Cleantech Capital Inc.
TSX VENTURE : YES.P

September 16, 2015 17:28 ET

Cleantech Capital Inc. Announces LOI With Char Technologies Inc. for Proposed Qualifying Transaction

TORONTO, ONTARIO--(Marketwired - Sept. 16, 2015) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR THROUGH UNITED STATES WIRE SERVICES.

Cleantech Capital Inc. ("Cleantech") (TSX VENTURE:YES.P), a capital pool company, announces it has entered into a letter of intent (the "LOI") dated September 11, 2015 with respect to a proposed business combination with Char Technologies Inc. ("Char") intended to constitute Cleantech's qualifying transaction (the "Transaction"), as such term is defined by the TSX Venture Exchange (the "Exchange"), subject to regulatory approval and other conditions. The resulting company will be renamed "Char Technologies Inc." The LOI was negotiated at arm's length.

The Proposed Transaction

The Transaction will be structured as a three-cornered amalgamation in which Char will amalgamate with a new wholly owned subsidiary of Cleantech formed solely for the purpose of facilitating the Transaction. On the closing of the Transaction, Cleantech will change its name to Char Technologies Inc.

For purposes of determining the relative share exchange ratios, upon completion of the Qualifying Transaction the shareholders of each of Cleantech and Char shall hold the numbers of shares and percentages of shares of combined entity ("ResultCo") as set out below. The resulting allocation is as follows:

Name of Corporation Number of Shares of ResultCo Options of ResultCo Fully Diluted Total Shares of ResultCo Percentage of Shares of ResultCo
Cleantech 14,500,000 2,045,000(1) 16,545,000 48.33% basic
50.45% fully diluted
Char 15,500,000 750,000(2) 16,250,000 51.66% basic
49.55% fully diluted
Total 30,000,000 2,795,000 32,795,000 100%
(1) Stock options and agent's options.
(2) To be granted at closing.

The Transaction will not be non-arm's length transaction for the purposes of the policies of the Exchange. James Sbrolla, an officer, director and holder of 27.6% of the outstanding shares of Cleantech is also a shareholder of Char, as is his spouse, together holding 10% of the shares of Char. Eric Beutel, a director and shareholder of 3% of the outstanding shares of Cleantech is also a shareholder of Char holding 1% of the shares of Char.

About Char

Char is in the business of producing a proprietary activated charcoal like material (SulfaCHAR™), which can be used to removed hydrogen sulfide from various gas streams (focusing on methane-rich and odourous air). The SulfaCHAR™, once used for the gas cleaning application, has further use as a sulfur-enriched biochar for agricultural purposes (saleable soil amendment product). Char was formed under the Business Corporations Act (Ontario) on February 9, 2011 and amalgamated on June 3, 2015.

There are currently seventeen shareholders of Char. The holders of more than 10% of the shares of Char are as follows:

Ontario Centres of Excellence (Toronto, Ontario) (10%);
Andrew White (Toronto, Ontario) (30.6%);
Donald Kirk (Caldeon, Ontario) (13%); and
James Sbrolla and Ann Tavares (Toronto, Ontario) (10%).

Selected Financial Information (Unaudited)

As at July 3, 2015
Assets $ 570,331
Liabilities
Current $ 104,570
Non-Current $ 37,500
Seven Months Ended July 31, 2015
Revenue $ 57,105
Expenses $ 84,645
(Loss) $ (27,540 )

Combining the business of Char with the existing financial resources of Cleantech will enable Char to meet the matching financing condition of a Sustainable Development Technology Canada ("SDTC") Natural Gas fund (supported by the Canadian Gas Association) grant of a $750,000 to build a 1 tonne per day SulfaCHAR production unit. Char applied for and has received a committed term sheet from the SDTC Natural Gas fund for the $750,000 grant, releasable in 3 tranches upon Char meeting build milestones, subject to a 10% holdback. The $2.3 million production unit construction is scheduled over 16 months, financed as to the $750,000 SDTC grant, $550,000 in kind contributions from three consortium participants (including unit site) and $1,200,000 in cash and in house in kind services by Char.

Officer and Directors

Upon completion of the Transaction, the Board of Directors of Cleantech will consist of five (5) directors, being four of the current directors of Cleantech and one (1) nominee of Char to be determined with public company, cleantech experience who shall be independent as defined in National Instrument 52-110 - Audit Committees.

Upon completion of the Transaction, it is currently proposed that the directors of ResultCo will be as follows:

Ian Anderson

Director

Ian Anderson, currently a director of Cleantech, is the President of CKF Inc., since June 2009, before accepting this role; he was Executive Vice President and Chief Operating Officer. CKF Inc. is a foam packaging and molded pulp product company with three manufacturing locations across Canada. Prior to joining CKF Inc., Ian spent 30 years in the can-making industry, managing plants and businesses across the Americas and the U.K. Most recently, he was Vice President of Operations for Crown Metal Packaging Canada Inc.

Ian served on the board of Stewardship Ontario, serves on the board of International Molded Fiber Association and is an active member of Foodservice Packaging Institute and Canadian Plastics Industry Association.

Eric Beutel

Chief Financial Officer and Director

Eric Beutel, currently a director of Cleantech, is Vice president of Oakwest Corporation Limited, a Toronto based Investment holding company. Eric is currently a director and Chairman of the Investment Committee of The Equitable Group (EQB-T), the parent company of The Equitable Bank. Eric is also a Board member of In-Touch Survey Systems (INX-V). Mr. Beutel has been in the investment industry for over twenty years. He holds an MBA degree from the University of Ottawa.

