Fronsac Capital Inc.
TSX VENTURE : GAZ.P

Fronsac Capital Inc.

May 06, 2008 11:54 ET

Fronsac Capital Signs an Agreement in Principle for the Acquisition of Units of a Limited Partnership as a Qualifying Transaction

MONTREAL, QUEBEC--(Marketwire - May 6, 2008) - Fronsac Capital Inc. ("Fronsac") (TSX VENTURE:GAZ.P), a capital pool company, is pleased to announce the signing of an agreement in principle dated March 26, 2008 with all the holders of units of Societe en commandite BCCGL Richelieu St-Hilaire ("BCCGL"), in order to complete its qualifying transaction under Policy 2.4 of the TSX Venture Exchange ("Policy 2.4"). BCCGL holds all the issued and outstanding shares of 9167-9688 Quebec Inc., which holds an immovable along Highway 20 in Mont St-Hilaire which is the subject of leases relating to the operation of a McDonald's restaurant, a Beau-Soir convenience store and an Ultramar service station. The unitholders, each of whom holds 20%, are Sofinat Ltd., a company owned by Claire Jodoin-Lassonde (director of Fronsac) and the members of her immediate family, Investissements Grimards Inc., a company owned by Martin Grimard (director of Fronsac), Jacques Beaudry (director of Fronsac), Gestion Cholette Lefebvre senc, a partnership held by Michel Cholette (director of Fronsac) and Gestion Immobiliere MSC Inc., a company held by Richard Chicoine (director of Fronsac). The vendors are all residents of the Province of Quebec. Following this acquisition, Fronsac intends to devote itself to the acquisition of sites along major highways or roads, including fast food restaurants integrated into a complex where there is also gas and ideally a convenience store.

The proposed transaction is a related party transaction as that expression is defined in Policy 2.4 and, accordingly, is subject to an independent valuation and the approval of the majority of the shareholders who are unrelated to the transaction. The agreement in principle provides that the purchase price for all the units is $1,000,000, which amount will be payable through the issuance of 4,000,000 common shares of Fronsac with a value of $0.25 each in favour of the vendors. In addition to the usual conditions for this type of transaction, the conclusion of the transaction is also subject to a minimum private placement of 4,000,000 common shares and a maximum of 6,000,000 common shares in its capital stock at a price of $0.25 per share for respective amounts of $1,000,000 and $1,500,000. It is expected that part of the private financing will be subscribed by the directors of Fronsac.

For the 9-month period ended January 31, 2008, the assets covered by the agreement in principle generated net net net income of $133,766 and resulted in operational charges of $123,020. On that date, the assets had a total book value of $1,632,297. As at January 31, 2008, the shareholders' equity of BCCGL was $339,703 and its liabilities were $1,292,594. For the 9-month period ended January 31, 2008, operations generated a cash flow of $62,098 (unaudited data).

The construction of the 420 square metre building located at 40 and 50 Brunet St. in Mont St-Hilaire was completed in December 2003 and the lessees began operating their business in January 2004. The land has a total surface area of 6,400 square metres.

Once the transaction is completed, Fronsac intends to meet the minimum listing requirements of the TSX Venture Exchange (the "TSX") for a company in the real estate sector.

Conditions

Finalization of the transaction is subject to the consent of the TSX and other regulatory approval, and in particular with respect to the requirements which would make the transaction a qualifying transaction as defined in Policy 2.4. The Company has asked for an exemption from Policy 2.2 of the TSX respecting sponsorship requirements.

The transaction is also subject to various other conditions, including the completion of legal, accounting, financial and other audits, the whole to the complete satisfaction of Fronsac; the obtaining of the consent of Fronsac's Board of Directors; agreement on all the terms and conditions of all the agreements to be entered into in order to sign and give effect to the agreement in principle; receipt of an independent valuation confirming the value of the building indirectly held by BCCGL and a minimum private financing of $1,000,000. The parties have agreed to make every possible effort to close this transaction before June 15, 2008.

The following persons are currently directors of Fronsac:

Michel Cholette has been the President, Chief Executive Officer and a director of Fronsac since 2006. Mr. Cholette has been the President of Gestion Cholette Inc., a company which manages several private companies specialized in residential construction, since 1990.

Martin Grimard has been the Secretary, Chief Financial Officer and a director of Fronsac since 2006. Mr. Grimard is the President of three private companies operating convenience stores integrated into gasoline dispensing stations.

Claire Jodoin Lassonde has been a director of Fronsac since 2006. Ms. Jodoin Lassonde is the President of Sofinat Ltd., a private investment company.

Richard Laferriere has been the President and Chief Executive Officer of FRV Media Inc. since December 1998. He has also been Chairman of the Board of Warnex Inc. since 1996 and of Solutions Extenway Inc. since September 2005. Richard Laferriere has been a director of Fronsac since 2006.

Richard Chicoine is the President of Efficom Inc., a private advertising company active in the publishing of agendas for special interest groups. Mr. Chicoine has been a director of Fronsac since 2006.

Jacques Beaudry has been the President of Jean-Paul Beaudry Ltd. since June 2004. He has been a director of the National Convenience Stores Distributors Association since 2004 and of the Canadian Council of Grocery Distributors since 2005. Mr. Beaudry has been a director of Fronsac since 2006.

Claire Jodoin Lassonde is not expected to renew her term of office as a director of Fronsac. Michel Lassonde will be appointed as director to replace her and will be the only new insider for the purpose of the transaction. Michel Lassonde is a consultant and corporate director. From October 1991 to March 2008, Mr. Lassonde was a Court of Quebec judge.

The completion of the transaction is conditional upon, among other things, the consent of the TSX and, if necessary under the TSX rules, the approval of the majority of the minority shareholders. Where applicable, the closing of the transaction requires shareholder approval. There is no guarantee that the transaction will be carried out and, if it is, that it will be in the proposed form.

Investors should know that, with the exception of information provided in the proxy circular or the management filing statement to be prepared for the purposes of the transaction, the information published or received with respect to the transaction may not all be accurate or complete and investors should not rely on it. The trading of securities of a capital pool company should be considered highly speculative.

The TSX Exchange has not reviewed and does not accept responsibility for the proposed transaction and has not approved or disapproved the contents of this press release.

Contact Information

  • Fronsac Capital Inc.
    Michel Cholette
    President and Chief Executive Officer
    (450) 973-4144