/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
CALGARY, June 10 /CNW/ - L1 Capital Corp. ("L1") (TSXV: LOA.P), a capital
pool company under the policies of the TSX Venture Exchange (the "TSXV"), is
pleased to announce that on April 28, 2008, and amended on May 14, 2008, it
entered into a non-binding letter of intent dated April 23, 2008 (the "LOI")
with ThinkTel Communications Ltd. ("ThinkTel") to purchase all of the issued
and outstanding shares of ThinkTel at a purchase price of $4,400,000, payable
through the issuance of common shares in the capital of L1, with the deemed
price per share of $0.225 per share. The agreement is conditional and subject
to the policies of the TSXV.
The acquisition is intended to constitute L1's Qualifying Transaction to
become a Tier 2 Industrial Issuer on the TSXV and is subject to prior approval
from the TSXV.
Information Regarding ThinkTel
ThinkTel is a national telecommunications utility-like services provider
delivering voice, video and data services to business customers and wholesale
distributors across Canada. Thinktel's services, which replace existing local
voice and Internet services, are of immediate value to a wide range of
businesses and they do not require the customer to abandon their existing
equipment. ThinkTel has developed a proprietary suite of applications enabling
communications solutions that make it easy for businesses to take advantage of
the benefits of integrating voice, video and data services over a single
connection while improving service levels.
ThinkTel has reached a stage where it has built out the national network
and completed the development of its service and delivery models with hundreds
of direct and wholesale customers. A substantial customer base currently
supports the operational costs of the business and has validated the business
model. The model empowers the customers to order, provision, and manage their
accounts online, improving responsiveness and flexibility. This model also
enables ThinkTel to scale up growth without the need to make significant
investments in staff and also reduces the cost of customer acquisition and
ThinkTel has secured multiple long-term access agreements with Canadian
and US telecommunications providers which will support the rapid growth of the
business. ThinkTel is currently able to deliver services to over 80% of
Canadian business and residential customers and also has the ability to
connect to nearly all types of customer equipment. ThinkTel can provide both
functional and economic benefit on the delivery of basic services with
significant additional value delivered by advanced applications such as click
to call, voice recognition, and complex call routing.
ThinkTel derives its income from recurring monthly service fees as well
as fees charged for usage-based services. ThinkTel is focused on business to
business transactions and is primarily focused on service delivery to small to
medium sized businesses. Additional utilization of the network is achieved
through ThinkTel's wholesale services division which provides network services
to both business and residential service providers.
ThinkTel operates four data centres in Canada and provides access to a
full suite of communications services covering most of Canada. ThinkTel's
switching facilities provide redundant access to the public switched telephone
network as well as to multiple data and Internet providers. ThinkTel also
utilizes two of the centres for customer collocation and hosting of ThinkTel
ThinkTel is a private company incorporated under the laws of the Province
of Alberta on April 24, 2003 as 1043599 Alberta Ltd. and changed its name to
ThinkTel Communications Ltd. on June 23, 2003 with its registered and business
offices located at Suite 812, 10080 Jasper Avenue, Edmonton, Alberta.
David Damer is the President and Chief Executive Officer of ThinkTel,
Jim Dawson is the Vice President, Business Development of ThinkTel,
Mark Fossen is the Chief Operating Officer, and all are directors of ThinkTel
and reside in Edmonton, Alberta.
The following provides shareholders of ThinkTel that own or control,
directly or indirectly, equal to or more than 10% of the Class "A" common
shares (the "Shares") issued and outstanding:
Shareholder Position with ThinkTel Shares Held % of Shares(1)
David Damer President, Chief Executive 874,686 22.98
Officer and a director
Jim Dawson Vice President, Business 780,882 20.51
Development and a director
(1) Based on 3,807,025 Shares issued and outstanding as of the date
The following provides selected audited consolidated financial information
regarding ThinkTel for the year ended December 31, 2007:
Revenue $ 1,677,248
Gross Profit 927,889
Net loss for the year (6,744)
Cash flow from operations 128,548
Current Assets 476,474
Total Assets 932,589
Current Liabilities 513,396
Total Liabilities 701,046
Shareholders' Equity 231,543
Terms of the Proposed Qualifying Transaction
L1 anticipates that the acquisition will be completed pursuant to a share
purchase agreement entered into between L1 and each of the shareholders of
ThinkTel but may be completed pursuant to an exempt take-over bid under the
Business Corporations Act (Alberta).
