Boost Capital Corp. Announces Proposed Qualifying Transaction With Holle Potash Corp.
Boost Capital Corp. has entered into an agreement dated Feb. 12, 2012, for the arm's-length acquisition of 100 per cent of the common shares of Holle Potash Corp., a company incorporated under the Canada Business Corporations Act. Pursuant to the terms of the letter agreement, and subject to completion of satisfactory due diligence and receipt of all necessary regulatory and exchange approvals, the proposed acquisition of Holle will qualify as Boost's qualifying transaction as defined in Policy 2.4.
About Holle Potash
Holle is a mining exploration corporation formed by amalgamation on Sept. 2, 2008, that has more than 50 shareholders, but is not a reporting issuer, headquartered in Longueuil, Que., with a primary business of potash exploration and development projects in the Republic of Congo.
In 2010, Holle entered the Republic of Congo with the objective of acquiring potash explorations targets, with a strong focus on the Koilou region located in Point-Noire. According to Holle, the region represents one of the most prospective areas for potash (carnallite) in the world (Potash basin) based on historical data provided by the Ministry of Mines of ROC and the NI 43-101 technical report completed for Holle on June 22, 2011, and subsequently revised. The report was prepared by geologist Doug F. Hambley from Agapito and Associates Inc. Holle has entered into a share purchase agreement on Aug. 27, 2010, with Afrimines SA (a Congolese corporation), whereby Holle purchased all the issued and outstanding shares of Afrimines, Afrimines thus becoming a wholly owned subsidiary of Holle. By this acquisition, Holle acquired an interest in two mining exploration licences (Manenga and Tchitondi) in the ROC. The licences cover 681 square kilometres and are valid until June, 2013.
On the basis of the consolidated audited financial statements for the year ended Oct. 31, 2010, Holle had total assets of $3,562,351, liabilities of $2,230,012, shareholders' equity of $1,332,339 and working capital of $13,937 (as of the date of the present press release, Holle has a cash position of $600,000).
About the proposed transaction
Boost and Holle have agreed to combine their businesses by means of a triangular amalgamation. The amalgamation will effectively provide for the acquisition of all of the outstanding equity interests of Holle by Boost indirectly through a wholly owned federally incorporated subsidiary of Boost in a transaction in which the shareholders of Holle will receive shares of Boost and, if applicable, convertible securities of Boost. As a result of the amalgamation of amalgamation entity and Holle, Boost will become the sole beneficial owner of all of the outstanding shares of the amalgamated corporation.
The amalgamation will result in Boost issuing to Holle shareholders one Boost Share for each Holle share held, and the convertible securities of Holle will be exchanged for convertible securities of Boost on the same terms and conditions attached to such convertible securities prior to the amalgamation.
As at the date hereof, there are six million Boost shares issued and outstanding and convertible securities (options) exercisable for 760,000 Boost shares, and 112,997,985 Holle shares issued and outstanding and convertible securities exercisable for 27,560,200 Holle shares, not taking into account the Holle shares to be issued pursuant to the private placement (defined below). Accordingly, if the amalgamation were to be completed today, Boost would issue an aggregate of 112,997,985 Boost shares at a price of 35 cents per share to the shareholders of Holle.
Following completion of the amalgamation and the private placement (assuming the maximum private placement is achieved (not including the overallotment option (defined below)), the former shareholders of Holle will own approximately 71.07 per cent of the Boost shares, current shareholders of Boost will hold approximately 3.77 per cent of the Boost shares, and subscribers in the private placement will hold approximately 25.16 per cent of the Boost shares. Accordingly, the amalgamation will constitute a reverse takeover of Boost.
The amalgamation is an arm's-length transaction and therefore is not a related-party transaction. As a result, no meeting of Boost shareholders is required as a condition to completion of the amalgamation.
Following completion of the amalgamation, the amalgamated corporation will be a wholly owned subsidiary of Boost. The parties also agreed that, subject to exchange approval, a finder's fee of $40,000 will be payable to EAM Inc. in connection with the amalgamation, the whole as provided for in the exchange's policies. EAM is an entity which acts at arm's length with both Boost and Holle.
All parties shall use their good faith efforts to complete and be in a position to execute a definitive agreement relating to the amalgamation on or before March 15, 2012 (or such other date as may be mutually agreed to by Boost and Holle).
Concurrent private placement
Concurrently with the execution of the amalgamation, Holle has engaged Salman Partners Inc. to act as lead agent in connection with a brokered best-efforts private placement of subscription receipts of Holle at an issue price of 35 cents per subscription receipt to raise aggregate gross proceeds of up to $14-million. The agent has the option to increase the size of the private placement by up to 15 per cent by giving notice to Holle prior to the closing of the private placement. The gross proceeds of the private placement, less the expenses of the agent payable by Holle, are to the deposited in escrow pending satisfaction of all conditions precedent to the amalgamation, and the obtaining of all required director and third party approvals for the amalgamation, in each case to the satisfaction of the agent and Holle not being in breach of various covenants.
