CPVC Blackcomb Inc.
TSX VENTURE : BKC.P

March 23, 2007 17:30 ET

CPVC Blackcomb Inc.: Prestige Telecom Announces Financing Plans and Going Public Transaction

Loewen Ondaatje McCutcheon Limited and GMP Securities L.P. to act as agents for $5 million private placement of Prestige Telecom FIER Sherbrooke Croissance Durable to invest $1 million in Prestige Telecom

MONTREAL, QUEBEC--(CCNMatthews - March 23, 2007) - Prestige Telecom Inc. ("Prestige") today announced details concerning its financing plans and proposed going public through a qualifying transaction with CPVC Blackcomb Inc. ("Blackcomb") (TSX VENTURE:BKC.P), a capital pool company. The transactions announced today involve the completion of a private placement in Prestige of up to a $5,000,000 and the business combination (the "Business Combination") of Prestige Telecom Inc. with Blackcomb, which will constitute the Qualifying Transaction of Blackcomb pursuant to Policy 2.4 of the TSX Venture Exchange Inc. ("TSX Venture") as agreed in a letter of intent dated March 15, 2007.

About Prestige

Prestige is one of Canada's leading independent companies offering engineering, material furnishing and installation services ("EFI") to telecommunication and cable companies and has been active in this line of business since 1980. The services offered by Prestige include outside plant engineering, central office design, furnishing, installation and support services for wireline, wireless and cable television network operators, as well as original equipment manufacturers ("OEM's").

Prestige operates from three full service locations located in Montreal, Quebec; Toronto, Ontario; and Calgary, Alberta, and has more than 250 professional and technical personnel.

Prestige operates in the United States market through a mutual subcontractor agreement with Comforce Corporation (AMEX:CFS) under the trade name Prestige Comforce Professional Services ("PCPS"). PCPS is based in Plano, Texas and provides services to customers throughout the United States.

Prestige provides technical and professional services, materials and support under multiple long-term contracts with telecom network operators and OEM equipment vendors.

Prestige and PCPS have several core competencies and competitive advantages including:

(a) superior in-depth knowledge of telecom central office infrastructures and technologies, including optical transport, TDM switching, voice over IP, DC power, outside plant electronics, as well as wireless and microwave technologies;

(b) the only company to provide central office full service operational capabilities throughout Canada and the United States; and

(c) delivery of timely, cost effective and high quality results for customers across all activity disciplines.

Utilizing these core competencies and competitive advantages, Prestige's principal business areas are:

(a) Engineering, which involves the design of wireless, wireline and cable television networks.

(b) Materials, which involves distribution and inventory management, manufacturing, staging, systems integration and testing.

(c) Installation services, which including for central office, wireline access electronics, wireless cell sites and network equipment installations, principally for OEM vendors.

(d) Line-up & Test, which includes optical, wireline, wireless network commissioning, end-to-end testing and turn up.

(e) Power, which includes the design, installation and maintenance of DC power plants for telecom applications.

(f) Maintenance & Support, which involves ongoing maintenance and service for the above facilities for telecom networks.

Prestige Chairman and Chief Executive Officer, Pierre Yves Methot, commented "Our market is experiencing solid growth as a result of the prevailing outsourcing trend put forward by the operators and manufacturers in the face of increasing competition. We believe that the financings and going public transaction announced today will give us the ability to act as a consolidator of the fragmented Canadian market for engineering, material furnishing and installation service to the phone and cable companies."

About Prestige Share Capital, Proposed Financings and Financial Results

Prestige is incorporated under the laws of Canada and currently has 1,000,002 common shares (the "Prestige Common Shares") issued and outstanding. The share capital of Prestige will be reorganized such that Prestige will have up to a maximum of 40,000,000 Prestige Common Shares outstanding (the "Prestige Reorganization") as of the Closing Date of the Business Combination. The number of Prestige Common Shares to be outstanding after the Prestige Reorganization is subject to the approval of the Agents and Prestige.



