CALGARY, June 3 /CNW/ - HFG Holdings Inc. ("HFG") is pleased to announce
that it has entered into a letter of intent (the "LOI") dated effective
May 23, 2008 with Central Mining America, Inc. ("CMA"), a Texas company, for
the acquisition of all the issued and outstanding securities of CMA (the
"Acquisition"). CMA is a Texas-based salt mining company that owns salt mining
leases on a salt mineral property located in Van Zandt County, Texas. HFG
intends to finance the Acquisition of CMA through the issuance of
37,037,037 common shares (or a class of securities convertible in common
shares) of HFG on a post-Consolidation basis (as outlined herein) at a deemed
price of $US 1.35 per common share for total consideration of $US 50,000,000.
It is anticipated that the Acquisition will constitute HFG's Qualifying
Transaction under the applicable policies of the TSX Venture Exchange (the
"Exchange"). The principle elements of the Acquisition, which are described in
greater detail below, are:
- as a result of the Acquisition, CMA will become a wholly-owned
subsidiary of HFG and the business of CMA will become the business of
- the closing of concurrent private placement financings (collectively,
the "Private Placements") of CMA of a minimum of $US 15 million (the
"Private Placement Minimum") and up to a maximum of $US 25 million
(the "Private Placement Maximum");
- the consolidation of the issued and outstanding common shares of HFG
on a three-for-one basis (the "Consolidation");
- a change of the corporate name of HFG to a name as determined and
agreed to by the parties (the "Name Change");
- the continuation of Scott Monroe, President and Treasurer of CMA, and
Margaret Monroe, Vice President and Secretary of CMA, as board
members of HFG; and
- following the completion of the Acquisition and Consolidation, and
the closing of the Private Placement, HFG is expected to have between
49,898,148 and 57,305,556 common shares outstanding on a non-diluted
basis, which represents, approximately, a 3.5% to 3.1% interest for
existing shareholders of HFG.
CMA is a salt mining company based in Texas whose primary assets are salt
mining leases over approximately 65 acres of salt mineral property in the
Grand Saline Salt Dome, Texas. CMA also owns approximately 32 acres of surface
land leases over the current salt mine surface site known as "Monroe Salt".
Through U.S. Salt International Inc., a Texas company, CMA intends to sell the
salt produced from the mine to buyers in China. U.S. Salt International Inc.
currently has salt purchase contracts for the sale of its salt production with
state-owned Chinese companies.
Prior to the completion of the Acquisition, it is intended that CMA will
complete a private placement of units (each, a "CMA Unit") at a price, subject
to the approval of the Exchange, of $US 1.35 per CMA Unit for aggregate gross
proceeds of up to $US 5,000,000 (the "Private Placement of Units"). Each CMA
Unit will consist of one common share (a "CMA Share") and one-half of one
common share purchase warrant (each whole common share purchase warrant, a
"CMA Warrant"), each CMA Warrant entitling the holder thereof to acquire one
CMA Share at a price of $US 1.35 per CMA Share. It is further intended that,
prior to the completion of the Acquisition, CMA will complete a private
placement of CMA Shares for additional gross proceeds of up to $US 20,000,000
(the "Private Placement of Shares") at a price, subject to the approval of the
Exchange, of $US 1.35 per CMA Share. The total gross proceeds in respect of
the Private Placement of Units and the Private Placement of Shares is
anticipated to be, collectively, a minimum of $US 15,000,000 and up to a
maximum of $US 25,000,000. The net proceeds from the Private Placements will
be used by CMA to (a) place the Monroe Mine in production; (b) execute its
business plan; (c) pay for transaction expenses; and (c) for general working
Wolverton Capital Markets ("Wolverton") has been retained as the lead
agent for the Private Placements. CMA has agreed to compensate Wolverton for
its services performed in the capacity as lead agent as follows: (a) payment
of a corporate finance fee in the amount of $10,000; (b) payment of seven (7%)
percent of the gross proceeds realized by CMA in connection with the Private
Placement; and (c) issuance of agent's options to acquire that number of CMA
Shares equal to seven (7%) percent of the total number of CMA Shares sold in
connection with the Private Placement.
HFG and CMA intend, subject to Exchange approval, to complete the
Acquisition by way of an amalgamation or share exchange which may or may not
involve the incorporation and use of a Canadian or United States wholly-owned
subsidiary of HFG.
