MONTREAL, Dec. 8 /CNW Telbec/ - MCO Capital Inc. ("MCO" or the "Company") (NEX: MCO.H), IOU Central Inc. ("IOU Central"), a private company existing under the laws of Canada, its subsidiary IOU Central Inc. (Delaware) ("IOU USA"), a private company existing under the laws of Delaware, and the shareholders of IOU Central and IOU USA have entered into a non-arm's length share exchange agreement (the "Share Exchange Agreement") in furtherance of the letter of intent announced previously by the Company on October 15, 2009.
Pursuant to the terms of the Share Exchange Agreement, MCO has agreed to acquire from the shareholders of IOU Central and IOU USA all of the issued and outstanding shares of IOU Central and IOU USA (other than the shares of IOU USA already held by IOU Central), being a total of 537,572 shares of IOU Central (each an "IOU Central Share") and 2,167,975 common shares of IOU USA (each an "IOU USA Share") on the basis of 63 class B shares of MCO (the "Class B Shares") for each IOU Central Share and 3.25 Class B Shares for each IOU USA Share. Based on the closing price of MCO's Class B shares on the NEX of $0.10 on June 30, 2009, the exchange ratio implies a value for each IOU Central Share of $6.30 and for each IOU USA Share of $0.325.
Completion of the proposed transaction is subject to certain conditions, including receipt of necessary regulatory approvals, including of the Canadian National Stock Exchange (the "CNSX") the MCO disinterested minority shareholder approval described below, completion of satisfactory due diligence and completion of definitive legal documentation, among others.
The Class B Shares are currently listed on the NEX division of the TSX Venture Exchange (the "TSX-V"). The Company intends to delist from the NEX prior to completion of the proposed transaction and list on the CNSX after completion of the proposed transaction. The Company has received conditional approval from the CNSX and listing will be subject to MCO fulfilling all of the listing requirements of the CNSX which includes satisfying the minimun working capital condition.
The proposed transaction falls within the definition of "related party transaction", as set out in Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions ("MI 61-101"), as, at the date that the proposed transaction was agreed to, each of The Marleau Capital Corporation ("MCC") and Messrs. Philippe, Charles and Hubert Marleau were "related parties" (within the meaning of MI 61-101) of MCO and IOU Central. More specifically, MCC is a "control person" of MCO, MCC is a "control person" of IOU Central, and Messrs. Philippe, Charles and Hubert Marleau are the shareholders of MCC. In addition, MCC is indirectly a "control person" of Palos Management Inc., the general partner of the Palos Capital Pool, LP ("Palos") and which partnership is a shareholder of IOU Central. While the proposed transaction benefits from an exemption from the valuation requirements of NI 61-101, it is subject to the minority approval thereof, and the shareholders of MCO will meet on December 21, 2010, to provice disinterested minority shareholder approval to the proposed transaction. The management information circular in respect thereof has been mailed to shareholders of MCO and is also available at www.sedar.com.
The proposed transaction is expected to be completed in the first quarter of 2011.
Investors are cautioned that, except as disclosed in such management information circular, any information released or received with respect to the proposed transaction may not be accurate or complete and should not be relied upon. Trading in the securities of MCO should be considered highly speculative.
There can be no assurances that the proposed transaction will be completed within the delays contemplated, or that it will be completed at all.
Neither the TSX-V nor the CNSX has in any way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
About IOU Central
IOU Central, via its subsidiary, IOU USA, operates an Internet-based lending platform aimed at small businesses throughout the United States that are under served by banks today. IOU Central allows these businesses to obtain loans (up to $100,000) without having to turn to more expensive factoring type products. To learn more visit: www.ioucentral.com
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 TSX-V and the Company has not had any commercial activities over the past 7 years. MCO was previously known as Matco Ravary.
At the meeting of shareholders of MCO on December 21, 2010, shareholders of MCO will also, notably, be asked to approve the completion of a four-for-one share consolidation of the Class B Shares, to adopt a resolution approving the change in the Company's name from "MCO Capital Inc." to "IOU Financial Corp., to approve the amendment and restatement of the Company's existing stock option plan, and to elect directors for the ensuing year.
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 Central, 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.
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.
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