The shareholders of Prestige following the Prestige Reorganization
(assuming the maximum number of 40,000,000 Prestige Common Shares are
issued) will be:

----------------------------------------------------------------------------
Number of Prestige
Name and Municipality of Residence(1) Common Shares Held Percentage
----------------------------------------------------------------------------
Pierre Yves Methot, Chairman and Chief 21,803,497 54.51%
Executive Officer
Montreal, Quebec
----------------------------------------------------------------------------
Brian W. McFadden, President and Chief 2,067,814 5.17%
Operating Officer
Montreal, Quebec
----------------------------------------------------------------------------
CPVC Financial Corporation 4,965,144 12.41%
Montreal, Quebec
----------------------------------------------------------------------------
FIER CPVC Montreal L.P. 3,846,289 9.62%
Montreal, Quebec
----------------------------------------------------------------------------
Chahram Bolouri 1,451,517 3.63%
Montreal, Quebec
----------------------------------------------------------------------------
Prestige Employees 4,081,629 10.20%
Montreal, Quebec
----------------------------------------------------------------------------
Alain Lambert 514,062 1.29%
St. Bruno, Quebec
----------------------------------------------------------------------------
William L. Hess, Q.C. 514,062 1.29%
Montreal, Quebec
----------------------------------------------------------------------------
Robert E. Brown 514,062 1.29%
Westmount, Quebec
----------------------------------------------------------------------------
Michael Pesner 241,924 0.60%
Montreal, Quebec
----------------------------------------------------------------------------
Total: 40,000,000 100%
----------------------------------------------------------------------------

Note: (1) Includes both direct and indirect ownership.


Prestige will also have loans outstanding in the amount of $1,140,000 to each of CPVC Financial Corporation (TSX VENTURE:LHB) and FIER CPVC Montreal L.P. (the "Prestige Loans"), each bearing interest at 6.5% per annum and requiring monthly payments of interest only and maturing on November 8, 2011, but repayable at any time by Prestige. After completion of the Prestige Reorganization, Prestige will also have outstanding an aggregate of 4,560,000 share purchase warrants each entitling the holder to purchase one Prestige Common Share at a price of $0.50 per share until November 2011 (the "Prestige Warrants").

Prestige has engaged Loewen, Ondaatje, McCutcheon Limited and GMP Securities L.P. to act as agent (the "Agents") on a "best efforts" basis for a private placement of up to 10,000,000 units ("Prestige Units") at a price of $0.50 per unit for gross proceeds of up to $5,000,000, where each Prestige Unit will be comprised of a Prestige Common Share and one-half of a common share purchase warrant (a "Prestige Private Placement Warrant"), with each Prestige Private Placement Warrant entitling the holder to acquire an additional Prestige Common Share at a price of $0.60 per share for a period of 18 months from the date of issuance (the "Prestige Private Placement"). The Prestige Placement Warrants will be required to be exercised (or they will expire) in the event that the NewCo Common Shares (defined below) trade on a recognized stock exchange at a closing trading price per share to be agreed upon with the Agents for any twenty business day period. The proceeds of the Prestige Private Placement will be used to fund acquisitions and for general working purposes.

Prestige will pay the Agents a cash commission of 8% in connection with the Private Placement. The Agents will also be granted agent's options (the "Prestige Agent's Options") to purchase 8% of the number of Prestige Units sold under the Prestige Private Placement, with each Prestige Agent's Option entitling the holder to purchase one Prestige Unit at a price of $0.50 per unit for a period of 18 months from the closing of the Prestige Private Placement.

In addition, it is anticipated that before the closing of the Business Combination Prestige will complete a financing with FIER Croissance Durable S.E.C. ("FIER Croissance Durable") located in Sherbrooke, Quebec (the "FIER Croissance Durable Financing"). FIER Croissance Durable is a FIER region fund of $15 million managed by Messrs. Alain Boissonneault, Jean Pelchat and Jean Shoiry. The mandate of the FIER Croissance Durable is to invest in small and medium size companies. Pursuant to a letter of offer for investment, FIER Croissance Durable has agreed to lend to Prestige $1,000,000 by way of a five year subordinated term loan. At the closing of the Business Combination, the subordinated loan will be automatically converted into a convertible debenture bearing interest at a rate of 12% annually and having a four year term from the closing of the Business Combination (the "FIER Convertible Debenture"). The FIER Convertible Debenture shall be convertible, in all or in part, into NewCo Common Shares, at FIER Croissance Durable's sole discretion, at a price of $0.60 per share for the first two years following the closing of the Business Combination, at a price of $0.70 per share during the third year and at a price of $0.90 in the fourth year.

It is a condition precedent of the Business Combination that the Prestige Private Placement and the FIER Croissance Durable Financing be completed for gross proceeds of not less than $1,000,000 on a combined basis. Prestige will also further increase its working capital by approximately an additional $1,800,000 by the completion of the Business Combination of Prestige and Blackcomb.

Assuming the completion of the maximum Prestige Private Placement, the FIER Croissance Durable Financing and the Prestige Reorganization, Prestige will have outstanding up to 50,000,000 Prestige Common Shares, up to 800,000 Prestige Agent's Options, up to 5,000,000 Prestige Private Placement Warrants, 4,560,000 Prestige Warrants and the $1 million principal amount of FIER Convertible Debentures.

