Sagittarius Capital Corporation
TSX VENTURE : SCX.P

September 22, 2009 20:34 ET

Sagittarius Enters Into Letter of Intent for Qualifying Transaction

TORONTO, ONTARIO--(Marketwire - Sept. 22, 2009) - Sagittarius Capital Corp. (the "Corporation" or "Sagittarius") (TSX VENTURE:SCX.P) has entered into a letter of intent (the "Letter of Intent") dated September 15, 2009, pursuant to which it proposes to acquire all of the issued and outstanding securities of Tianjin City Tian Yi Seamless Steel Tube Manufacturing Co., Ltd. ("Seamless"). Seamless is a steel tube manufacturer based in the People's Republic of China ("PRC"). The Corporation is a capital pool company and intends for the acquisition of Seamless to constitute its Qualifying Transaction (the "Qualifying Transaction") as such term is defined in the policies of the TSX Venture Exchange (the "Exchange").

Terms of Acquisition

Following the execution of the Letter of Intent, Seamless intends to complete a reorganization (the "Reorganization") to transfer the ownership and/or economic benefit of Seamless' operations directly or indirectly to an offshore entity which will become the direct shareholder of Sagittarius upon the completion of the Qualifying Transaction (the "Target").

Pursuant to the terms of the Letter of Intent, subject to certain conditions, the Corporation intends to acquire all of the issued and outstanding common shares of the Target in consideration for a total of 56,150,997 common shares of the Corporation at a deemed price of $0.20 per share. The number of Sagittarius common shares issuable in exchange for the Target shares is based on a preliminary valuation of Seamless' cash flow as indicated in its draft unaudited December 31, 2008 financial statements. The number of shares issuable will be adjusted based on audited financial statements for the same period if financial results differ by at least $100,000 (subject to a 120% cap in case of an upward adjustment).

As part of the proposed Qualifying Transaction, Seamless has obtained a bridge loan equivalent to $250,000 from an arm's length lender, the proceeds of which will fund part of Seamless' transaction costs (the "Bridge Loan"). The Bridge Loan will be automatically converted into Target shares immediately prior to the completion of the Qualifying Transaction, and such Target shares will be exchanged into 2,500,000 Sagittarius common shares upon the completion of the Qualifying Transaction. The Bridge Loan will become due and payable on January 31, 2010 if the Qualifying Transaction has not been completed, subject to acceleration by the lender in certain circumstances. The Bridge Loan was secured by certain of Seamless' assets.

The Qualifying Transaction is an arm's length transaction. No insider of the Corporation owns securities in Seamless and no insider of Seamless owns securities in the Corporation.

Upon completion of the Qualifying Transaction, the Corporation will be engaged in the business of Seamless.

About Seamless

Seamless was established in September of 2006 under the laws of the PRC. Seamless is a manufacturer specializing in seamless steel pipes, operating from a manufacturing facility located in Tianjin, PRC. Seamless commenced its operation in January of 2008, and has been manufacturing seamless carbon steel and alloy steel tubes complying with the specifications GB, ASTM, API 5L, API 5CT, JIS, DIN, and BS. Unaudited revenues for the twelve month period ended December 31, 2008 were approximately RMB345 million (approximately $56 million). Seamless has obtained the American Petroleum Institute's Certificate and API certificate for API 5CT, API 5L and API 5D. Seamless' current production line has a designed production capacity of over 100,000 tons per year with an annual production value of 650 million RMB. Currently, Seamless produces seamless steel tubes with 10 various specifications (external diameter: 73 ~ 168mm; thickness of tube:4.5 ~ 20mm), which are mainly used in petrochemical, machinery, shipbuilding and power station industries. Seamless has approximately 300 staff, including 18 engineering technicians and 12 managerial personnel.

Sponsorship of Qualifying Transaction

Research Capital Corporation, subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the Qualifying Transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Description of Significant Conditions to Closing

Completion of the Qualifying Transaction will be subject to satisfaction or waiver of terms and conditions, customary or otherwise, including but not limited to completion of the Reorganization, satisfactory completion of due diligence, execution of a definitive agreement on or before November 30, 2009, and all required approvals and consents, including the approval of the Exchange.

If completed, the Proposed Transaction is expected to constitute the Corporation's Qualifying Transaction under Policy 2.4 of the Exchange.

Completion of the Qualifying Transaction is subject to a number of conditions including but not limited to, due diligence, Exchange acceptance and if required by Exchange policies, 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. The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Additional Press Release

The Corporation plans on issuing additional press releases and updates as the definitive agreement is signed and due diligence is completed. The shares of the Corporation will remain halted until the completion of the Qualifying Transaction.

CAUTIONARY STATEMENTS RE FORWARD LOOKING INFORMATION

This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Qualifying Transaction and associated transactions, including statements regarding the terms and conditions of the Qualifying Transaction and associated transactions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Qualifying Transaction and associated transactions, that the ultimate terms of the Qualifying Transaction and associated transactions will differ from those that currently are contemplated, and that the Qualifying Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, Seamless, the Target, or their respective financial or operating results or (as applicable), their securities.

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

  • Sagittarius Capital Corp.
    Robin Sundstrom
    Chief Executive Officer
    (416) 368-8770 x223