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TORONTO, Feb. 27, 2014 /CNW/ - Oriana Resources Corporation (TSXV: OUP.P) ("Oriana") is pleased to announce that it has entered into a letter of intent (the "LOI") dated February 25, 2014 with MLM1 Corp., doing business as The Madcap Learning Adventure ("Madcap"), a corporation existing under the laws of Ontario, which outlines the general terms and conditions pursuant to which Oriana and Madcap intend to complete a transaction that will result in Oriana acquiring all of the issued and outstanding securities of Madcap. The transaction will constitute Oriana's qualifying transaction under the policies of the TSX Venture Exchange (the "Exchange").
Terms of Acquisition
Under the terms of the LOI, Oriana will acquire all of the issued and outstanding securities of Madcap in exchange for equity in Oriana, as further described below (the "Qualifying Transaction"). It is currently anticipated that the Qualifying Transaction will be effected through a "three-cornered amalgamation" (the "Amalgamation"), whereby: (i) Madcap will amalgamate with a newly incorporated company incorporated under the laws of Ontario and wholly-owned by Oriana, to form an amalgamated corporation ("Amalco"); (ii) the holders of Madcap's common shares will receive 20,651,250 common shares of Oriana ("Common Shares") at an ascribed value of $0.40 per Common Share, post consolidation of the Common Shares as described herein; and (iii) Amalco will become a wholly-owned subsidiary of Oriana. The final structure of the Qualifying Transaction is subject to receipt of definitive tax, corporate and securities law advice satisfactory to both Oriana and Madcap.
Pursuant to the terms of the LOI, completion of the Qualifying Transaction will be subject to a number of conditions, including receipt of gross proceeds of not less than $5,000,000 pursuant to the QT Financing (as defined and described below), completion of the Debt Conversion (as defined and described below), completion or waiver of sponsorship, receipt of all required regulatory approvals, including the approval of the Exchange of the Qualifying Transaction, completion of all due diligence reviews, satisfaction of the minimum listing requirements of the Exchange and all requirements under the Exchange rules relating to completion of a Qualifying Transaction, and execution of a definitive amalgamation agreement or other definitive transaction documents.
The proposed Qualifying Transaction is not a "Non-Arm's Length Qualifying Transaction" within the meaning of Policy 2.4 of the Exchange and, as such, shareholder approval is not required, unless otherwise required by the Exchange.
Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange, unless exempt in accordance with Exchange policies. Oriana intends to apply for an exemption from sponsorship requirements; however, there is no assurance that Oriana will obtain this exemption.
A filing statement in respect of the proposed Qualifying Transaction will be prepared and filed in accordance with Policy 2.4 of the Exchange on SEDAR at www.sedar.com no less than seven business days prior to the closing of the proposed Qualifying Transaction. A press release will be issued once the filing statement has been filed, as required pursuant to Exchange policies or any other material changes occur.
Concurrent with the closing of the Qualifying Transaction, Oriana intends to change its name and will also apply to change its stock symbol after the closing of the Qualifying Transaction.
Oriana currently has 13,000,000 Common Shares issued and outstanding, as well as options and warrants to acquire Common Shares. There are 1,100,000 options that entitle the holders thereof to acquire an aggregate of 1,100,000 Common Shares at a price of $0.10 per share. There are 300,000 warrants that entitle the holders thereof to acquire an aggregate of 300,000 Common Shares at a price of $0.10 per share. Under the terms of the LOI, Oriana will undertake a 4:1 share consolidation such that it will have 3,250,000 Common Shares issued and outstanding with a corresponding adjustment taking place to the options and warrants. On a pre-consolidation basis, the Qualifying Transaction is being done at an ascribed value of $0.10 per share which equals $0.40 per share on a post-consolidation basis.
Madcap currently has 88.32 common shares outstanding and no options or warrants. Each Madcap common share shall be exchanged on the Amalgamation for 233,823.03 Common Shares, such that post Amalgamation the shareholders of Madcap will hold, in the aggregate, 20,651,250 Common Shares.
Post-consolidation, and without taking into account the QT Financing (as described below), the Resulting Issuer will have approximately 350,000 options and warrants issued and outstanding.
In conjunction with the closing of the Qualifying Transaction, it is a condition that the holder of $1,500,000 principal amount of convertible promissory notes issued by Madcap will convert all of such notes into approximately 20% of the common shares of the Resulting Issuer at a conversion price of approximately $0.154 per common share (on a post-consolidation basis), based on a QT Financing (as defined below) of $6,000,000 (the "Debt Conversion"). In addition, a trade creditor has agreed to accept 128,750 common shares of the Resulting Issuer at an issue price of $0.40 per common share to satisfy a trade payable of Oriana in the amount of $51,500.
It is a condition of the LOI that concurrent with the completion of the Qualifying Transaction, Madcap and Oriana shall complete a brokered private placement (the "QT Financing"), for minimum proceeds of $5,000,000 and maximum proceeds of $7,500,000. Madcap is in the process of engaging an agent to assist in the QT Financing.
Madcap will use the proceeds of the QT Financing to continue to fund the development costs to produce 24 new modules of its educational software and for general working capital purposes.
MLM1 Corp. ("The Madcap Learning Adventure")
Madcap was amalgamated pursuant to the laws of the Province of Ontario on April 1, 2013, pursuant to an amalgamation between ML/Madcap Corp. and its wholly owned subsidiary, MLM1 Corp. The amalgamated entity continued to carry on the business of Madcap under the name MLM1 Corp. David Devine of Toronto, Ontario is the sole control person of Madcap. Madcap produces and develops digital and interactive non-linear educational software for grades kindergarten to twelve. Through the use of such digital and interactive software, Madcap intends to change the learning lives of students and teachers by implementing ground-breaking immersive ways to achieve higher order thinking skills and competencies for students of the digital age.
Oriana has requested a halt in the trading of the Common Shares until the Qualifying Transaction is completed.
A comprehensive press release with further particulars relating to the Qualifying Transaction will follow in accordance with the policies of the Exchange.
All information contained in this news release with respect to Oriana and Madcap was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.
Completion of the Qualifying Transaction is subject to a number of conditions including, but not limited to, completion of satisfactory due diligence, completion of the QT Financing, completion of the Debt Conversion, execution of a definitive agreement in respect of the Qualifying Transaction, Exchange acceptance and if applicable pursuant to Exchange 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 in the securities of a capital pool company should be considered highly speculative.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange ) has in any way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved of the contents of this release.
This press release does not constitute and the subject matter hereof is not, an offer for sale or a solicitation of an offer to buy, in the United States or to any "U.S Person" (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "1933 Act")) of any equity or other securities of the Company. The securities of the Resulting Issuer to be issued in connection with the QT Financing have not been registered under the 1933 Act and may not be offered or sold in the United States (or to a U.S. Person) absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act.
Notice on forward-looking statements:
This release includes forward-looking statements regarding Oriana, Madcap and their respective businesses. Such statements are based on the current expectations of the management of each entity. The forward-looking events and circumstances discussed in this release, including completion of the Qualifying Transaction and the QT Financing, may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks affecting the companies, economic factors and the equity markets generally. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Oriana and Madcap undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
SOURCE: Oriana Resources Corporation
For further information:
For further information regarding the Qualifying Transaction, please contact:
Oriana Resource Corporation
Richard Buzbuzian, Chief Executive Officer
Email: [email protected]
David Devine, President and Chief Executive Officer
Email: [email protected]