Each subscription receipt will automatically be exercised without payment of any additional consideration and without any further action by the holder thereof, into one unit of Holle upon satisfaction of the escrow release conditions, subject to adjustment in certain events. Each unit shall comprise one Holle share and one-half of one common share purchase warrant. Each warrant will entitle the holder thereof to purchase an additional Holle share at an exercise price of 45 cents per warrant share at any time prior to the date that is two years from the date of trading of the Boost shares on the exchange following the completion of the amalgamation, subject to adjustment in certain events.
The private placement is anticipated to close in mid-April to late April, 2012. If the escrow release conditions are not satisfied prior to 5 p.m. on June 29, 2012, the escrowed funds plus accrued interest shall be used by Holle to repurchase the subscription receipts for cancellation at a price per subscription receipt equal to the issue price.
For the agent's services in connection with the private placement, Holle has agreed to pay to the agent a cash commission equal to 6.0 per cent of the gross proceeds realized by Holle in respect of the sale of subscription receipts. As additional consideration for the services of the agent, Holle has agreed to the agent compensation options entitling the agent to subscribe for that number of Holle shares as is equal to 6.0 per cent of the total number of subscription receipts sold pursuant to the private placement. Each compensation option will be exercisable for a period of two years following the date of trading of the Boost shares on the exchange following the completion of the amalgamation at an exercise price equal to the issue price.
The net proceeds from the private placement will be used for the drilling of 10 wells in two phases, three wells to determine the optimal location and a further seven wells to confirm preliminary brine field potential. A portion of the funds raised will also be used for general working capital and general corporate purposes.
Completion of the amalgamation is conditional upon all necessary regulatory approvals, including the approval of the exchange, closing of the concurrent private placement and other conditions which are typical for a business combination transaction of this type.
After giving effect to the amalgamation, it is expected that Boost will carry on business under the name Holle Potash Corp. (or such other name as may be acceptable to applicable authorities), and the Boost shares are expected to be listed on the exchange under a new trading symbol.
The proposed management of Boost following the completion of the amalgamation will include as follows.
Christian Okouna (director/chairman)
Mr. Okouna is presently the chairman of the board of Holle. Mr. Okouna has extensive experience in business ventures worldwide accompanied with strong ties to the ROC government. He is responsible for the founding of the company, Zanaga Iron Ore., which is listed on the London Stock Exchange and is performing strongly to date. Previously, Mr. Okouna was with MagIndustries as its business development manager and as general manager of MagAlloy Congo SA. Mr. Okouna was responsible for assembling all of MagIndustries's assets in ROC. Other outstanding accomplishments include the formation of such companies as Congo Gold SA, Cominvest SA (partner of Sundance, an Australian venture) and MPD Congo SA. Mr. Okouma currently resides in Johannesburg, South Africa.
Joel Gerbore (chief executive officer and director)
Mr. Gerbore is currently the president of Holle. Having a strong amount of relationships and being well connected in the West African political sphere, as well as Europe and North America, Mr. Gerbore has been in the consultation field for more than 20 years. Major companies like Hydro Quebec, National Bank of Canada and D.M.R. have benefited from his expertise in project management, as well as business planning and re-engineering of business processes. His business acumen covers the European marketplace as well as North America. Mr. Gerbore has a master of arts degree from the University of Montreal, in Canada, and a university degree from the Universite de Bordeaux in France. Mr. Gerbore resides in Varennes, Que.
Claude Ayache (chief financial officer)
Mr. Ayache is presently the vice-president of finances of Holle. With over 25 years of experience, including at the CFO and director level of public companies in Canada and the United States, Mr. Ayache provides public companies and reporting issuers with the necessary support to meet the increasing demand of the regulators. In addition, Mr. Ayache provides assistance in developing financial projections and business plans for entrepreneurs seeking the support of a strong financial executive with extensive public company experience, as well as turnaround and operational experience on an as needed basis.
Mr. Ayache's approach has always been to merge his capital markets expertise with that of his financial accounting knowledge to help clients meet their goals and supply the services they require. Mr. Ayache's expertise spans the following industries: asset-based lending, distribution, life/health sciences, film and entertainment, financial services, forestry, manufacturing, mining (exploration and extraction), oil and gas, technology, as well as not for profit, with projects that have led him to all continents, with the exception of Australia and Antarctica. Mr. Ayache holds an accounting degree from Concordia University and is a qualified CMA. Mr. Ayache resides in Toronto, Ont.
In addition to the foregoing, one or more additional directors will be appointed in compliance with the polices of the exchange.
Sponsorship of qualifying transaction
Boost intends to make application to exchange that the qualifying transaction should be exempt from sponsorship requirements in accordance with Policy 2.2 of the exchange. However, there can be no assurance that Boost will obtain such exemption.
The information in this press release related to Holle, its business and the proposed management of Boost following the completion of the amalgamation was provided to Boost by Holle.
Completion of the transaction is subject to a number of conditions, including but not limited to, exchange acceptance and, if applicable pursuant to 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.
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