MCO Capital Inc. Announces the Proposed Acquisition of IOU Central Inc.


    
    -  MCO Capital is to acquire all of the share capital of IOU Central
       Inc., which owns 87.9% of its American subsidiary IOU Central Inc.
       ("IOU USA").

    -  MCO Capital is also to acquire the balance of the share capital of IOU
       USA, thus giving the Company 100% of IOU USA.
    
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<p><location>MONTREAL</location>, <chron>Oct. 15</chron> /CNW Telbec/ - MCO Capital Inc. ("MCO" or the "Company") (NEX: MCO.H), IOU Central Inc. ("IOU"), a private company existing under the laws of <location>Canada</location>, and IOU shareholders have entered into a non-arm's length letter of intent (the "LOI") pursuant to which, subject to the completion of the Security Purchase Agreement, the MCO Offering and the Concurrent Offering (as defined hereinafter) (together the "Conditions Precedent"), MCO will acquire all of the outstanding common shares of IOU in an all-share transaction (the "Acquisition"), whereby IOU shareholders will receive 63 common shares of MCO for each common share of IOU (the "Exchange Ratio"). Based on the closing price of MCO's common shares on NEX of <money>$0.10</money> on <chron>June 30, 2009</chron>, the Exchange Ratio implies a value for each IOU common share of <money>$6.30</money>.</p>
<p>The Acquisition together with the Conditions Precedent is expected to constitute a non-arm's length Reverse Takeover of the Company (the "RTO") as defined in the policies of the TSX Venture Exchange (the "TSXV").</p>
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<p>Transaction details</p>
<p/>
<p>Under the terms of the Acquisition, the IOU shareholders will receive 63 common shares of MCO for each common share of IOU held. This will result in MCO issuing approximately 33,538,932 common shares to IOU shareholders, representing a total consideration of <money>$3,353,893</money> (the "Consideration"). The Consideration may be reviewed following further evaluation during the due diligence that may be carried out by the parties to the LOI or any other person designated by the parties to the LOI. In the event of a change in the Consideration, the number of MCO's common shares to be issued to the IOU shareholders shall be adjusted accordingly.</p>
<p>Although MCO, IOU and IOU shareholders are bound by the LOI, they are to enter into a definitive share purchase agreement (the "Agreement") to complete the Acquisition. The parties will proceed in good faith to negotiate the terms and conditions of the Agreement as soon as possible, with a view to consummating the Acquisition on or before <chron>December 15, 2009</chron> (the "Termination Deadline").</p>
<p>The completion of the Acquisition is subject to the approval of the TSXV and all other necessary regulatory approval. The completion of the Acquisition is also subject to additional conditions precedent, including shareholder approval of MCO and of IOU, satisfactory completion of due diligence reviews by the parties, board of director's approval of MCO and IOU, the satisfaction of the Conditions Precedent and certain other conditions.</p>
<p/>
<p>Conditions precedent</p>
<p/>
<p>The closing of the Acquisition is subject to the successful completion by MCO of an offering of up to 6,060,606 MCO common shares at a price of $0.0825 per share for gross proceed of <money>$500,000</money> (the "MCO Offering"). The MCO Offering shall be closed promptly to allow MCO to have sufficient funds to undertake the RTO.</p>
<p>Concurrently with the Acquisition, MCO will enter into a security purchase agreement providing for the acquisition of all the remaining issued and outstanding securities of IOU USA, by way of a share exchange (the "Security Purchase Agreement"). Pursuant to the Security Purchase Agreement MCO will issue 4,447,914 common shares at <money>$0.10</money> per share in exchange for the 1,366,957 common shares of IOU USA not owned by IOU. In addition, pursuant to the Security Purchase Agreement MCO will issue 4,617,376 options with an exercise price of <money>$0.11</money> per share until <chron>December 11, 2013</chron>, in exchange for the 1,419,037 convertible securities of IOU USA currently outstanding.</p>
<p>In connection with the completion of the Acquisition, MCO will also proceed to a concurrent offering of a minimum of 20,000,000 MCO common shares at a price of <money>$0.10</money> per share for gross proceeds of <money>$2,000,000</money> (the "Concurrent Offering"). The Concurrent Offering is expected to close concurrently with the Acquisition in order to meet the minimum listing requirements of the TSXV. MCO has entered into negotiations to retain a broker for part of the Concurrent Offering and will issue a news release disclosing details once a formal engagement has been executed.</p>
<p>Following the closing of the RTO, presuming that the Purchase Price will remain unchanged, and after the MCO Offering, the Security Purchase Agreement, the Concurrent Offering and the Shares for Debt (as defined hereinafter) are completed, there will be 69,581,141 MCO common shares issued and outstanding, and the IOU shareholders will hold approximately 48.2% of MCO.</p>
