Listing: TSX Venture Exchange
TORONTO, March 31 /CNW Telbec/ - The Board of Dynex Power Inc.
(TSX VENTURE: DNX) ("Dynex") is pleased to announce that the company has
entered into a non-binding letter of intent dated March 28, 2008 related to
the proposed acquisition of control of Dynex by Zhuzhou CSR Times Electric
Co., Ltd. ("Times Electric"), a leading Chinese manufacturer of mass transit
electrical systems, based in Hunan Province, People's Republic of China
Times Electric, at its option, will acquire either 80% or 100% of the
outstanding common equity shares of Dynex for cash at a price of Cdn$0.55 per
share. This price is non-binding on Times Electric, except as explained below.
The transaction is subject to a definitive agreement being entered into by
Dynex and Times Electric. There can be no assurances that this transaction
will close. Times Electric has, however, agreed to use its reasonable efforts
to reaffirm the price within sixty days of March 28, 2008. The structure to be
used for the proposed transaction remains to be determined and will be the
subject of further negotiation between Dynex and Times Electric, as will the
terms to be contained in the definitive agreement.
If the proposed transaction proceeds, the entry into the definitive
documentation and the closing of the transaction will be subject to conditions
including the following: satisfactory completion of due diligence by Times
Electric, the execution of the definitive support agreement and the
replacement irrevocable lock-up agreements (referred to below), approvals by
the board of directors and shareholders of Times Electric, approvals from
certain Chinese regulators and the TSX Venture Exchange, as well as the
approval of the board of directors of Dynex and the approval or acceptance of
the transaction by the shareholders of Dynex.
The letter of intent includes binding exclusivity whereby Dynex agrees
not to solicit, either actively or passively, offers to acquire all or part of
Dynex, or accept or entertain offers from any party other than Times Electric
to acquire all or part of Dynex for a period of 100 days from the date a
letter of credit is opened for the Dynex Break Fee (as defined below). This
exclusivity period may be extended by up to 25 days. The exclusivity provision
does not preclude the directors of Dynex from exercising their fiduciary
duties in the context of an unsolicited offer, subject to Dynex immediately
making Times Electric aware of such offer. During the exclusivity period,
Times Electric will conduct its due diligence and the parties will engage in
negotiation towards concluding the definitive agreement.
In exchange for granting the exclusivity period, Times Electric has
agreed to deliver to Dynex within fifteen business days from March 28, 2008,
an irrevocable letter of credit on a reputable PRC bank advised by a reputable
Canadian bank, in favour of Dynex's legal counsel, LaBarge Weinstein
Professional Corporation in the amount of Cdn$715,777 (the "Dynex Break Fee").
The Dynex Break Fee will be paid to Dynex if the proposed transaction
does not close by reason of Times Electric refusing to proceed, save where (a)
such failure to proceed is due to a force majeure event or by reason of Dynex,
both of which exempting circumstances are defined in greater detail in the
letter of intent; or (b) Times Electric decides after conducting its due
diligence that the price of Cdn$0.55 per share is too high, because it is not
within the current range of market multiples that an investment bank
experienced in Canadian merger and acquisition transactions would normally
apply to the annual revenue, EBITDA and pre-tax profits in establishing the
enterprise value of a company.
A break fee of 5.0% of the purchase price for 80% of the common equity
shares of Dynex (or 100% if Times Electric has provided prior written notice
of its intention to proceed with 100%) will be payable to Times Electric by
Dynex if Dynex closes an offer from another party to acquire Dynex during the
exclusivity period, if Dynex refuses to execute a mutually agreed support
agreement or Dynex otherwise fails to proceed with closing after the execution
of the support agreement.
In addition, Times Electric has obtained from Messrs. David Banks and
Daniel Owen, who collectively own approximately 40.95% of Dynex's outstanding
common equity shares, irrevocable voting and lock-up undertakings to vote
their shares in favour of the proposed transaction and (depending on the
transaction structure) to tender their shares to the transaction at a price of
Cdn$0.55 per share. Times Electric's purpose in obtaining these voting and
lock-up undertakings is to seek to ensure a successful transaction. The voting
and lock-up undertakings would be superseded by replacement irrevocable
lock-up agreements to be entered into contemporaneously with the execution of
a definitive agreement once the form of the transaction is determined.