The completion of the Qualifying Transaction is subject to a number of
conditions, including the following:
(a) TSXV approval of the Qualifying Transaction;
(b) receipt of any consents, approvals, orders or decisions from any
governmental, regulatory, and judicial (if required) authorities and
other third parties necessary for the completion of the Qualifying
(c) approval of the Qualifying Transaction and the entering into of a
definitive agreement respecting the Qualifying Transaction (the
"Definitive Agreement") from each of the Board of Directors of L1
(d) the TSXV escrow agreement shall have been entered into in a form and
with terms and conditions satisfactory to L1, ThinkTel and the TSXV;
(e) completion of satisfactory due diligence by both parties.
The Definitive Agreement will also contain customary conditions to the
completion of the Qualifying Transaction, as well as reciprocal indemnities,
representations and warranties standard for transactions of this nature.
Subject to the provisions of TSXV Policy 2.4, L1 has agreed to advance to
ThinkTel an advance of $25,000, the terms of which are presently being
finalized by ThinkTel and L1. Additionally, pursuant to TSXV policy 8.5, L1
has agreed to advance as a secured loan to ThinkTel an amount not to exceed
In the event the Qualifying Transaction is completed by way of exempt
take-over bid, ThinkTel has agreed to use its reasonable best efforts to
obtain definitive Lock-up Agreements executed by the senior management and
directors of ThinkTel committing to participate in the sale to L1 and, if
necessary, from other major shareholders representing not less than 90% of the
ThinkTel shares on a fully-diluted basis. Closing of the Qualifying
Transaction shall be conditional upon prior receipt by L1 of said Pre-Tender
It is anticipated that the L1 shares issued to the shareholders of
ThinkTel will be subject to a value escrow arrangement under the policies of
the TSXV. As well, the LOI contemplates that certain shareholders of ThinkTel
will be subject to a voluntary performance based escrow agreement (the
"Performance Escrow") with the release of such escrowed shares based on
quarterly gross sales increasing to annualized rate of $4,000,000 from the
current annualized sale of approximately $3,000,000. In addition, a 40%
contribution to margin using "earnings before interest, taxes, administration
and sales" (EBITAS) will be required. If ThinkTel fails to attain the required
level of performance within 24 months after the effective date of the
Definitive Agreement, any shares remaining under the Performance Escrow shall
Subject to regulatory and TSXV approval, L1 and ThinkTel have agreed to
issue to Orilla Corporation shares in the capital of L1 up to a maximum of 5%
of the value of the Qualifying Transaction, at a deemed price per share equal
to the value determined in the Qualifying Transaction, as a finder's fee in
connection with the Qualifying Transaction.
Directors, Management and Insiders of the Resulting Entity
The proposed Qualifying Transaction with ThinkTel is at arm's length to
L1. Upon completion of the transaction, the following individuals will act as
directors and/or officers of L1:
Mr. David Damer, Chief Executive Officer and Director
Mr. Damer is the founder, President and Chief Executive Officer of
ThinkTel and an 18 year veteran of the telecommunications and IT industry in
Canada. Prior to ThinkTel, Mr. Damer has held senior sales and management
positions within Bell Nexxia, C1 Communications, Sprint Canada, and IBM.
Mr. Damer holds a degree in Computer Engineering from the University of
Alberta and has been a Professional Engineer in the Province of Alberta since
Mr. Jim Dawson, VP Sales
Mr. Dawson has been Vice President, Business Development of ThinkTel
Communications from June 2004 to the present. In 1995, he received his
Business Administration diploma from the Northern Alberta Institute of
Technology. He then spent four years in print advertising sales at The
Edmonton Journal, when an interest in technology took him to the
telecommunications industry. Over the next five years, he held senior account
executive positions at Bell Canada, and Bell Mobility.