<p>The RTO will be a non-arm's length transaction as <person>Mr. Philippe Marleau</person>, the current President, director and one of the shareholders of MCO is also the CEO, sole director and one of the shareholders of IOU. In addition, <person>Mr. Hubert Marleau</person> and <person>Mr. Charles Marleau</person>, current directors and shareholders of MCO are also insiders of IOU. The Palos Capital Pool is also a shareholder of IOU. The general partner of the Palos Capital Pool is Palos Management Inc., a wholly owned subsidiary of Palos Capital Corporation. <person>Mr. Philippe Marleau</person> is a principal and director of Palos Capital Corporation. Following the closing of the RTO, it is anticipated that four nominees will join <person>Mr. Philippe Marleau</person> on the board of directors of MCO so that the reconstituted board of directors will consist of five directors.</p>
<p><person>Mr. Philippe Marleau</person> is the founder of IOU and has served as IOU's CEO and sole director since <chron>August 2006</chron>. In addition, <person>Mr. Marleau</person> currently serves as CEO of IOU USA and is a principal and director of Palos Capital Corporation. From <chron>March 2000</chron> to <chron>August 2004</chron>, <person>Mr. Marleau</person> served as Vice President, Equity Research for Merrill Lynch. Prior to <chron>March 2000</chron>, <person>Mr. Marleau</person> held various positions with financial services firms, including Credit Suisse First <location>Boston</location> and Scotia Capital. <person>Mr. Marleau</person> currently serves as a director of GC-Global Capital Corp. a reporting issuer on the TSXV. He also serves as a director of numerous private companies. <person>Mr. Marleau</person> is a Chartered Financial Analyst (CFA) and received his Bachelor's Degree in Engineering from McGill University in 1996.</p>
<p>Completion of the RTO is subject to a number of conditions, including, but not limited to, TSXV acceptance, disinterested shareholder approval and such other terms and conditions to be determined by the parties to take place concurrently with the RTO, in order to meet the minimum listing requirements of the TSXV. In this regard, MCO proposes to hold a meeting of its shareholders to approve the RTO and such other matters as are required by law or the TSXV as soon as possible. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.</p>
<p>Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of MCO should be considered highly speculative.</p>
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<p>The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.</p>
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<p>About IOU</p>
<p/>
<p>IOU is a holding corporation for its 87.9% holding of the shares of IOU USA, which will operate an Internet-based lending platform in the <location>United States</location> as its sole activity. Currently, IOU USA facilitates loans between borrowers and third-party lenders. Upon the approval of its regulatory filings with the SEC, IOU USA's Internet-based loan marketplace will enable registered borrowers to post loan requests and borrow money and registered lenders to purchase notes issued by IOU USA, the proceeds of which are designated to fund specific loans made to individual registered borrowers. Please refer to the IOU USA registration statement filed with the SEC on EDGAR for more information on its business. IOU USA's principal executive offices are located at 1255 Roberts Boulevard, Suite 116, Kennesaw, <location>Georgia</location> 30144, and its website address is <a href="http://www.ioucentral.com/">http://www.ioucentral.com/</a>.</p>
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<p>About MCO</p>
<p/>
<p>The business of MCO is to identify and evaluate business assets with a view to a potential acquisition. MCO shares are presently listed on the NEX division of the TSXV and the Company has not had any commercial activities over the past 6 years. MCO was previously known as Matco Ravary. Upon completion of the RTO, MCO intends to be relisted on the TSXV as a Tier 2 issuer in the Industrial or Technology Issuer category.</p>
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<p>Other matters</p>
<p/>
<p>MCO has entered into a non arm's length debt settlement agreement with Marleau Capital Corporation, wherein the Company proposes to issue 1,300,000 common shares to Marleau Capital Corporation at a deemed issue price of <money>$0.10</money> per share (the "Shares") in satisfaction of <money>$130,000</money> owed by MCO to Marleau Capital Corporation, pursuant to an unsecured loan without interest granted to MCO in order to help it meet its obligations during its period of inactivity.</p>
<p>The Shares will be subject to a four-month hold period. Completion of the debt settlement is subject to acceptance by the TSXV.</p>
<p/>
<p>Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of MCO and IOU, including, but not limited to, the impact of general economic conditions, industry conditions, dependence upon regulatory and shareholder approvals, the execution of definitive documentation and the uncertainty of obtaining additional financing. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. MCO does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.</p>
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    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 release.
    

For further information: For further information: Philippe Marleau, President, MCO Capital Inc., (514) 397-0188, pmarleau@paloscapital.com; Philippe Marleau, Chief Executive Officer, IOU Central Inc., (514) 789-0694, pmarleau@ioucentral.com

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