ESTec Systems Corp. Enters Into Definitive Agreement for Previously Announced Going Private Transaction

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EDMONTON, Nov. 9, 2016 /CNW/ - (TSX Venture: ESE) – ESTec Systems Corp. ("ESTec" or the "Company") is pleased to announce it has entered into a binding amalgamation agreement (the "Amalgamation Agreement") with 2000067 Alberta Ltd. ("Holdco") and 2000285 Alberta Ltd. ("AcquisitionCo"), entities controlled directly or indirectly by Anthony B. Nelson, a director, officer and shareholder of the Company. The Amalgamation Agreement sets forth the definitive terms of the Company's proposed going private transaction previously announced on October 24, 2016. Pursuant to the Amalgamation Agreement, AcquisitionCo and the Company will amalgamate to form an amalgamated company ("Amalco") under the Business Corporations Act (Alberta) and, through a series of transactions, Holdco will acquire all of the issued and outstanding common shares in the capital of Amalco (the "Transaction"). Shareholders of the Company (other than dissenting shareholders and Holdco or its affiliates) at the time of closing of the Transaction will be entitled to receive $0.12 in cash for each common share in the capital of ESTec ("Common Share") held.

Provided all conditions and approvals are met, upon closing of the Transaction: (a) each holder of Common Shares (other than dissenting shareholders and Holdco or its affiliates) will receive one (1) fully paid and non-assessable Class A redeemable preferred share in the capital of Amalco (a "Class A Redeemable Preferred Share") for each one (1) Common Share held, which shall be immediately redeemed by Amalco for $0.12 per share in accordance with the terms of the Amalco Class A Redeemable Preferred Shares, following which all such Common Shares shall be cancelled.

The acquisition price of $0.12 per Common Share represents a 26% premium to the closing price of the Common Shares on October 24, 2016 (the last trading day prior to the announcement of the Transaction) and a premium of approximately 32% to the 30 day weighted average price of the Common Shares on the TXV Venture Exchange up to and including October 24, 2016.

Shareholders of Holdco upon closing of the Transaction will consist of the Nelson family and other ESTec shareholders acting jointly and in concert with the Nelson family (collectively, the "Interested Group"). Prior to the closing of the Transaction, Holdco will acquire all Common Shares owned, controlled or directed by the Interested Group (other than those held in registered accounts) in exchange for shares of Holdco.

Pursuant to Multilateral Instrument 61-101 ("MI 61-101"), the Transaction is a "business combination" and the completion of the Transaction will require simple majority approval of the Company's minority shareholders. Of the 10,461,629 currently issued and outstanding Common Shares, the Interested Group owns or controls, directly or indirectly, 7,726,758 (73.68%) Common Shares in aggregate, and the votes attached to such shares will be excluded for the purposes of obtaining minority shareholder approval under MI 61-101. The Transaction will also need to be approved by at least 66 2/3% of the votes duly cast by all shareholders of the Corporation.

The Board of Directors (with conflicted directors abstaining) has determined that the Transaction is in the best interests of the Company and the shareholders of the Company, has determined that the Transaction is fair, from a financial point of view, from the perspective of the shareholders of the Corporation receiving the cash offer of $0.12 per Common Share, has approved the Transaction and the entering into of the Amalgamation Agreement and has determined to recommend that shareholders vote in favour of a special resolution approving the Transaction. The directors and officers of the Company, and certain other shareholders who are part of the Interested Group, representing approximately 73.74% of the outstanding Common Shares have entered into lock-up agreements pursuant to which they have agreed to vote their Common Shares in favour of the Transaction. An information circular of the Company in respect of the Transaction (the "Information Circular") is expected to be mailed to shareholders on or about November 17, 2016 for an annual and special meeting of shareholders scheduled to take place on December 9, 2016. If the required conditions have been met and approvals have been obtained, it is expected that closing of the Transaction will occur on or about December 13, 2016.

On November 4, 2016, Quantum Advisory Inc. ("Quantum") provided the Special Committee of the Board of Directors with its written opinion (the "Fairness Opinion") that, based on the scope of review and the assumptions and considerations noted in the Fairness Opinion, as at the October 31, 2016 effective date of the Fairness Opinion, the Transaction is fair, from a financial point of view, from the perspective of the shareholders of the Company receiving the cash offer of $0.12 per Common Share.

The Transaction is also subject to a number of conditions, including the receipt of the required shareholder approvals and TSX Venture Exchange approval. The Company has agreed not to solicit or initiate any discussion or negotiation concerning the sale of significant assets or other business combinations. In the event the Transaction does not proceed, under certain circumstances, the Company has agreed to pay to Holdco the aggregate amount of any disbursements and out of pocket expenses that have been incurred by Holdco in connection with the Transaction. The Information Circular and Amalgamation Agreement will be filed by the Company on its SEDAR profile at www.sedar.com.

Following completion of the Transaction, it is anticipated that the Common Shares will be de-listed from the TSX Venture Exchange and the Company will apply to the applicable securities commissions to cease to be a reporting issuer.

Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking statements, including but not limited to, the Transaction and its proposed terms, the anticipated date of the annual general and special shareholder meeting to consider the Transaction and date of mailing in connection therewith, the SEDAR filing of the Information Circular and the Amalgamation Agreement, the anticipated date of closing the Transaction and the expectation that the Common Shares will be delisted following the closing of the Transaction and the expectation that Company will apply to cease to be a reporting issuer following the closing of the Transaction, which forward-looking statements involve substantial known and unknown risks, uncertainties and assumptions, certain of which are beyond the Company's control.  Such risks, uncertainties and assumptions include, without limitation, those associated with required shareholder approvals and stock exchange approvals for the Transaction, and other conditions of the Transaction, and those generally associated with changes capital markets and general economic conditions, and other risks, uncertainties and assumptions. Without limiting the foregoing, the words "believe", "expect", "anticipate", "intend", "estimate", "plan" and similar expressions identify forward-looking statements. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company or its shareholders will derive therefrom.  Readers are cautioned that the foregoing list of factors is not exhaustive.  Additional information on these and other factors that could affect the Company's operations and financial results are included in reports, including the Company's Management Discussion and Analysis for the year ended June 30, 2016, on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.  Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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 news release.

This news release is not for dissemination in the United States or to U.S. persons.

SOURCE ESTec Systems Corp.

For further information: ESTec Systems Corp., Mark A. Bamford, Chief Financial Officer, (780) 483-7120, Fax: (780) 489-9557, Email: mbamford@estec.com

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