Based on unaudited management prepared consolidated financial statements for the ten months ended January 31, 2007, Prestige had revenue of $18,492,347, cost of sales of $14,363,208, gross profit of $4,129,139, operating expenses of $3,047,553, EBITDA of 1,131,128 and net income of $207,992. In addition, as at January 31, 2007 Prestige had working capital of $3,134,112, assets of $11,659,211 and liabilities of $7,219,724.

Based on unaudited management prepared consolidated financial statements for the three months ended March 31, 2006, Prestige had revenue of $4,123,581, cost of sales of $2,969,884, gross profit of $1,153,697, operating expenses of $884,895, EBITDA of $356,776, a gain on settlement of debt following a proposal to creditors of $5,703,958 and net income of $5,465,078. In addition, as at March 31, 2006 Prestige had working capital of $1,096,276, assets of $8,687,031 and liabilities of $6,735,536.

Based on unaudited management prepared consolidated financial statements for the year ended December 31, 2005, Prestige had revenue of $21,032,901, cost of sales of $16,326,004, gross profit of $4,706,897, operating expenses of $4,942,553, EBITDA of $826,985 and incurred a net loss of $606,364. In addition, as at December 31, 2005 Prestige had negative working capital of $1,309,954, assets of $9,433,547 and liabilities of $13,947,130.

Financial statements were prepared on the basis of generally accepted accounting principles in Canada, using the differential accounting method.

Information Concerning Blackcomb

Blackcomb is a capital pool company that completed its initial public offering and the common shares of Blackcomb (the "Prestige Common Shares") are listed for trading on TSX Venture. Blackcomb currently has outstanding 4,850,000 common shares (the "Blackcomb Common Shares") and stock options to acquire 485,000 Blackcomb Common Shares at a price of $0.50 per share until August 31, 2010 (the "Blackcomb Stock Options") and agent's options to purchase 118,000 Blackcomb Common Shares at a price of $0.50 per share until August 9, 2007 (the "Blackcomb Agent's Options"). As at December 31, 2006, Blackcomb had cash assets net of liabilities of approximately $1,800,000.

About the Business Combination

Blackcomb and Prestige have agreed to complete the Business Combination pursuant to an amalgamation or arrangement, to be determined, to form a new company to be called Prestige Telecom Inc. ("NewCo"). The proposed Business Combination is a non-arm's length transaction as Alain Lambert and William L. Hess, Q.C. directors, officers and principal shareholders of Blackcomb are directors and officers of the companies that have provided the Prestige Loans. As a result, Blackcomb has formed a special committee of its board of directors to review and approve the exchange ratio of the Business Combination. Pursuant to the terms of the Business Combination: (i) the holders of the Blackcomb Common Shares will receive one common share of NewCo (the "NewCo Common Shares") for each Blackcomb Common Share owned; and (ii) the holders of the Prestige Common Shares will receive one NewCo Common Share with a deemed value of $0.50 per share for each Prestige Common Share owned resulting in total consideration of $20 million (assuming the maximum number of 40,000,000 Prestige Common Shares are outstanding), subject to final approval of the special committee of Blackcomb. The outstanding Prestige Existing Options, Prestige Debt Warrants, Prestige Warrants, Prestige Agent's Options, Blackcomb Stock Options and Blackcomb Agent's Options shall be replaced with the same number of NewCo options and warrants with identical terms.

The special committee of Blackcomb for the purposes of the Business Combination consists of C. Lal Narang.

About NewCo the Resulting Issuer

After completion of the Business Combination, management of NewCo will consist of Pierre Yves Methot as Chairman and Chief Executive Officer, Brian W. McFadden as President and Chief Operating Officer, Michel Brunet as Chief Financial Officer, Stephen C. Rouleau as Vice-President, Sales and Marketing, and Stewart F. Beatty as Vice-President, Engineering.

After completion of the Business Combination, the NewCo board of directors will consist of eight members, being Pierre Yves Methot, Chahram Bolouri, Michael Pesner, Brian W. McFadden, Robert E. Neal, Jean-Pierre Veilleux and two additional independent directors to be determined.

Pierre-Yves Methot, age 44, was Executive Vice-President of Prestige from 1996 to 2002. He was President of Prestige from December 2002 to February 2007 and he his currently the Chairman and Chief Executive Officer of Prestige. Mr. Methot was the key figure in the strategic reorientation of Prestige that resulted in substantial growth in revenues for Prestige. Mr. Methot was previously a senior partner in a Canadian legal firm and also acted as consultant in international development. Mr. Methot has a Bachelor of Laws Degree from the University of Ottawa and is a member of the Quebec Law Society.

