Agreement calls for privately held OSM Solar Corp. to amalgamate with
Forterra through an exchange of shares
Shareholders of OSM would receive 90% of shares of Forterra; plan for an
up to 10:1 consolidation of Forterra's issued and outstanding shares
Future of Forterra depends on successful pursuit of strategy to broaden
its business into other renewable sectors of the Canadian marketplace
OSM's solar modules, manufactured in Welland, qualify under Ontario's
manufacturing content rules for the FIT program
PUSLINCH, ON, May 17 /CNW/ - Forterra Environmental Corp. (Forterra or
the company) (TSXV: FTE), a manufacturer, marketer, and seller of
organic soil amendment products based on worm castings, today announced
that it has entered into an agreement to merge with OSM Solar Corp.
(OSM). The transaction would constitute a reverse takeover (RTO)
pursuant to the policies of the TSX Venture Exchange.
OSM is a privately held company with its manufacturing plant and head
office in Welland, Ontario. It designs and builds high-performance
solar panels that are used to power businesses, government and
agricultural facilities, and homes. OSM's solar panels qualify under
the Ontario manufacturing content rules of the province's
Feed-In-Tariff (FIT) program. OSM expects to sell its solar panels in
other provinces as well as in the United States. OSM's management has
more than 25 years of experience in the manufacture of solar panel
Under the agreement, Forterra and OSM would carry out an amalgamation
following which all of the issued and outstanding shares of OSM will be
exchanged for common shares of Forterra on a basis such that the
shareowners of OSM will receive shares representing 90 percent of the
total number of issued and outstanding shares of Forterra calculated on
a fully diluted basis after giving effect to the amalgamation and an up
to 10:1 consolidation of Forterra's shares. Current shareholders of
Forterra would own 10 percent of the issued and outstanding shares of
the company after the amalgamation and consolidation are completed.
Forterra and OSM are intending to complete a definitive agreement for
the RTO transaction no later than June 30, 2011 and are targeting to
close the merger by August 31, 2011. Completion of the RTO and
consolidation require the approval of Forterra's shareholders. The
company expects to hold an Annual and Special Meeting this summer to
seek the approval of its shareholders. Proceeding with the transaction
also is subject to the satisfaction or waiver of a number of other
conditions, including but not limited to the completion of further due
diligence by Forterra and OSM, the consents and approvals of government
and regulatory bodies, including the TSX Venture Exchange, and the
consent of the debentureholders of Forterra to make their debentures
non-interest bearing and to extend their maturity to December 31, 2012.
Following completion of the amalgamation, it is expected that the Board
of Directors of Forterra will consist of the company's current
directors (Don Green, Bruce Bent, Rod Malcolm, John Gamble, and David
Woolford) and the addition of Dr. Taesung Kim. Dr. Kim is the Chief
Executive Officer of Symphony Energy, a manufacturer of solar energy
modules. OSM's solar energy systems are based on the use of the
Symphony brand of photovoltaic (PV) modules. Dr. Kim will be taking on
increasing responsibilities for OSM's research and development programs
in the future.
"For about the past four years, Forterra has struggled to establish
itself as a company manufacturing, marketing, and selling
environmentally friendly, organic soil enhancers," said Don Green,
Chairman and Chief Executive Officer. "During these years, we have
learned a great deal about the marketplace and refined our products and
production processes. However, we also have made many mistakes in our
learning process and have not managed to make the business profitable.
"Sales did not materialize as anticipated. Our working capital
shortfall worsened significantly as the company became increasingly
indebted, putting Forterra's future in imminent jeopardy. We became
entirely dependent on loans and certain services supplied by directors
and some shareholders. In view of this and given the inventory on hand,
Forterra reduced operations to a maintenance level. Changes made
included the departure of the company's President and Chief Operating
Officer and other staff reductions," Mr. Green continued.
"We determined that any possible future for Forterra depended on
pursuing a strategy that, if successful, will enable it to transition
and broaden its environmentally friendly business into other renewable
sectors of the Canadian marketplace. Working particularly with John
Gamble, a director of Forterra who also is serving as Chief Financial
Officer, our Board approved pursuing the amalgamation with OSM, for
which Mr. Gamble serves as President & Chief Executive Officer.
"In our view, there is no doubt that Forterra needs to execute a
strategy that broadens our business in the renewables sector and
enables us to recapitalize the company in order to remain a going
concern. As we pursue this strategy through the completion of the
amalgamation with OSM, certain directors and shareholders of Forterra
will continue to provide the short-term financial support necessary to
continue the business through this difficult time," Mr. Green said.
About Forterra Environmental Corp.
Forterra manufactures, markets, and sells environmentally friendly
organic soil amendment products based on worm castings, which boost
fertility while restoring the soil with organic matter for sustainable,
longer-term benefits, including stronger root growth, and drought and
pest resistance. Forterra products contain only organic material.
They are ideal for golf courses, sports fields, lawn care, parks,
nurseries, orchards, and vineyards. Essentially, Forterra uses red
wriggler worms to convert organic material into vermicompost or worm
castings. Worm castings contain micronutrients, which are required for
healthy plant development. Worm castings also contain microbes, which
increase the rate at which plants take up available macronutrients and
micronutrients. Further information is available on the company's
website at www.forterra.com.
This news release contains forward-looking statements based on current
expectations. These forward-looking statements entail various risks
and uncertainties that could cause actual results to differ materially
from those reflected in these forward-looking statements. Such
statements are based on current expectations, are subject to a number
of uncertainties and risks, and actual results may differ materially
from those contained in such statements. These uncertainties and risks
include, but are not limited to, availability of resources, competitive
pressures, changes in market activity, the ability to sign contracts
with customers, the development of markets for worm castings, its
ability to breed and maintain a sufficiently large worm population, and
regulatory requirements. Risks and uncertainties about Forterra's
business are more fully discussed in the company's disclosure
materials, including its annual information form and MD&A, filed with
the securities regulatory authorities in Canada. Forterra assumes no
obligation to update any forward-looking statement or to update the
reasons why actual results could differ from such statements.
Neither the TSX Venture Exchange Inc. 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. Neither the TSX Venture Exchange nor its Regulation Services
Provider has passed upon the merits of the proposed RTO transaction. A
definitive agreement between Forterra and OSM for the proposed RTO has
not been signed. There can be no assurance that a definitive agreement
will be signed or that, if signed, the proposed RTO will be completed.
Following the signing of the definitive agreement, Forterra will issue
a news release providing further details of the proposed RTO.
Subsequently, Forterra will issue a Management Information Circular
with respect to the required Annual and Special Meeting of Shareholders
that will be called to consider the proposed transaction and to approve
Forterra's ongoing corporate and securities law and TSX Venture
SOURCE Forterra Environmental Corp.
For further information:
Investor and Media Relations
Richard W. Wertheim
Wertheim + Company Inc.
Phone : 416-594-1600
Cell : 416-518-8479
Chairman & Chief Executive Officer