian W. Delaney (Chairman), Tye W. Burt, William (Mac) Evans, Richard
Holdaway, Dale Johnson, Wade Larson and Scott Larson.
Peter H. Puccetti, Chief Executive Officer of Longford, commented:
"Since the reconstitution of Longford's board last August, we have
reviewed many opportunities in a multitude of sectors to deploy
Longford's cash in a manner designed to create value for our
shareholders. UrtheCast is a perfect fit for Longford, and we are
excited about what we believe is the compelling opportunity it affords
to our shareholders to generate long-term shareholder value."
Scott Larson, President and Chief Executive Officer of UrtheCast stated:
"This transaction not only provides us with the capital needed to
execute upon our business plan but adds high calibre directors such as
Ian Delaney and Tye Burt to our team. I look forward to welcoming our
new shareholders as UrtheCast completes and launches the first High
Definition Video Camera in space."
The RTO will be effected by way of a statutory plan of arrangement
pursuant to the Business Corporations Act (British Columbia). Under the terms of the arrangement, Longford will
acquire all of the issued and outstanding shares of UrtheCast in
exchange for Longford common shares based on an exchange ratio that
will be determined at the effective time of the arrangement in
accordance with a formula set out in the plan of arrangement. The
exchange ratio will be based on agreed equity valuations of Longford
and UrtheCast immediately prior to the effective time which, subject to
in the case of Longford, is expected to be approximately $24 million;
in the case of UrtheCast, is based upon an equity value for UrtheCast
immediately prior to signing the Arrangement Agreement of $63.5 million
before upward adjustment for the gross proceeds received by UrtheCast
prior to the effective time from the UrtheCast Financing (described
Longford currently expects that the exchange ratio under the plan of
arrangement will be approximately 13.86 Longford common shares for
every UrtheCast share.
Immediately after the completion of the arrangement, Longford intends to
consolidate its outstanding shares on a 15-for-1 basis. On a pro
forma, post-consolidation basis, Longford expects to have
47 million issued and outstanding common shares, of which approximately
26% would be held by Longford's shareholders and approximately 74%
would be held by UrtheCast's shareholders; and
outstanding stock options and warrants and other equity compensation
arrangements to issue up to an additional 6.1 million common shares.
The RTO has been unanimously approved by the board of directors of both
Longford and UrtheCast. Completion of the RTO is expected to occur in
or about June 2013 and is conditional upon, among other things, receipt
of all required court, stock exchange and shareholder approvals,
including the shareholders of both Longford and UrtheCast.
The RTO is an arm's length transaction for Longford.
Shareholders of UrtheCast who collectively own approximately 63% of
UrtheCast's issued and outstanding shares have entered into support
agreements with Longford and UrtheCast pursuant to which they have
agreed to vote in favour of the arrangement.
Goodwood Inc. and Salida Capital LP, who collectively exercise control
over approximately 32% of Longford's issued and outstanding shares,
have entered into support agreements with Longford and UrtheCast
pursuant to which they have agreed to vote in favour of the
transactions to be considered by Longford shareholders relating to the
Longford will be calling a meeting of its shareholders to seek approval
of, among other things, the issuance of its shares pursuant to the
arrangement and the adoption of new equity based compensation
arrangements upon completion of the arrangement. Longford will issue a
further press release when it mails a management information circular
in respect of its shareholders' meeting.
UrtheCast will also be calling a meeting of its shareholders to seek
approval of the arrangement.
Under the Arrangement Agreement, UrtheCast is permitted to raise
additional capital by way of one or more private placements of its
common shares prior to the completion of the arrangement (the
"UrtheCast Financing"). Concurrently with the execution of the
Arrangement Agreement, UrtheCast completed an initial tranche of the
UrtheCast Financing by issuing approximately $5.6 million of common
shares to a group of investors that included Longford. If the
arrangement is not completed, the investors (including Longford) in
this initial tranche will have certain rights to require UrtheCast to
repurchase their shares and, in certain circumstances, to appoint one
member of UrtheCast's board of directors. The Arrangement Agreement
provides UrtheCast with the flexibility to issue up to an additional
$14.4 million of common shares under the UrtheCast Financing.
Canaccord Genuity Corp., Cormark Securities Inc. and Clarus Securities
Inc. are acting as agents to UrtheCast for the UrtheCast Financing
Sponsorship and Trading Halt
Canaccord Genuity Corp. has been retained to act as sponsor of the RTO.
In accordance with the policies of the TSX Venture Exchange, trading in
the shares of Longford has been halted. The length of time that such
halt will continue remains to be determined.
This release contains certain "forward looking statements" and certain
"forward-looking information" as defined under applicable Canadian
securities laws. Forward-looking statements and information can
generally be identified by the use of forward-looking terminology such
as "may", "will", "expect", "intend", "estimate", "anticipate",
"believe", "continue", "plans" or similar terminology. Forward-looking
statements and information include, but are not limited to, statements
with respect to the transactions contemplated under the arrangement
agreement and RTO, the UrtheCast financing and receipt of the requisite
regulatory, court and shareholder approvals in respect thereof.
Forward-looking statements and information are subject to various known
and unknown risks and uncertainties, many of which are beyond the
ability of Longford to control or predict, that may cause Longford's
actual results, performance or achievements may be materially different
from those expressed or implied thereby, and are developed based on
assumptions about such risks, uncertainties and other factors set out
here in, including but not limited to: the risk that the RTO will not
be approved by the applicable stock exchange, the court or the
shareholders of Longford and/or UrtheCast, as applicable; risks and
uncertainties related to the arrangement not being completed in the
event that the conditions precedent thereto are not satisfied and other
related risks and uncertainties. Longford undertakes no obligation to
update forward-looking information except as required by applicable
law. Such forward-looking information represents management's best
judgment based on information currently available. No forward-looking
statement can be guaranteed and actual future results may vary
materially. Accordingly, readers are advised not to place undue
reliance on forward-looking statements or information.
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.
SOURCE: Longford Energy Inc.
For further information:
Peter H. Puccetti
Chief Executive Officer
Longford Energy Inc.
President and Chief Executive Officer
Earth Video Camera Inc.