Subject to shareholder and Exchange approval, HFG will complete the
Consolidation, pursuant to which existing HFG securities will be consolidated
on a three-for-one basis, such that existing HFG shareholders will hold
approximately 1,750,000 post-Consolidation common shares immediately before
the Acquisition. Prior to the Consolidation, HFG is expected to have
outstanding director and employee share options to acquire 525,000 common
shares at an exercise price of $0.20 per share (the "HFG Options"). It is
expected that the holders of the HFG Options will retain such options
subsequent to the completion of the Acquisition, in accordance with HFG's
current share option plan. In addition, before the Consolidation, HFG is
expected to have outstanding agent's options to acquire 125,000 common shares
at an exercise price of $0.20 per share that were issued in connection with
HFG's initial public offering (the "HFG Warrants"). Post-Consolidation, there
will be outstanding 175,000 HFG Options with an exercise price of $0.60 and
41,667 HFG Warrants with an exercise price of $0.60.
The common shares of HFG to be issued to the shareholders of CMA will be
issued pursuant to exemptions from the prospectus requirements of the
applicable securities legislation, and may be subject to resale restrictions
as required under the applicable securities legislation and escrow conditions
as required by the Exchange.
Following the completion of the Consolidation, HFG will have
1,750,000 common shares outstanding on a non-diluted basis. Assuming
37,037,037 common shares of HFG are issued to CMA in connection with the
closing of the Acquisition, HFG is expected to have the following
(a) Assuming CMA issues 11,111,111 common shares in connection with the
closing of the Private Placement Minimum, a minimum of
49,898,148 common shares outstanding; or
(b) Assuming CMA issues up to 18,518,519 common shares in connection with
the closing of an amount of up to the Private Placement Maximum, a
maximum of 57,305,556 common shares outstanding.
The completion of the Acquisition is subject to a number of conditions
including, but not limited to, the following:
1. the execution of a definitive agreement with respect to the
Acquisition (the "Definitive Agreement");
2. the approval of the Consolidation and the Name Change by the
shareholders of HFG at a properly constituted special meeting of the
common shareholders of HFG;
3. the approval of the Acquisition by the shareholders of CMA at a
properly constituted meeting of the common shareholders of CMA;
4. the closing of the Private Placement Minimum;
5. the receipt of all necessary regulatory, corporate and material third
party approvals, including the approval of the Exchange, and
compliance with all applicable regulatory requirements and conditions
in connection with the Acquisition;
6. the maintenance of the listing of HFG's common shares on the
7. the confirmation of the representations and warranties of each party
to the Definitive Agreement as set out in such agreement;
8. the absence of any material adverse effect on the financial and
operational condition or the assets of each of the parties to the
9. the delivery of standard completion documentation including, but not
limited to, legal opinions from Canadian and United States legal
counsels, comfort or consent letters from Canadian and United States
auditors, officers' certificates and certificates of good standing;
10. other conditions precedent customary for a transaction such as the
The completion of the Acquisition is intended to occur on the later of
the tenth business day following the satisfaction or waiver of the conditions
precedent or September 1, 2008, or such other date as is mutually agreed to by
the parties. If the Acquisition is not completed on or before September 1,
2008, the terms of the LOI or the Definitive Agreement (if applicable) will be
terminated. Each of HFG and CMA will be responsible for the payment of its own
costs and expenses incurred in connection with the Acquisition.
HFG expects to call a shareholders' meeting to be held in July of 2008 to
consider, among other things, the Consolidation. It is expected that the
principal shareholders of HFG, including Timothy Halter, George Diamond and
Jeff Lawson, will enter into a voting support agreement to approve the
Consolidation at the meeting of the HFG shareholders.
It is the intention of HFG and CMA to establish and maintain a board of
directors with a combination of appropriate skill sets and that is compliant
with all regulatory and corporate governance requirements, including any
applicable independence requirements. The board of directors of HFG currently
consists of three members. Upon completion of the Acquisition, it is expected
that the board of directors of HFG will be increased to five members, all five
of whom will be nominated by CMA and are expected to be Scott Monroe, Margaret
Monroe and three nominees of CMA.
CMA is wholly-owned and controlled by Scott Monroe and Margaret Monroe.
Mr. Monroe is the President and Treasurer of CMA. He received an Honourable
Doctorate degree from the Southwest Petroleum Institute of China and has over
20 years of experience in the international mining and commodities industries.
