/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, May 30, 2012 /CNW/ - CMQ Resources Inc. (TSXV: NV) ("CMQ") announced today that it intends to complete a private placement (the "Offering") of approximately $2,500,000 principal amount of secured convertible debentures to Matco Investments Ltd. ("Matco"), CMQ's principal creditor and shareholder and a control person of CMQ.
The Offering will consist of the issuance of $2,500,000 principal amount of convertible debentures (the "Debentures") secured against all present and after acquired property of CMQ on similar terms to CMQ's existing secured indebtedness owing to Matco. The Debentures shall have a maturity date of two years from the date of issuance and bear interest at a rate equal to 9% per annum. The accrued principal and interest amounts owing on the Debentures shall be convertible, at Matco's election, into common shares of CMQ at a price equal to $0.10 per common share. It is currently anticipated that Matco will be the only subscriber to the Offering. Matco and related persons currently hold 22,094,141 common shares of CMQ, representing 49.99% of CMQ's outstanding common shares and would hold 69,188,682 common shares of CMQ, representing 68% of CMQ's outstanding common shares if the full principal amount of the Debentures were to be converted. Matco also holds the November 2011 convertible debenture with a principal amount of $1,500,000. If the full principal amount of the November 2011 convertible debenture were to be converted Matco would own an incremental 15,000,000 common shares.
In CMQ's information circular relating to the annual and special meeting of shareholders of CMQ held on June 21, 2011 (the "Meeting"), CMQ disclosed that it intended to enter into future financings which may involve Matco acquiring up to 90% of the issued and outstanding shares of the Corporation. At the Meeting, shareholders of CMQ approved, both on a majority basis and on a "majority of the minority" basis, a resolution approving such financing and Matco's participation therein to become a de facto control person of CMQ in accordance with Multilateral Instrument 61-101 ("MI 61-101"). In connection with the Offering, CMQ is relying upon the exemption set forth in section 5.5(c) of MI 61-101 which allows an issuer to forego receiving a formal valuation in respect of a related party transaction. There have been no prior valuations of CMQ, its material assets or its securities made in the twenty four months preceding the date hereof.
On December 19, 2010, CMQ entered into a funding and forbearance agreement with Matco, pursuant to which Matco agreed that it would, for a period ending on October 19, 2011, forbear from enforcing its rights and remedies against the Corporation (the "Forbearance") in respect of substantially all amounts CMQ was indebted to Matco. On October 19, 2011 the Forbearance was extended to May 30, 2012. In connection with the Offering, CMQ and Matco have entered into an agreement to extend the Forbearance previously granted by Matco to February 20, 2013, conditional on completion of the Offering on or prior to June 30, 2012, and for no additional consideration.
The net proceeds of the Offering will be used principally for working capital purposes.
The terms of the Offering and the extended forbearance were negotiated between Matco and an independent committee of CMQ's board of directors consisting of independent directors of CMQ, free from any interest in the Offering, which has recommended proceeding with the Offering and forbearance extension. The completion of the Offering remains subject to receipt of all required regulatory approvals not previously obtained, including that of the TSX Venture Exchange.
This press release is not an offer to sell securities in the United States. Securities may not be offered or sold in the United States in the absence of registration or an exemption from registration.
The Exchange does not accept responsibility for the adequacy or accuracy of this release.
This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws including with respect to the timing, completion of and terms of the Offering and forbearance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements typically contain statements with words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "intend", "may", "will", "shall", "project", "would", "should", or similar words suggesting future outcomes.
Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to CMQ and shareholders. Forward-looking statements are based on management's current beliefs as well as assumptions made by, and information currently available to, management. Though management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that forward-looking statements will not be achieved. The forward-looking statements contained in this press release are made as of the date hereof and CMQ does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
For further information:
Please contact Ryan Jennings, Corporate Secretary, CMQ Resources Inc., Tel: (403) 294-6496.