Forterra Environmental Agrees to Merge with Solar Module Manufacturer

  • 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 components.

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 KimDr. 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.

Forward-Looking Statements

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 Exchange requirements.


SOURCE Forterra Environmental Corp.

For further information:

Investor and Media Relations
Richard W. Wertheim
Wertheim + Company Inc.
Email: wertheim@wertheim.ca
Phone : 416-594-1600
Cell : 416-518-8479
or
Don Green
Chairman & Chief Executive Officer
Phone: 905-634-8647
Email: dmgreen@allstream.net

Organization Profile

Forterra Environmental Corp.

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