A separate and potentially additional break fee of 2.5% of the purchase
price for 80% of the common equity shares of Dynex (or 100% if Times Electric
has provided prior written notice of its intention to proceed with 100%),
shall be payable by Dynex upon either of David Banks or Daniel Owen (a)
refusing to execute and deliver the related replacement irrevocable lock-up
agreements concurrently with the definitive support agreement between Dynex
and Times Electric; (b) materially breaching his irrevocable voting and
lock-up undertakings; or (c) otherwise failing to proceed with closing.
There can be no assurance that any definitive agreement will be entered
into, that any proposed transaction will be accepted or approved by the
shareholders of Dynex or that any transaction will be completed as a result of
the execution of the letter of intent. Investors are cautioned against trading
in Dynex common equity shares based on the fact of this non-binding letter of
Times Electric has stated its intention to retain the services of the
senior management team as well as retain Dynex's manufacturing plant in
Dr. Paul Taylor, President and Chief Executive Officer of Dynex, said, "I
am very satisfied with this proposed transaction. The firm that is proposing
to acquire Dynex is large, highly regarded and has a bright future. We have
worked diligently with them over the past five months to achieve this result.
We are optimistic the transaction will close on schedule, starting a long and
productive working relationship with a company and a management team we
greatly admire. We are also pleased with the potential of larger and more
reliable capital resources to fund our future developments."
David Banks, Chairman of Dynex, also commented, "The Board is delighted
with this transaction. We are satisfied that the price is fair and we are
delighted to have our company in the hands of owners who will help it achieve
the great destiny we know it can enjoy as well as look after our people. Our
counterparty is made up of people with impressive commercial skill and
integrity. We will be very pleased to present this proposed transaction to our
shareholders in due course. We are also pleased that some shareholders may
remain invested in what we believe will be a strategically exciting firm that
will grow in value and importance."
About Zhuzhou CSR Times Electric Co., Ltd
Times Electric is a limited liability company established in Hunan
Province, PRC whose shares are listed and traded on the Hong Kong Stock
Exchange. It is a leading supplier of on-board electric systems in the PRC
rail-transport industry, and its principal business activities include
research and development, design, manufacture and sale of a wide range of mass
transit electric drive converters and control systems. The company also
produces electrical components including semiconductor devices, sensors and
other related products.
Dynex is one of the world's leading independent suppliers of specialist,
high power semiconductor products. Dynex Semiconductor Ltd is its operating
business and is based in Lincoln, England in a facility housing the fully
integrated silicon wafer fabrication, assembly and test, sales, design and
development operations. Dynex designs and manufactures high power bipolar
discrete semiconductors, power modules, including insulated-gate bipolar
transistors (IGBTs), and high power electronic assemblies. Dynex products are
used world wide in power electronic applications including electric power
generation, transmission and distribution, marine and rail traction drives,
aircraft, electric vehicles, industrial automation and controls. The company
continues to produce and sell certain high reliability integrated circuits
(ICs) for use in specialist applications led by its proven radiation hard
Silicon-on-Sapphire products for space and nuclear applications.
Forward Looking Statements
This news release contains forward-looking information. These statements
relate to future events or future performance and reflect management's current
expectations and assumptions. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and
results discussed in the forward-looking statements. There are a number of
factors beyond the control of Dynex that could result in the termination of
the proposed transaction or negotiations between Dynex and Times Electric
could result in transaction terms that differ significantly from those
The TSX-Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
Press announcements and other information about Dynex are available on
the World Wide Web at http://www.dynexsemi.com.
For further information:
For further information: Dr. Paul Taylor, President and Chief Executive
Officer; Bob Lockwood, Finance Director and Chief Financial Officer, Dynex
Power Inc., Tel: +44 1522 500 500, firstname.lastname@example.org