Cosmos Capital Inc.

August 06, 2009 21:16 ET

Cosmos Group Requests Access to Cossette's Books and Records by August 17th 2009

MONTREAL, QUEBEC--(Marketwire - Aug. 6, 2009) - Cosmos Capital Inc. ("Cosmos Capital") announced today that it has sent, on behalf of a group of investors (the "Cosmos Group"), a letter to the Special Committee of Cossette which reiterated its request to access the Company's books and records ("Dataroom") and allow it to conduct its confirmatory due diligence as previously stated in its July 20th letter attached to its same date press release.

Cosmos requests that initial access be granted no later than August 17th, 2009, stating this will have allowed the Company an ample four weeks for the preparation of the Dataroom since the request was first made on July 20th.

In its letter, which is attached below, the Cosmos Group expressed its concern at the lack of urgency and progress up until now. It explained:

"Notwithstanding the poor operating and financial performances during recent quarters, the senior management team's lackadaisical response to it, and the resulting ongoing financial stress on the organization, we are willing to reaffirm our price of $4.95 if we are granted access to the Company's books and records by the date mentioned above. In the event that we are not, we will reassess our price and interest in the transaction."

As a reminder, on July 20th, 2009, Cosmos Capital announced that it had submitted a proposal to the Board of Directors of Cossette Inc. ("Cossette") to acquire all of the issued and outstanding subordinate voting shares of Cossette at a price of $4.95 per share. This price represented a 52.3% premium over the previous closing price and a 45.7% premium over the average trading price of Cossette's subordinate voting shares on the TSX for the 30 trading days preceding the announcement. Cosmos Capital also announced that it had entered into a lock-up agreement with Burgundy Asset Management Ltd. ("Burgundy") with respect to its 1,847,500 subordinate voting shares of Cossette that it owns, representing approximately 11.1% of Cossette's outstanding shares on a fully diluted basis. Together, the members of the Cosmos Group and Burgundy control approximately 30% of the outstanding shares of Cossette.



Letter to the Special Committee of the Board of Directors

August 6, 2009
Mr. Jean Lavigueur,
Chairman of the Special Committee
Special Committee of the Board of Directors of Cossette Inc.
801 Grande Allee Ouest, Suite 200
Quebec City, Quebec
G1S 1C1


Dear Mr. Lavigueur,

On July 20, 2009, Cosmos Capital Inc. ("Cosmos") informed the Board of Directors of Cossette Inc. ("Cossette" or the "Company") in writing of the intention of a group of investors (the "Cosmos Group") to acquire all of the outstanding subordinate voting shares of Cossette (other than those that it does not already own) for $4.95 per share representing a 52.3% premium over the prior day's close.

As indicated in our letter, Cosmos has entered into a lock-up agreement with Burgundy Asset Management Ltd. ("Burgundy") regarding 1,847,500 subordinate voting shares, representing 11.1% of the shares on a fully-diluted basis. In addition, members of Cosmos and affiliates currently own 2,911,580 multiple voting shares and 205,773 subordinate voting shares representing 18.7% of the outstanding shares on a fully-diluted basis.

Since the announcement, Cosmos has not received any written communication from the Special Committee regarding its intention to discuss our proposal and our request for due diligence. The Cosmos Group owns a significant stake in the Company and is very sensitive to these delays.

Although the Cosmos Group has completed extensive preliminary due diligence based on publicly available information, our proposal is, as previously stated in Section 5 of our aforementioned letter, subject to confirmatory due diligence which is standard for a transaction of this nature.

We therefore request initial access to Cossette's books and records no later than 5pm Eastern time August 17th, 2009. The Company will thus have had an ample four weeks to prepare for our due diligence request.

While it is our strong preference to continue to work with you to reach a binding agreement in a cooperative and expeditious fashion, we have become increasingly concerned by the lack of urgency and progress, which is not in the best interest of the Company and Shareholders.

Notwithstanding the poor operating and financial performances during recent quarters, the senior management team's lackadaisical response to it, and the resulting ongoing financial stress on the organization, we are willing to reaffirm our price of $4.95 if we are granted access to the Company's books and records by the date mentioned above. In the event that we are not, we will reassess our price and interest in the transaction.

We trust that the Special Committee will be responsive to this request and facilitate a transaction with Cosmos in a timely manner. We look forward to hearing from you shortly.

Paul Corriveau

Executive Vice-President,

Cosmos

Cautionary Note:

This news release contains "forward-looking statements" regarding the proposal of the Cosmos Group to purchase all of the subordinate voting shares of Cossette including subordinate voting shares resulting from the conversion of all outstanding multiple voting shares (other than shares owned by members of the Cosmos Group and their affiliates), including statements regarding the terms and conditions of the proposed offer. 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 others, the risks that the Cosmos Group will not proceed with a formal offer or its offer will be unsuccessful for any reason.

The forward-looking statements contained in this document are made as of the date of this document and the Cosmos Group does not undertake any obligation to update publicly or revise any of the forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained in this news release are expressly qualified by this cautionary note.

Legal Notice:

This news release does not constitute an offer for or solicitation of shares in any jurisdiction. Any such solicitation would be made only by formal offer and only in those jurisdictions where the Cosmos Group may legally do so. The issuance of this news release is not an admission that anyone named herein owns or controls any securities described herein or is a joint actor with another named entity (except as expressly disclosed).

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