E.G. Capital Inc.
TSX VENTURE : EGC.H

June 18, 2013 18:05 ET

E.G. Capital Inc. Announces Recapitalization, a New Chief Executive Officer and Proposed New Name

CALGARY, ALBERTA--(Marketwired - June 18, 2013) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH UNITED STATES NEWSWIRES

E.G. Capital Inc. ("E.G." or the "Company") (TSX VENTURE:EGC.H) is pleased to announce that it has entered into a financing and reorganization agreement (the "Reorganization Agreement") with Grant White (the "New CEO") which, among other things, contemplates: (i) the consolidation of its common shares on a 10 for 1 basis; (ii) a non-brokered private placement financing for gross proceeds of up to $200,000 (the "Private Placement"); (iii) the appointment of the New CEO; (iv) the appointment of new directors (the "New Board"); and (v) a change of the name of E.G. to Quantum International Income Corp. (collectively, the "Transaction"). Completion of the Transaction is subject to standard closing conditions, including the approval of each of the NEX board of TSX Venture Exchange Inc. (the "TSXV") and the shareholders of E.G.

New Chief Executive Officer

Effective immediately, Grant White will take over the office of Chief Executive Officer of E.G. Prior to closing, it is expected that additional members will be added to the management team. It is also proposed that new directors will be added post-closing of the Transaction.

Grant White has over 20 years of investment banking experience in New York, Toronto and San Francisco. He is the founder, in 2011 of Finao Advisory Corporation which provides executive and transaction advisory consulting services to companies, including acting as CEO to Focus Gold Corporation in the US from 2010-2012. Previously he was Global Head of Capital Markets for Pope and Company in 2009. He was formerly head of investment banking at Blackmont Capital from 2005 to 2008 which he helped grow to a leading independent investment dealer in Canada. He has also held positions at CS First Boston, Gleacher NatWest and Westwind Partners in Toronto. Throughout his career he has completed significant M&A transactions and financings. He was also very active in the creation and financing of several income trusts that employ business strategies which are similar to the proposed new corporate strategy of E.G.

Corporate Strategy

The Company intends to seek opportunities to acquire and grow businesses in order to generate stable distributions for its shareholders, as well as to achieve overall capital appreciation. The Company will seek to acquire operating businesses with a proven track record, an opportunity for growth and whose management wishes to continue to operate the business going forward.

The Company's investment approach will be to grow through the acquisition of "platform" businesses that are consistent with its business strategy and acquisition criteria and then to continue to build revenues and earnings within these businesses. Potential acquisition targets may be private or public companies in a variety of industries, thereby allowing for diversification. Acquisition of all or a majority of the ownership of each such business is preferred. Value will be created by seeking out high growth, high margin opportunities where the acquired businesses can maintain and develop the deep knowledge, expertise and understanding of their customers' needs required to deliver superior service and command higher pricing and margins than the competition.

New Name

Upon closing of the Transaction and receipt of stock exchange and shareholder approval, it is expected that the name of the Company will be changed to Quantum International Income Corp.

Share Consolidation

Prior to the completion of the Transaction and subject to shareholder and regulatory approval, E.G. expects to consolidate its shares on 10 for 1 basis (the "Consolidation"), with the result being that the number of post-consolidation common shares (the "Post-Consolidation Shares") outstanding is expected to be reduced from 19,014,974 to 1,901,497.

Private Placement

Pursuant to the Private Placement, the New CEO, together with certain additional subscribers identified by him, will subscribe for up to 4,000,000 units ("Units") of E.G. (on a post-Consolidation basis) at a price of $0.05 per Unit for total proceeds up to $200,000. Each Unit will be comprised of one Post-Consolidation Share and one share purchase warrant ("Warrant"), each Warrant entitling the holder to purchase one Post-Consolidation Share at a price of $0.10 for a period of one year from the date of issue. In the event of and in connection with any transaction which results in the graduation of E.G. from a listing on the NEX market of the TSXV to a listing on Tier 1 or Tier 2 of the TSXV, E.G. shall file an application to the TSXV to amend the expiry date of the Warrants to be the date that is five years from the the date of issue.

The proceeds of the Private Placement will be used for general corporate purposes.

Board of Directors Recommendation

The board of directors of E.G. has determined that the Transaction is in the best interests of the shareholders of E.G., and has unanimously approved the components of the Transaction and recommends that the shareholders of E.G. approve same.

The members of the board of directors and the officers of E.G., who, in the aggregate, with their spouses, control approximately 34.9% of the common shares of E.G., have entered into support agreements or agreed to enter into support agreements with the New CEO pursuant to which each has agreed, among other things, to vote his or her shares to approve the Transaction.

The Reorganization Agreement

The Reorganization Agreement contains a number of customary representations, warranties and conditions, including receipt of all necessary regulatory and shareholder approval, and provides for a non-completion fee of $20,000 payable by E.G. to the other party in certain circumstances. The complete Reorganization Agreement will be accessible on E.G.'s SEDAR profile at www.sedar.com.

Note Regarding Forward-Looking Information

Certain information in this news release constitutes forward-looking information under applicable securities law. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking information. Forward-looking information is often identified by terms such as "may", "should", "anticipate", "expect", "intend" and similar expressions. Forward-looking information in this news release include, but are not limited to, information with respect to the completion of the transactions contemplated by the Reorganization Agreement. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks that required shareholder, regulatory and third party approvals and consents are not obtained on terms satisfactory to the parties within the timelines provided for in the Reorganization Agreement; risks that other conditions to the completion of the Transaction are not satisfied on the timelines set forth in the Reorganization Agreement or at all; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; industry and government regulation; changes in legislation, income tax and regulatory matters; the ability of E.G. to implement its proposed corporate strategy; competition; currency and interest rate fluctuations; and other risks. Readers are cautioned that the foregoing list is not exhaustive.

Readers are further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. The forward-looking information in this news release is based on certain key expectations and assumptions made by E.G., including expectations and assumptions concerning timing of receipt of required shareholder and regulatory approvals and the satisfaction of other conditions to the completion of the Transaction. Forward-looking information contained in this news release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this press release are made as of the date hereof and E.G. undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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.

Contact Information

  • E.G. Capital Inc.
    Keith Eaman
    President
    (514) 299-7077

    E.G. Capital Inc.
    Grant White
    (416) 827-7167