Provides More than $25 Million of New Funding in Going Public Transaction
TORONTO, March 28, 2013 /CNW/ - Longford Energy Inc. (NEX - LFD.H) ("Longford") and Earth Video Camera Inc. ("UrtheCast") are pleased to announce that they have today entered into an arrangement agreement (the "Arrangement Agreement") pursuant to which Longford will acquire all of the issued and outstanding common shares of UrtheCast in exchange for shares of Longford (the "RTO").
UrtheCast is a privately held British Columbia corporation that was incorporated in 2010. UrtheCast is focused on the commercialization of a high definition streaming video and images of Earth from space. UrtheCast is at an advanced stage of implementing its business plan and currently expects to have its first video cameras installed in space later this year.
Upon completion of the RTO:
- UrtheCast would become a wholly-owned subsidiary of Longford and the current UrtheCast shareholders would become Longford shareholders;
- Longford would begin to carry on UrtheCast's business and change its name to "UrtheCast Corp.";
- UrtheCast's existing senior management team, including Scott Larson (Co-Founder and President), Wade Larson (Co-Founder and Executive Vice-President), Dr. George Tyc (Co-Founder and Chief Technology Officer), Jeff Rath (Corporate Finance, Mergers & Acquisitions), Dr. Serguei Bedziouk (Vice President, Russia Relations) and Issa Nakhleh (Chief Financial Officer), would continue with the business as Longford's senior management team; and
- the Longford board of directors would be reconstituted to include representatives from the existing Longford board and the existing UrtheCast board, with the new reconstituted board expected to consist of Ian W. Delaney (Chairman), Tye W. Burt, William (Mac) Evans, Richard Holdaway, Dale Johnson, Wade Larson and Scott Larson.
Peter H. Puccetti, Chief Executive Officer of Longford, commented: "Since the reconstitution of Longford's board last August, we have reviewed many opportunities in a multitude of sectors to deploy Longford's cash in a manner designed to create value for our shareholders. UrtheCast is a perfect fit for Longford, and we are excited about what we believe is the compelling opportunity it affords to our shareholders to generate long-term shareholder value."
Scott Larson, President and Chief Executive Officer of UrtheCast stated: "This transaction not only provides us with the capital needed to execute upon our business plan but adds high calibre directors such as Ian Delaney and Tye Burt to our team. I look forward to welcoming our new shareholders as UrtheCast completes and launches the first High Definition Video Camera in space."
The RTO will be effected by way of a statutory plan of arrangement pursuant to the Business Corporations Act (British Columbia). Under the terms of the arrangement, Longford will acquire all of the issued and outstanding shares of UrtheCast in exchange for Longford common shares based on an exchange ratio that will be determined at the effective time of the arrangement in accordance with a formula set out in the plan of arrangement. The exchange ratio will be based on agreed equity valuations of Longford and UrtheCast immediately prior to the effective time which, subject to certain adjustments:
- in the case of Longford, is expected to be approximately $24 million; and
- in the case of UrtheCast, is based upon an equity value for UrtheCast immediately prior to signing the Arrangement Agreement of $63.5 million before upward adjustment for the gross proceeds received by UrtheCast prior to the effective time from the UrtheCast Financing (described below).
Longford currently expects that the exchange ratio under the plan of arrangement will be approximately 13.86 Longford common shares for every UrtheCast share.
Immediately after the completion of the arrangement, Longford intends to consolidate its outstanding shares on a 15-for-1 basis. On a pro forma, post-consolidation basis, Longford expects to have approximately:
- 47 million issued and outstanding common shares, of which approximately 26% would be held by Longford's shareholders and approximately 74% would be held by UrtheCast's shareholders; and
- outstanding stock options and warrants and other equity compensation arrangements to issue up to an additional 6.1 million common shares.
The RTO has been unanimously approved by the board of directors of both Longford and UrtheCast. Completion of the RTO is expected to occur in or about June 2013 and is conditional upon, among other things, receipt of all required court, stock exchange and shareholder approvals, including the shareholders of both Longford and UrtheCast.
The RTO is an arm's length transaction for Longford.
Shareholders of UrtheCast who collectively own approximately 63% of UrtheCast's issued and outstanding shares have entered into support agreements with Longford and UrtheCast pursuant to which they have agreed to vote in favour of the arrangement.
Goodwood Inc. and Salida Capital LP, who collectively exercise control over approximately 32% of Longford's issued and outstanding shares, have entered into support agreements with Longford and UrtheCast pursuant to which they have agreed to vote in favour of the transactions to be considered by Longford shareholders relating to the arrangement.
Longford will be calling a meeting of its shareholders to seek approval of, among other things, the issuance of its shares pursuant to the arrangement and the adoption of new equity based compensation arrangements upon completion of the arrangement. Longford will issue a further press release when it mails a management information circular in respect of its shareholders' meeting.
UrtheCast will also be calling a meeting of its shareholders to seek approval of the arrangement.
Under the Arrangement Agreement, UrtheCast is permitted to raise additional capital by way of one or more private placements of its common shares prior to the completion of the arrangement (the "UrtheCast Financing"). Concurrently with the execution of the Arrangement Agreement, UrtheCast completed an initial tranche of the UrtheCast Financing by issuing approximately $5.6 million of common shares to a group of investors that included Longford. If the arrangement is not completed, the investors (including Longford) in this initial tranche will have certain rights to require UrtheCast to repurchase their shares and, in certain circumstances, to appoint one member of UrtheCast's board of directors. The Arrangement Agreement provides UrtheCast with the flexibility to issue up to an additional $14.4 million of common shares under the UrtheCast Financing. Canaccord Genuity Corp., Cormark Securities Inc. and Clarus Securities Inc. are acting as agents to UrtheCast for the UrtheCast Financing
Sponsorship and Trading Halt
Canaccord Genuity Corp. has been retained to act as sponsor of the RTO.
In accordance with the policies of the TSX Venture Exchange, trading in the shares of Longford has been halted. The length of time that such halt will continue remains to be determined.
This release contains certain "forward looking statements" and certain "forward-looking information" as defined under applicable Canadian securities laws. Forward-looking statements and information can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology. Forward-looking statements and information include, but are not limited to, statements with respect to the transactions contemplated under the arrangement agreement and RTO, the UrtheCast financing and receipt of the requisite regulatory, court and shareholder approvals in respect thereof. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Longford to control or predict, that may cause Longford's actual results, performance or achievements may be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out here in, including but not limited to: the risk that the RTO will not be approved by the applicable stock exchange, the court or the shareholders of Longford and/or UrtheCast, as applicable; risks and uncertainties related to the arrangement not being completed in the event that the conditions precedent thereto are not satisfied and other related risks and uncertainties. Longford undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
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.
SOURCE: Longford Energy Inc.
For further information:
Peter H. Puccetti
Chief Executive Officer
Longford Energy Inc.
President and Chief Executive Officer
Earth Video Camera Inc.