/NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES/
BURLINGTON, ON, June 30 /CNW/ - IPICO Inc. (TSX-V:RFD) announced today its intention to issue on a non-brokered private placement basis convertible secured debentures and warrants (the "Offering") for gross proceeds of up to $2,500,000. The Offering is conditional on the final approval of the TSX Venture Exchange and shareholder approval at a special meeting of shareholders to be called for this purpose. Conditional approval of the Offering by the TSX Venture Exchange has been obtained. IPICO anticipates closing on or about September 30, 2010, subject to those approvals and satisfaction of other customary conditions, including execution of subscription agreements and other documentation. The proceeds of the Offering may be made available in tranches, as required, subject to certain conditions. The net proceeds of the Offering will be used for general corporate purposes.
The debentures will be designated as Series C debentures, will mature on the second anniversary of issue and will be convertible at the option of the holder into common shares of IPICO at a conversion price of $0.10 per share. The debentures will bear interest at a rate of 12% per annum, payable upon maturity or earlier repayment. The debentures will be secured by a general security interest over all of the assets and undertaking of IPICO and will rank in priority to the outstanding Series B debentures of IPICO. Each purchaser of Series C debentures will receive on issue 10,000 common share warrants for each $1,000 debenture purchased. Each warrant will entitle the holder to purchase one common share of IPICO for a period of 24 months at a price of $0.10 per share.
IPICO's largest shareholder, Brookfield Technology Fund ("BTF"), has indicated its intention to purchase the Offering in tranches totalling $2,000,000, subject to certain conditions. Up to an additional $500,000 of the Offering will be offered to the holders of the outstanding Series B debentures of IPICO. Those debenture holders include several investment funds and five directors and former directors of IPICO.
BTF's purchase of the Offering is subject to the prior approval of the holders of IPICO's outstanding Series B debentures. That consent has been obtained, subject to the reduction of the conversion price of the Series B debentures from $0.25 to equal the $0.10 conversion price applicable to the Series C debentures, the extension of the term of the Series B debentures to correspond to the maturity date of the Series C debentures, the reduction of the exercise price of the 14,000,000 warrants held by the Series B debenture holders from $0.25 to equal the $0.10 conversion price applicable to the Series C debentures and the extension of the term of those warrants to the same date. All changes to the terms of those securities are subject to shareholder approval.
It is a further condition to BTF's purchase of the Offering that the conversion price of IPICO's Class A Preferred Shares also be reduced to equal the $0.10 price applicable to the Series C debentures, the outstanding Series B debentures and the 14,000,000 outstanding warrants. In consideration of that change BTF has agreed to certain other changes to the rights attaching to the Class A Preferred Shares in favour of IPICO and its common shareholders. All changes to the terms of the Class A Preferred Shares are subject to shareholder approval.
BTF holds at the date hereof approximately 3,164,557 common shares and 5,000,000 Class A Preferred shares convertible into common shares of IPICO. Assuming the purchase and conversion by BTF of Series C debentures totalling $2,000,000, the issue of a total of $2,500,000 Series C debentures and the conversion of all outstanding convertible securities of IPICO upon the terms thereof, BTF would hold approximately 47% of the issued common shares of IPICO on a fully diluted basis. As a related party transaction, participation in this Offering by BTF has been approved by a special committee of the board of directors of IPICO constituted for this purpose, and will be subject to shareholder approval.
In order to meet its immediate cash needs pending shareholder approval of the Offering, IPICO arranged with BTF an interim bridge loan by way of up to $1,000,000 of secured convertible Series C debentures as described above, without warrants. This interim loan is subject to the final approval of the TSX Venture Exchange, but is not conditional upon the changes to the other securities described above in connection with the Offering and accordingly is not subject to shareholder approval. Conditional approval of the interim loan by the TSX Venture Exchange has been obtained. The interim loan is subject to the unconditional approval of the holders of IPICO's outstanding Series B debentures, which consent has been obtained.
IPICO completed today the issue of $500,000 Series C debentures under the interim loan. The balance of the interim loan may be made available, as required, subject to certain conditions. It is intended that the interim loan will be repaid from the net proceeds of the Offering. If the Offering is not approved by IPICO shareholders at the special meeting called for that purpose, the interim loan will become immediately repayable.
Assuming the purchase and conversion by BTF of Series C debentures totalling $1,000,000, and the conversion of all outstanding convertible securities of IPICO upon the terms thereof, BTF would hold approximately 19% of the issued common shares of IPICO on a fully diluted basis.
This news release was disseminated less than 21 days prior to the closing date of the interim loan. The shorter period was reasonable or necessary given BTF's familiarity with IPICO, the only recently concluded understanding as to the material terms of the Offering and interim bridge loan, and IPICO's current working capital requirements.
This news release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction. The Debentures being offered have not been and will not be registered under the United States Securities Act of 1933 and state securities laws. Accordingly, the Debentures may not be offered or sold in the United States except pursuant to applicable exemptions from registration.
This news release contains certain forward-looking statements pertaining to IPICO's proposed private placement, including statements as to the anticipated time of closing. Any statements in this news release that are not statements of historical fact may be considered to be forward-looking statements. Written words such as "may", "will", "expect", "believe", "anticipate", "estimate", "intends", "goal", "objective", "seek", "attempt", or variations of these or similar words, identify forward-looking statements. These statements by their nature are estimates of future results only and involve substantial risks and uncertainties, including those detailed from time to time. Actual results could differ materially from those contained in the forward-looking statements and are based on current expectations that involve a number of risks and uncertainties, including, but not limited to, the inability to close the interim loan or the Offering as a result of the failure to settle and enter into definitive documentation or the failure to receive regulatory or other approvals on terms acceptable to IPICO and the subscribers. These and other risks may be detailed from time to time in IPICO's periodic reports filed on SEDAR (www.sedar.com).
ABOUT IPICO Inc.
IPICO Inc. is an RFID solution supplier with operations in Canada, USA, South Africa, Europe, and Asia. IPICO produces smart labels, tags and readers based on the IP-X communication protocol. Its products are designed to conform to regulatory requirements in most major geographical regions, to excel at long read range, fast multi-read anti-collision and high thru-beam read-speeds of dynamic tag populations, and to allow for multi-reader rollout in close proximity. IPICO's products are used to optimize the management of products, equipment, people, animals and processes within the logistics and other value chains. For further information, go to www.ipico.com.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE IPICO INC.
For further information: For further information: Gordon Westwater, President & CEO, IPICO Inc., Tel: +1 905-631-6310, Email: email@example.com; Ted Irwin, Chief Financial Officer, IPICO Inc., Tel: +1 905-631-6310, Email: firstname.lastname@example.org