CAPITAL WAPITI INC.
TSX VENTURE : WTI.P

July 13, 2007 16:28 ET

Capital Wapiti Inc. Announces the Acquisition of an Industrial Property and a Private Placement as its Proposed Qualifying Transaction

MONTREAL, QUEBEC--(Marketwire - July 13, 2007) - Capital Wapiti Inc. (TSX VENTURE:WTI.P) (the "Corporation"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), announced today its proposed Qualifying Transaction as defined under Exchange Policy 2.4 - Capital Pool Companies (the "CPC Policy").

The proposed Qualifying Transaction involves two primary components: (i) the purchase by the Corporation (the "Acquisition") of an industrial property located at 1201 California Avenue, in Brockville, Ontario (the "Target Property") from The Data Group Limited Partnership, a limited partnership created under the laws of the Province of Ontario, (the "Vendor") pursuant to an offer to purchase between the Corporation and the Vendor dated July 13, 2007 (the "Offer"); and (ii) a distribution of common shares of the Corporation (the "Distribution") by private placement in an amount sufficient to cover the acquisition costs of the Target Property and certain additional future acquisitions. The Target Property is currently occupied by the Vendor. The Vendor is at arm's length to the Corporation. The proposed Qualifying Transaction is therefore not a "Non Arm's Length Qualifying Transaction" as defined under the CPC Policy and thus does not require shareholder approval.

In connection with the Qualifying Transaction, the Corporation intends to retain the services of National Bank Financial Inc. as agent to conduct the Distribution on a best efforts basis.

The Corporation will use a portion of its cash on hand and the cash it will receive from the Distribution to purchase the Target Property pursuant to the Acquisition for a purchase price of approximately $4.5 M (the "Purchase Price") to be paid upon closing, subject to the usual adjustments, free and clear of any encumbrance.

Pursuant to the Offer but subject to prior Exchange approval, the Corporation shall deliver, within 16 days following the filing of this press release, the sum of $100,000 to the Vendor, which sum shall be held as a first deposit (the "First Deposit"). A second sum of $100,000 shall be delivered to the Vendor three days following the waiver of its due diligence period in the Offer (the "Diligence Date") (the "Second Deposit"), following the waiver by the Corporation of certain conditions. Both deposits will be credited against the Purchase Price upon completion of the Acquisition. Failing such completion of the Acquisition, the First Deposit and the Second Deposit, together with interest accrued thereon, shall be returned to the Corporation without deduction.

The building comprising the Target Property has a gross leasable area of approximately 93,634 square feet. The site of the Target Property contains approximately 5.92 acres of land area.

It is the intention of the parties that, upon closing of the Acquisition, the Corporation will lease the Target Property to the Vendor, pursuant to a lease to be agreed upon by the Vendor and the Corporation prior to the Diligence Date. The term of the lease shall be 10 years commencing on the date of the closing of the Acquisition. The Vendor shall have one five-year renewal option exercisable by not less than a 12-month prior written notice.

The Target Property shall generate to the Corporation an approximate net rental of $374,536 per annum for the first five years and $421,353 per annum for years six to ten after the Acquisition, and $468,170 per annum for the first five years of the renewal period. The lease shall be net and carefree to the Corporation and the Vendor shall be responsible for all expenses required to operate, upkeep, maintain and manage the Target Property.

The Corporation intends to use the balance of the proceeds of the proposed Distribution to identify and evaluate additional properties and to satisfy (in whole or in part) the purchase price for subsequent acquisitions.

Insiders of the Corporation after completion of the Qualifying Transaction will remain Messrs. Marc G. Fortier, Gregory J. Koegl, Serge Beaudet, Bernard McDonell, Robert L. Trudeau, Gilles Masson, Pierre Gauvreau, Jean Aucoin, Jean E. Martineau and Jean Mazigi.

The backgrounds of all of the directors of the Corporation are contained in the final prospectus of the Corporation dated April 5, 2007 which is available on the SEDAR website at www.sedar.com.

The completion of the Qualifying Transaction is conditional upon, among other things, the completion of the proposed Distribution, the completion of the Acquisition and final Exchange acceptance of the Qualifying Transaction.

The Corporation has requested that trading on its common shares be halted until the closing of the Qualifying Transaction.

It is the Corporation's expectation that the closing of the Qualifying Transaction will occur on September 15, 2007 or earlier.

Completion of the proposed transaction is subject to a number of conditions, including but not limited to Exchange acceptance. There can be no assurance that the proposed transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the transaction, any information released or received with respect to the 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 TSX Venture 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.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Capital Wapiti Inc.
    Mr. Gregory J. Koegl
    President and Chief Executive Officer
    514-875-1400 ext. 222
    or
    Capital Wapiti Inc.
    Mr. Serge Beaudet
    Secretary and Chief Financial Officer
    514-892-2936