John Nicholson

President and Chief Operating Officer

President, Environmental Business Consultants

John has worked in the Environmental/Clean Tech sector since 1989, in environmental consulting, environmental law and government.

As President of the Environmental Business Consultants since 2003, John is responsible for day-to-day operations of the company and servicing clients in the environmental technology sector as well as industry and government. He worked for three years for the Ministry of the Environment at the Green Industry & New Program Development Group and Environmental Assessment and Approvals Branch. During his seven years at Torys, John's worked with environmental lawyers at the firm servicing multi-national clients on a number of matters. He was the environmental law groups' key contact person with government regulators. He is a member of the Air and Waste Management Association and is the past President of the Ontario Chapter.

He has a BSc (1986) and MSc (1992) in Environmental Engineering from the University of Guelph and is a registered professional engineer in the Province of Ontario.

James Sbrolla

Director

James Sbrolla ICD.D, currently CEO and a director of Cleantech, is a veteran of the financial and environmental industries. His career has been focused primarily on public and private companies in the clean-technology sector.

He is Chairman of Environmental Business Consultant and serves on other boards including Actual Media, WE Communications and BlueZone Technologies.

James is also an Entrepreneur in Residence in the Business Accelerator Program funded by Ontario's Ministry of Economic Development and Innovation. In this mentorship role, he coaches entrepreneurs and technology developers through the process of commercialization. He also is a qualified expert for the Investment Accelerator Fund and sits on the Ontario Centers of Excellence funding panel as a Cleantech domain expert. He regularly conducts due diligence for institutional investors and other organizations.

A widely-published and often quoted journalist in business media, James has written on a variety of topics including a multi-national study on finance, the environment and sustainable development. James is a graduate of the University of Western Ontario and Wilfrid Laurier University (WLU) and in 2011 graduated from the Institute of Corporate Director's Program at the Rotman School of Business at the University of Toronto. He is also past faculty at WLU.

Andrew White

Chief Executive Officer

Andrew White is co-inventor of SulfaCHAR™ and co-founder of CHAR Technologies. He co-invented SulfaCHAR, during graduate work in chemical engineering at the University of Toronto where he received awards based on studies related to alternative energy technologies and for the highest standing in Fourth Year courses related to environment studies. Andrew co-founded CHAR, while completing a Master's Degree in Business, Entrepreneurship and Technology (MBET) at the University of Waterloo, where his student team won the IBK Capital Ivey Business Plan Competition. He has been the major driving force behind CHAR, and can be credited with CHAR's success to date.

William White

Chairman and Director

Mr. White, currently a director of Cleantech, joined Woodland Biofuels as COO in 2012. He was on the Board of Directors of Afexa Life Sciences from 2009-2011 and served as Chairman. He retired as the President of DuPont Canada in 2008 after 34 years with the EI DuPont de Nemours company. He was a past director of Afexa Life Sciences, Helix BioPharma Corp. and Progressive Waste Management Solutions. He chairs the advisory board for the Schulich Center of Excellence for Responsible Business, past Director of MaRSDiscovery District and received his Institute of Corporate Directors (ICD.D) certification in 2012. He is a graduate of Purdue University where he chairs the Advisory Board of Mechanical Engineering.

Upon completion of the Transaction, it is expected that John Nicholson will serve as President and Chief Operating Officer and Andrew White will serve as Chief Executive Officer of ResultCo and Eric Beutel will serve as Chief Financial Officer.

Conditions

In addition to customary conditions respecting sponsorship, regulatory and shareholder approvals and due diligence, the transactions are subject to and conditional upon the shareholders of Char approving the Transaction and the shareholders of Cleantech approving the change of name of Cleantech to "Char Technologies Inc.".

Other conditions to completion of the Transaction include:

  • Negotiation and execution of a definitive agreement in respect of the Transaction.
  • Preparation and filing of a filing statement outlining the definitive terms of the Transaction in accordance with the rules of the Exchange.
  • Receipt of all director, shareholder and requisite regulatory approvals relating to the Transaction, including, without limitation, Exchange approval.

Concurrent Financing

Cleantech and Char intend to complete a concurrent financing in connection with the Transaction, terms to be described in a follow up press release upon details being determined. There is no assurance a concurrent financing will be undertaken or completed.

Definitive Agreement

Cleantech and Char will negotiate a formal definitive agreement in good faith (the "Definitive Agreement"). The formal Definitive Agreement will contain covenants, representations, warranties, conditions, indemnities and provisions customary for transactions of the nature of the qualifying transaction.

Sponsorship

Cleantech expects to rely on exemption from the Exchange's requirement for sponsorship or if an exemption is not available, a sponsor for the qualifying transaction will be retained to conduct due diligence and file with the Exchange a sponsorship report satisfactory to the Exchange.

Board of Directors' Recommendation

The Board of Directors of Cleantech has approved the Transaction.

About Cleantech Capital Inc.

Cleantech is a capital pool company governed by Exchange policies. Cleantech's principal business is the identification and evaluation of assets or businesses with a view to completing a qualifying transaction within the meaning of Exchange policies.

Completion of the proposed transaction is subject to a number of conditions, including but not limited to Exchange acceptance and if applicable pursuant to the 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.

Investors are cautioned that, except as disclosed in the management information circular or filing statement 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.

Neither the 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.

Forward-Looking Statements

Certain information in this press release may constitute forward-looking information. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. Neither Cleantech nor Char assumes any obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements, unless and until required by applicable securities laws. Additional information identifying risks and uncertainties is contained in Cleantech's filings with the Canadian securities regulators, which filings are available at www.sedar.com.

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