Brian W. McFadden, age 53, is the President and Chief Operating Officer of Prestige after joining Prestige in October 2006 as Senior Vice-President, Corporate Strategies. Mr. McFadden has extensive experience in the global telecom business, including a 28 year career with Nortel Networks. Mr. McFadden held various senior management positions including President of the Optical Networks Division and Chief Technology Officer. Mr. McFadden has the mandate to work with senior management team to define and execute Prestige's future growth strategies. Mr. McFadden holds a Bachelor of Science degree in Electrical Engineering from the University of Waterloo and received an Alumni Achievement Medal from the University of Waterloo in October 2003.

Michel Brunet, age 56, has been the Vice President, Finance and Chief Financial Officer of Prestige since January 2004. Prior to joining Prestige, Mr. Brunet was the President of Michel Brunet & Associates, an independent consulting firm from 1996 to 2003. He previously was a Senior Vice-President, Commercial Banking, for a Canadian Chartered Bank and prior to that, he was the Vice-President and Controller of another Canadian Chartered Bank. Mr. Brunet has a Bachelor of Finance degree from HEC Montreal and is a Chartered Accountant.

Stephen C. Rouleau, age 49, has been the Vice-President, Sales and Marketing of Prestige since November 2006. Mr. Rouleau manages the execution of Prestige's sales plan. From 1990 to 1996, Mr. Rouleau was the founder and President of his own private company in the field of Traffic Control, which was involved with furnishing manufacturing equipment for this industry. Mr. Rouleau has a Marketing degree from the University of Concordia in Montreal.

Stewart F. Beatty, age 58, has been the Vice-President, Engineering of Prestige since February 2005. Mr. Beatty has over 29 years of experience in the telecommunications and IT industries. At Bell Canada, he held various management positions that involved all aspects of Network Services Engineering including Outside Plant Facilities, planning and corporate methods. Before leaving Bell Canada in 1995, he was Director - Computer Co-ordination for Network Services for Ontario. Mr. Beatty joined Geotech Communications Inc. ("Geotech") in 1999, as a Partner and Vice-President and subsequently in January 1999 he was promoted to President, a position he held until January 2005 when Geotech was acquired by Prestige. Mr. Beatty holds a Bachelor of Science degree in Engineering from the University of Waterloo.

Chahram Bolouri, age 52, has been a Director of Prestige since November 2006. Mr. Bolouri has been the President and Chief Executive Officer of Air Canada Technology Services ("ACTS") since January 2006. Prior to joining ACTS, Mr. Bolouri was the President, Global Operations at Nortel Networks ("Nortel") from July 1999 to December 2005. Mr. Bolouri was with Nortel for 23 years where he held a number of key executive positions, and is credited for building strategies which leveraged service offerings globally, transforming worldwide business operations and processes to become more responsive and competitive, while enhancing profit margins and improving customer satisfaction. Mr. Bolouri holds a Bachelor of Science degree in Industrial Engineering from Polytechnique de Montreal.

Robert E. Neal, age 52, has been a Director of Prestige since November 2006. Robert E. Neal retired in 2003 from Alliant Inc. after 24 years of service. Mr. Neal spent the 10 years prior to his retirement as the Senior Vice-President of Alliant Inc. Mr. Neal was a Director and President of Innovatia Inc. Mr. Neal is a past Director of several public companies, including NBTel Inc. (TSX), BCE Capital Inc. (TSX), iMagicTV Inc. (TSX and NASDAQ), and Voice Mobility Inc. (TSX). Mr. Neal has also served on the advisory board of several public and private companies.

Michael Pesner, age 64, has been a Director of Prestige since November 2006. Mr. Pesner is the President of Hermitage International Finance ("Hermitage") and has been since its inception in August 2002. Hermitage specializes in investment banking including mergers and acquisitions, restructuring, investigative accounting, divestitures, debt and equity financing for individuals and corporations in the United States and the United Kingdom. Mr. Pesner was a Senior Partner in Financial Advisory Services of KPMG in Montreal from 1989 until August 2002. Mr. Pesner is a Chartered Accountant. Mr. Pesner has a Bachelor of Commerce degree in Finance and Administration from McGill University, Montreal. Mr. Pesner also holds a Bachelor of Arts degree from Concordia University in Montreal.

Jean-Pierre Veilleux, age 52, has been a Director of Prestige since February 2007. Mr. Veilleux is the President of Lalco Laboratories Inc. ("Lalco") and has been since 1990. Lalco is a private company that specializes in the manufacturing and distribution of para-pharmaceutical and cosmetics products. Mr. Veilleux holds several certificates in Administration, Accounting and Marketing from the University of Quebec in Montreal (UQAM).



The shareholders of NewCo after completion of the maximum Prestige Private
Placement and the Business Combination and assuming the maximum number of
40,000,000 Prestige Common Shares are issued will be as follows:

----------------------------------------------------------------------------
Number of NewCo
Name(1) Common Shares Held Percentage
----------------------------------------------------------------------------
Pierre Yves Methot, Chairman and 21,803,497 39.75%
Chief Executive Officer
----------------------------------------------------------------------------
Brian W. McFadden, President and 2,067,814 3.77%
Chief Operating Officer
----------------------------------------------------------------------------
Prestige Private Placement 10,000,000 18.23%
Investors
----------------------------------------------------------------------------
CPVC Financial Corporation 4,965,144 9.05%
----------------------------------------------------------------------------
FIER CPVC Montreal L.P. 3,846,289 7.01%
----------------------------------------------------------------------------
Chahram Bolouri 1,451,517 2.65%
----------------------------------------------------------------------------
Prestige Employees 4,081,629 7.44%
----------------------------------------------------------------------------
Alain Lambert 1,300,562 2.37%
----------------------------------------------------------------------------
William L. Hess, Q.C. 1,064,062 1.94%
----------------------------------------------------------------------------
Robert E. Brown 1,064,062 1.94%
----------------------------------------------------------------------------
Michael Pesner 241,924 0.44%
----------------------------------------------------------------------------
Current Blackcomb Shareholders 2,963,500 5.40%
----------------------------------------------------------------------------
Total: 54,850,000 100%
----------------------------------------------------------------------------

Note: (1) Includes direct and indirect ownership.


Other Matters Concerning the Business Combination

Blackcomb has applied to TSX Venture for an exemption from the sponsorship requirements of TSX Venture in respect of the Qualifying Transaction.

The completion of the Business Combination is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Business Combination is also subject to additional conditions precedent, including: (i) shareholder approval of each of Blackcomb and Prestige for the Business Combination; (ii) approval of the special committee of Blackcomb; (iii) satisfactory completion of due diligence reviews by the parties; (iv) board of directors approval of Prestige and Blackcomb; (v) the entering into of a formal agreement in connection with the Business Combination; (vi) the entering into of employment agreements with certain key personnel of Prestige; (vii) the completion of the Prestige Private Placement and the FIER Croissance Durable Financing for aggregate gross proceeds of $1,000,000 on a combined basis; and (viii) certain other usual conditions.

Loewen, Ondaatje, McCutcheon Limited, subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the Business Combination. An agreement to act as sponsor should not be construed as any assurance with respect to the merits of the Business Combination or the likelihood of completion.

Blackcomb announces it has reserved a price of $0.50 per share for the grant of stock options to acquire up to 10% of the outstanding NewCo Common Shares (the "NewCo Stock Options") in the event the Business Combination and the Prestige Private Placement are completed. The grant of the NewCo Stock Options is subject to regulatory approval. The NewCo Stock Options will be granted to directors, officers, employees and consultants of NewCo, as determined by the Board of Directors of NewCo following the completion of the Acquisition and the Business Combination.

The Business Combination will be a non-arm's length transaction as Alain Lambert and William L. Hess are directors, officers and principal shareholders of CPVC Financial Corporation and FIER CPVC Montreal L.P., which are entities that provided the Prestige Loans.

Trading in the Blackcomb Common Shares is expected to resume shortly after the Agents have filed a sponsorship acknowledgement form with TSX Venture.

As indicated above, completion of the Business Combination is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Business Combination cannot close until the required shareholder approval is obtained. There can be no assurance that the Business Combination will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Information Circular of Blackcomb to be prepared in connection with the Business Combination, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of Blackcomb should be considered highly speculative.

The securities of Blackcomb being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Business Combination and has neither approved nor disapproved the contents of this press release.

Contact Information

  • CPVC Blackcomb Inc.
    Alain Lambert
    President
    (514) 395-1191
    or
    Prestige Telecom Inc.
    Pierre Yves Methot
    President and Chief Executive Officer
    (514) 457-4488 ext. 277
    or
    FIER Croissance Durable S.E.C.
    Jean Pelchat
    President
    (819) 829-1469