Fronsac Capital Inc.

Fronsac Capital Inc.

June 02, 2009 19:47 ET

Fronsac Capital Announces the Execution of a Letter of Intent to Purchase a Real Estate Property Located in St-Jean-sur-le-Richelieu

MONTREAL, QUEBEC--(Marketwire - June 2, 2009) - Fronsac Capital inc (TSX VENTURE:GAZ) is pleased to announce that it has signed a letter of intent to purchase a real estate property located in St-Jean-sur-Richelieu for a total amount of $ 3 450 000. The said property is owned by 9208-9226 Quebec inc. ("9208") and Fronsac will acquire all the issued and outstanding shares of the said company. The shareholders of this company are M. Normand Perreault, Mrs Nicole Perreault and Les Entreprises Claude Potvin inc. who are dealing at arm's length with Fronsac.

9208 is comprised of two buildings located on boulevard Saint-Luc alongside highway 35 which links up Montreal and St-Jean-sur-Richelieu. The first building is used by a convenience store and a Shell service station and the second building houses a car wash operation comprising three units. Taking into account the lease to be signed with the lessee and the non audited financial statements of 9208, these assets shall generate triple net annual revenues in excess of $300 000.

The amount of $ 3 500 000 will be paid cash on the closing date which shall take place as soon as all regulatory approvals have been obtained. Fronsac has already received an offer from a financial institution with regard to a first mortgage in the amount of $2 100 000.

At the same time and partly to finance the said transaction, Fronsac will proceed with the following private placements:

- Placement of debentures in the amount of $300 000 together with 150 000 warrants. Each warrant will entitle the holder thereof to purchase one common share of the Company at a price of $0.25 per share for a period of five years from the closing of the transaction. The debentures will mature in three years and will bear an interest of 8% annually. Those debentures will be bought by three persons and two of them are directors of the Company;

- Placement of a note in the amount of $250 000 together with 100 000 warrants. Each warrant will entitle the holder thereof to purchase one common share of the Company at a price of $0.25 per share for a period of five years from the closing of the transaction. The note will mature in five years from the closing date and bear interest at the rate of 10% per year. The said note will be secured by a second mortgage on the real estate property described hereinbefore; and

- Placement of 200 000 common shares of the Company at a price of $0.25 per common share for a total price of $50 000.

Any balance needed to complete the deal will be funded out of Fronsac's liquidities.

2950-6680 Quebec inc. ("2950") a company controlled directly and indirectly by two directors of the Company has also agreed to purchase the convenience store operated in one of the buildings. 2950 will become the lessee of 9208, which entity will be, after the acquisition, a wholly-owned subsidiary of Fronsac. The transaction between Fronsac and 9208 could not be completed without the sale of the convenient store as it was a condition of the sale to Fronsac. The two directors related to the said deal have been active in businesses of the same nature for years.

The transaction is subject to all usual conditions including obtaining the approval from the regulatory authorities including the TSX Venture Exchange.

There is no commission to be paid pursuant to this transaction.

Note Regarding Forward-Looking Statements

This news release contains forward-looking information, including "forward-looking statements" within the meaning of applicable Canadian securities laws. Such forward-looking statements include, without limitation, statements regarding the timing, terms and conditions and anticipated consequences of the possible transaction. Where statements by Fronsac capital express or imply an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Fronsac Capital expressly disclaims any obligation to release publicly revisions to any forward looking statement to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

About Fronsac

Fronsac is a real estate company dedicated to purchasing real estate properties located alongside highways or major roads and used exclusively by convenience stores, service station and fast food restaurants.

Neither 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.

Contact Information

  • Fronsac Capital inc.
    Michel Lassonde
    President and CEO