Mr. Mark Fossen, Chief Operating Officer
Mr. Fossen is currently a Director and the Chief Operations Officer of
ThinkTel. He has been active in the technology industry for over 12 years and
holds a Bachelor of Science in Physics, Computational Science, from the
University of Alberta, and an Electronic Engineering Technology Diploma from
The Northern Alberta Institute of Technology. Preceding ThinkTel, Mr. Fossen
was President and Chief Executive Officer of NetMonks Consulting Corporation
and worked with various research projects at the University of Alberta.
Mr. Gordon R. Travis, Chief Financial Officer, Chairperson and Director
Mr. Travis is currently the President, Chief Executive Officer, Chief
Financial Officer and a Director of L1, a principal of Liberty Strategic and
Financial Advisory, President of Liberty Holdings & Industries Ltd., a venture
capital corporation focussed upon the development and implementation of
information technology into various verticals and a Director of Pay Linx
Corporation. Prior to his involvement with Liberty Holdings & Industries Ltd.,
Mr. Travis held numerous senior financial and consulting positions within the
energy sector both in public and private companies. Mr. Travis received his
Bachelor of Commerce from the University of Calgary in 1975 and received his
C.M.A. designation in 1981.
Mr. Douglas C. Urch, Director
Mr. Urch, effective February 1, 2008, became the Chief Financial Officer
of Bankers Petroleum Ltd. He holds a Bachelor of Commerce Degree from the
University of Calgary, became a Certified Management Accountant in 1985 and is
a member of the Society of Management Accountants, Financial Executives
Institute and Petroleum Accountants Society of Canada.
Mr. Urch has over 27 years of business experience. Prior to being the
Vice President, Finance and Chief Financial Officer of Bankers Petroleum Ltd.,
Mr. Urch served as Vice President, Finance and Chief Financial Officer of
Rally Energy Corp. since September 2000. Prior to September 2000, Mr. Urch
provided financial management services for a variety of public and private
companies over a six year period. From 1991 to 1993 he was Chief Financial
Officer, Controller and Corporate Secretary at Barrington Petroleum Ltd. From
1983 to 1991, Mr. Urch was the Controller at Ryerson Oil and Gas Limited.
Mr. Henry Yip, Director
Mr. Yip is an engineer and has served as the President of C'andcee
Development Inc. since June 2007. C'andcee Development Inc. is a private
consulting and investment corporation. He also serves as the Executive
Chairperson at Nirix Technology, an Information Technology service provider.
From December 2004 to May 2006, Mr. Yip served as Chief Executive Officer of
DriveABLE Assessment Centres Inc. From April 2001 to June 2004, he served as
Executive Vice President of Network Services Allstream Inc., previously known
as AT&T Canada. From September 1995 to March 2001, Mr. Yip served as Vice
President, Network Services for Telus.
Mr. Yip has also served as a director of both For-Profit and
Not-for-Profit organizations such as Global Thermoelectric Inc. and TrLabs.
Currently Mr. Yip is sitting on the University of Western Ontario Engineering
Faculty Advisory Council as Vice Chair and is a Director of the Edmonton
Economic Development Corporation.
Completion of the Qualifying Transaction is subject to a number of
conditions, including but not limited to, TSXV acceptance and if applicable
pursuant to TSXV requirements, majority of the minority shareholder approval.
Where applicable, the Qualifying Transaction cannot close until the required
shareholder approval is obtained. There can be no assurance that the
Qualifying 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
Qualifying Transaction, any information released or received with respect to
the Qualifying Transaction may not be accurate or complete and should not be
relied upon. Trading the securities of a capital pool company should be
considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the
proposed transaction and has neither International Securities approved
nor disapproved the contents of this press release.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
For further information:
For further information: L1 Capital Corp., Gordon R. Travis, 88 Rosewood
Road NW., Calgary, Alberta, T2K 1N1, Telephone: (403) 338-1001, Facsimile: