Melbye Skandinavia AS

September 04, 2012 14:30 ET

Acquisition of Securities by Melbye Skandinavia AS

CALGARY, ALBERTA--(Marketwire - Sept. 4, 2012) - Pursuant to early warning disclosure requirements of applicable securities laws, Melbye Skandinavia AS ("Melbye"), a Norwegian company, announces that it has today acquired from Werklund Capital Corporation ("Werklund"), ownership and control of an undivided 50% interest (the "Interest") in the $6,000,000 principal amount debenture (the "Debenture") granted by RS Technologies Inc. ("RS") to Werklund and dated July 2011 (and executed and delivered on or about July 5, 2011) (the "Debenture"), as well as the security and ancillary documents related to the Debenture (collectively, the "Loan Documents"). This transaction was privately negotiated.

Melbye does not own any securities of RS other than the Interest in the Debenture and the Loan Documents.

The principal amount of $4,780,000 was outstanding under the Debenture as of the time of acquisition by Melbye of the Interest, and $1,220,000 was subject to being advanced by Melbye and Werklund subject to the terms of the Debenture. Melbye paid Werklund cash consideration of $2,390,000 (one-half of the outstanding principal amount) for the Interest in the Debenture and the Loan Documents.

Melbye and Werklund have also advanced another $550,000 to RS under the Debenture (in equal portions), such that $5,330,000 is now outstanding under the Debenture and $670,000 is subject to being advanced.

Pursuant to the terms of the Debenture, Werklund and Melbye have the option, in the aggregate, to convert the Debenture into 18,181,818 Common Shares of RS (the "Common Shares") (if fully drawn), having a conversion price of $0.33 per share, which would represent approximately 50.3% of the outstanding Common Shares. In addition, the terms of the Debenture grant Werklund and Melbye a top-up right to own, in the aggregate, not less than 50.1% of the issued and outstanding Common Shares in the event any Common Shares are issued by RS in a treasury transaction or upon the exercise of any other outstanding convertible securities into Common Shares.

Based upon the principal amount advanced under the Debenture as of the acquisition by Melbye of the Interest, Melbye was entitled to acquire 7,242,424 Common Shares upon conversion of the Interest (28.7% of the outstanding Common Shares, based upon the currently outstanding Common Shares, and giving effect to the issuance of the Common Shares to Melbye). After giving effect to the additional advance under the Debenture, Melbye is entitled to acquire 8,075,758 Common Shares upon conversion of the Interest (31.0% of the outstanding Common Shares, based upon the currently outstanding Common Shares, and giving effect to the issuance of the Common Shares to Melbye). Werklund is entitled to acquire the same numbers of Common Shares.

An agreement (the "Debenture Syndication and Agency Agreement") dated August 31, 2012 was entered into between Melbye and Werklund whereby Melbye acquired the Interest. The Debenture Syndication and Agency Agreement also provides for certain rights and obligations of Melbye and Werklund as co-owners of the Debenture and the other Loan Documents. As a result, Melbye and Werklund may be considered to be "joint actors" in relation to their ownership of the Debenture and the other Loan Documents under applicable securities laws. Melbye understands that Werklund is also issuing a press release which includes the purpose of Werklund in effecting the sale of the Interest to Melbye, and the intention of Werklund in relation to ownership or control of additional securities of RS.

Melbye and RS have a well-developed working relationship date back more than half a decade. Since 2009, Melbye has been the exclusive distributor of RS's composite utility poles in Scandinavia.

Melbye has acquired the Interest for investment purposes. Melbye wanted to contribute toward the growth of RS and help ensure the availability of RS's composite utility poles in the Scandinavian market.

Melbye has no intention to convert its Interest into Common Shares in the near term, and in the Debenture Syndication and Agency Agreement, Melbe and Werklund have agreed that they will not convert their respective interests in the Debenture without the consent of the other. Subject to the terms of the Debenture, Melbye expects to fund its proportionate share of the remaining authorized principal amount of the Debenture ($335,000 being Melbye's share, and $670,000 in the aggregate). In the future, subject to the terms of the Debenture Syndication and Agency Agreement (where applicable), Melbye may take such other actions in respect of its holdings of securities of RS as it may deem appropriate in light of the circumstances then existing, including the advance of additional funding to RS (on terms to be negotiated with RS, which may involve Werklund and other parties), the acquisition of Common Shares pursuant to the conversion of the Debenture, open market purchases or privately negotiated transactions to acquire Common Shares or other securities of RS, or the sale of all or a portion of its Interest or any other holdings of securities of RS (including the sale of Common Shares after a conversion of the Debenture) in the open market or in privately negotiated transactions to one or more purchasers. As will be described in more detail in the early warning report to be filed by Melbye, the Debenture Syndication and Agency Agreement contains restrictions (as between Melbye and Werklund) on the acquisition of beneficial ownership of Common Shares of RS and disposition of interests in the Debenture.

The acquisition of the Interest is not considered to be a "take-over bid" under applicable securities legislation, because the Debenture (and other Loan Documents) is not a "voting security" or an "equity security" as defined in applicable securities legislation. In the event that the sale of the Interest by Werklund is considered to be a "distribution" by Werklund under applicable securities legislation, Werklund is relying upon the exemption in section 2.37 of National Instrument 45-106 on the basis that the Debenture represents indebtedness secured in accordance with personal property security legislation of the Province of Alberta (and elsewhere).

Melbye will be filing a related early warning report as required by National Instrument 62-103.

Contact Information

  • Melbye
    Christian Aasheim
    Chief Executive Officer
    011-47-63-87-0151
    011-47-63-87-0151 (FAX)

    Melbye
    Prost Stabelsvei 22, 2021 Skedsmokorset, Norway