DevCorp Capital Inc.
TSX VENTURE : DCC.P

October 28, 2013 23:31 ET

DevCorp Announces Filing of the Filing Statement and the Proposed Closing Date

CALGARY, ALBERTA--(Marketwired - Oct. 28, 2013) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. WIRE SERVICES

DevCorp Capital Inc. (TSX VENTURE:DCC.P) ("DevCorp" or the "Corporation") is pleased to announce that further to DevCorp's press releases dated June 20, 2013, September 3, 2013 and October 22, 2013, DevCorp has filed its filing statement dated October 28, 2013 (the "Filing Statement") in connection with its qualifying transaction (the "Qualifying Transaction") with Good to Go Rentals Ltd. ("GTGR") and Neigum Hot Oilers (1992) Ltd. ("GTGT") and together with GTGR, "GTG"). The Qualifying Transaction is expected to close on or about October 31, 2013 and a copy of the Filing Statement is available under DevCorp's profile on SEDAR at www.sedar.com.

On October 25, 2013, the Corporation received conditional listing acceptance from the TSX Venture Exchange (the "Exchange") for the completion of the Qualifying Transaction, which will be effected pursuant to an amalgamation agreement (the "Amalgamation Agreement") among the Corporation, 1768399 Alberta Inc., a wholly-owned subsidiary of DevCorp ("DevCorp Subco"), and GTG. Pursuant to the Amalgamation Agreement, DevCorp will acquire: (a) all of the issued and outstanding shares of GTGR ("GTGR Shares") by way of amalgamation between DevCorp Subco and GTGR, following which the amalgamated company will be a wholly owned subsidiary of DevCorp; and (b) all of the issued and outstanding shares of GTGT ("GTGT Shares"), which will not amalgamate with DevCorp Subco but shall remain as a wholly owned subsidiary of DevCorp Subco following the amalgamation (the "Amalgamation") between GTGR and DevCorp Subco (the "Resulting Issuer").

Pursuant to the Amalgamation Agreement, the aggregate consideration to be paid by DevCorp for the all of the issued and outstanding securities of GTG to be acquired by DevCorp Subco at the time of the closing of the Qualifying Transaction will be $19,500,000, consisting of: (i) $7,500,000 in cash, (ii) $6,500,000 in common shares in the capital of the Resulting Issuer ("Resulting Issuer Shares"), constituting 32,500,000 shares issued at a deemed price of $0.20 per share and (iii) $5,500,000 in Resulting Issuer Shares, constituting 27,500,000 shares issued at a deemed price of $0.20 per share, to be escrowed and released in connection with an earn-out as follows:

  • 13,750,000 of these Resulting Issuer Shares will be held in escrow subject to the escrow requirements of the Exchange and subject to the Amalgamation Agreement such that these Resulting Issuer Shares will be released to Norm Neigum and Darla Dorsett based on the Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") of the Resulting Issuer as shown on the interim financial statements for the most recent quarter ended immediately following the date that is 12 months after the closing of the Qualifying Transaction in accordance with certain EBITDA based hurdles, as set out in greater detail in the Filing Statement (the "EBITDA Hurdle"); and

  • 13,750,000 of these Resulting Issuer Shares will be held in escrow; subject to the escrow requirements of the Exchange, such Resulting Issuer Shares will be released to Norm Neigum and Darla Dorsett based on the EBITDA of the Resulting Issuer as shown on the interim financial statements for the most recent quarter ended immediately following the date that is 24 months after the closing of the Qualifying Transaction in accordance with the EBITDA Hurdle.

If the EBITDA Hurdle is not met, the above 27,500,000 Resulting Issuer Shares that are not releasable from escrow shall be cancelled and returned to treasury. In addition, all Resulting Issuer Shares issued at closing pursuant to the Qualifying Transaction are subject to the Exchange imposed escrow conditions.

In addition to the earn-out escrowed Resulting Issuer Shares, there is also a cash component to the earn-out as follows:

  • up to $2,250,000 in cash paid out in accordance with the EBITDA Hurdle and such payment to be paid out to Norm Neigum and Darla Dorsett based on the EBITDA of the Resulting Issuer as shown on the interim financial statements for the most recent quarter ended immediately following the date that is 12 months after the closing of the Qualifying Transaction; and

  • up to $2,250,000 in cash paid out in accordance with EBITDA Hurdle and such payment to be paid out to Norm Neigum and Darla Dorsett based on the EBITDA of the Resulting Issuer as shown on the interim financial statements for the most recent quarter ended immediately following the date that is 24 months after the closing of the Qualifying Transaction.

In addition, Norm Neigum and Darla Dorsett shall be entitled to the following performance bonus payments pursuant to the performance incentive agreements (as described in the Filing Statement) on a 50:50 basis:

  • $1,000,000 in cash, payable following the Resulting Issuer having achieved $9,000,000 EBITDA of the Resulting Issuer (the "Milestone") on the date that is one year from the date of the closing of the Qualifying Transaction;

  • $1,000,000 in Resulting Issuer Shares issuable at a price based on a 90 day weighted average trading price of the Resulting Issuer Shares (subject to the rules and policies of the Exchange), subject to the Resulting Issuer having achieved the Milestone on the date that is one year from the date of the closing of the Qualifying Transaction;

  • $1,000,000 in cash, payable following the Resulting Issuer having achieved the Milestone on that date that is two years from the date of the closing of the Qualifying Transaction; and

  • $1,000,000 in the Resulting Issuer Shares issuable at a price based on a 90 day weighted average trading price of the Resulting Issuer Shares (subject to the rules and policies of the Exchange), subject to the Resulting Issuer having achieved the Milestones on the date that is two years from the date of the closing of the Qualifying Transaction.

Upon all of the conditions of the Amalgamation being met, the proceeds from the 50,000,000 subscription receipt private placement of GTGR (the "Subscription Receipts") will be released from escrow to the Resulting Issuer and each of the Subscription Receipts will be automatically convertible, concurrently with the completion of the Amalgamation and without additional payment or further action on the part of the holders thereof, through a series of transactions, into one Resulting Issuer Share. For further details on the private placement please refer to the press release of DevCorp dated September 3, 2013.

As previously announced on October 22, 2013, upon completion of the Qualifying Transaction, the Resulting Issuer intends to call a meeting of its shareholders to change its name to "Great Prairie Energy Services Inc." The trading symbol, "GPE" has been reserved with the Exchange in anticipation of such proposed name change. With the Resulting Issuer's initial focus on the prairies of Saskatchewan, Alberta and Manitoba, the management and the Board believe the new proposed name illustrates the Resulting Issuer's vision to acquire and expand the business in Saskatchewan and western Canada.

GTGR is a private Saskatchewan oilfield rental company based out of Kindersley, Saskatchewan and GTGT is a private Saskatchewan trucking company based out of Kindersley, Saskatchewan. DevCorp is a "capital pool company" and intends for the Qualifying Transaction to constitute the "Qualifying Transaction" of the Corporation as such term is defined in the policies of the Exchange. The Transaction is not a Non-Arm's Length Qualifying Transaction as defined in the policies of the Exchange.

For further details of the Qualifying Transaction, please see the Filing Statement availble on SEDAR at www.sedar.com.

In accordance with the policies of the Exchange, the DevCorp Shares are currently halted from trading. It is expected that the DevCorp Shares will resume trading on the Exchange, after all requirements of the Exchange have been satisfied, under the stock symbol "DCC".

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements relating to the Qualifying Transaction and other statements that are not historical facts. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These assumptions, risks and uncertainties include, among other things: the risk that the Qualifying Transaction will not be completed if a formal agreement is not reached or that the necessary approvals and/or exemptions are not obtained or some other condition to the closing of the Qualifying Transaction is not satisfied; the risk that Mr. Neigum's health may further deteriorate and its resulting impact on the business and operations of GTG; the risk that GTG may not be able to retain key employees to continue to maintain its operations; the risk that closing of the Qualifying Transaction could be delayed if DevCorp and GTG are not able to obtain the necessary approvals on the timelines planned; the assumptions relating to the parties entering into the formal agreement in respect of the Qualifying Transaction, its structure, and the timing thereof; the timing of obtaining required approvals and satisfying closing conditions for the Qualifying Transaction, state of the economy in general and capital markets in particular, investor interest in the business and future prospects of DevCorp and GTG.

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, DevCorp and GTG disclaim any intention and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Additionally, DevCorp and GTG undertake no obligation to comment on the expectations of, or statements made, by third parties in respect of the matters discussed above.

Readers should note that EBITDA is a non-GAAP financial measures and do not have any standardized meaning under GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. DevCorp believes that EBITDA is a useful supplemental measure, which provide an indication of the results generated by the Resulting Issuer's primary business activities prior to consideration of how those activities are financed, amortized or taxed. Readers are cautioned, however, that EBITDA should not be construed as an alternative to comprehensive income (loss) determined in accordance with GAAP as an indicator of the Resulting Issuer's financial performance.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements (as defined by the Exchange), 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 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.

The 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.

Not for distribution to U.S. Newswire Services or for dissemination in the United States of America. Any failure to comply with this restriction may constitute a violation of U.S. Securities Laws.

Contact Information

  • DevCorp Capital Inc.
    Sidney Dutchak
    President and Chief Executive Officer
    403-630-2157
    sdutchak@smcp.ca