Mr. Monroe has participated in numerous international and Chinese business
forums and currently serves as Chairperson of the Monroe Foundation, China and
the Monroe Scholarship Foundation at the Southwest Petroleum Institute of
China. Mrs. Monroe is the Vice-President and Secretary of CMA. Mrs. Monroe
received a Bachelor of Arts degree and an Honourable Doctorate degree from the
Southwest Petroleum Institute of China. She has over 25 years of experience in
the international mining, oil and gas and commodities industries. Her
experience includes involvement in both the public and private sectors, and
participation in a variety of international and Chinese business forums.
Currently, Mrs. Monroe serves as Vice Chairperson of the Monroe Foundation,
China and the Monroe Scholarship Foundation at the Southwest Petroleum
Institute of China.
HFG, a capital pool company within the meaning of the policies of the
Exchange, was incorporated in March 2007 and HFG's common shares were listed
and began trading on the Exchange in November 2007. HFG does not have any
operations and has no assets other than cash. HFG's business is to identify
and evaluate businesses and assets with a view to completing a Qualifying
Transaction under the policies of the Exchange.
Trading in the common shares of HFG has been halted on the Exchange since
May 26, 2008 and will resume trading on the completion of the Acquisition.
Except for statements of historical fact, all statements in this news
release, including, but not limited to, statements regarding future plans,
objectives and payments are forward-looking statements that involve various
risks and uncertainties.
Completion of the transaction is subject to a number of conditions,
including but not limited to, TSX Venture Exchange acceptance and, if
applicable pursuant to TSX Venture Exchange requirements, majority of the
minority shareholder approval. Where applicable, 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.
Investors are cautioned that, except as disclosed in the management
information circular or filing statement to be prepared in connection with the
transaction, any information released or received with respect to the
transaction may not be accurate or complete and should not be relied upon.
Trading in the securities of a capital pool company should be considered
The TSX Venture Exchange has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the
contents of this news release.
Wolverton Capital Markets has agreed to act as agent and, if required by
the TSX Venture Exchange, as sponsor in connection with the transaction. An
agreement to sponsor should not be construed as any assurance with respect to
the merits of the transaction or the likelihood of completion.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
FORWARD LOOKING INFORMATION
Certain information in this news release is forward-looking within the
meaning of certain securities laws, and is subject to important risks,
uncertainties and assumptions. This forward-looking information includes,
among other things, information with respect to HFG's beliefs, plans,
expectations, anticipations, estimates and intentions, the completion of the
Private Placement by CMA, HFG's acquisition of CMA Shares in exchange for HFG
common shares pursuant to prospectus and registration exemptions, the
execution of a definitive agreement for the Acquisition, the establishment of
a new HFG board of directors, and the activities of CMA after the Acquisition.
The words "may", "could", "should", "would", "suspect", "outlook", "believe",
"anticipate", "estimate", "expect", "intend", "plan", "target" and similar
words and expressions are used to identify forward-looking information. The
forward-looking information in this news release describes HFG's expectations
as of the date of this news release.
The results or events anticipated or predicted in such forward-looking
information may differ materially from actual results or events. Material
factors which could cause actual results or events to differ materially from
such forward-looking information include, among others, risks arising from
general economic conditions and adverse industry events, risks arising from
operations generally, reliance on contractual rights such as licences and
leases in the conduct of its business, reliance on third parties for sales of
product, reliance on key personnel, the need to protect intellectual property
and other proprietary rights, possible failure of the business model or
business plan or the inability to implement the business model or business
plan as planned, fluctuations in the exchange rate, competition, environmental
matters, and insurance or lack thereof.
HFG cautions that the foregoing list of material factors is not
exhaustive. When relying on HFG's forward-looking information to make
decisions, investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. HFG has assumed a
certain progression, which may not be realized. It has also assumed that the
material factors referred to in the previous paragraph will not cause such
forward-looking information to differ materially from actual results or
events. However, the list of these factors is not exhaustive and is subject to
change and there can be no assurance that such assumptions will reflect the
actual outcome of such items or factors.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS
THE EXPECTATIONS OF HFG AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY,
IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE
IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS
INFORMATION AS OF ANY OTHER DATE. WHILE HFG MAY ELECT TO, IT DOES NOT
UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.
For further information:
For further information: Timothy Halter, Chief Executive Officer, Chief
Financial Officer and Director, Telephone: (972) 233-0300, Facsimile: (972)
455-7337, E-mail: firstname.lastname@example.org; George Diamond, Director,
Telephone: (972) 985-4015, Facsimile: (972) 985-4014, E-mail: