Regent Pacific Properties Inc.
TSX VENTURE : RPP.P

September 03, 2010 12:10 ET

Further Details on Regent Letter of Intent to Acquire Office Complex Project for Qualifying Transaction

EDMONTON, ALBERTA--(Marketwire - Sept. 3, 2010) - Regent Pacific Properties Inc. ("Regent")(TSX VENTURE:RPP.P), a capital pool corporation, is pleased to announce further details of the transaction (the "Qualifying Transaction") first announced on October 16, 2009 (the "Initial Release"), as amended. Regent has entered into a letter of intent dated September 25, 2009 (the "Letter of Intent") with Cassel Centre Ltd. ("CCL"), an Edmonton-based private company incorporated pursuant to the Business Corporations Act (Alberta), wherein Regent will acquire fifty-five (55%) percent of the issued and outstanding shares of CCL (the "Transaction"). The Transaction is a Non-Arm's Length Transaction and as such will require approval of the shareholders of Regent under applicable policies of the TSX Venture Exchange (the "Exchange") and will constitute Regent's "Qualifying Transaction". The Transaction is considered a Non Arm's Length Transaction as Eddie W.W. Yu is a director and officer of both the Corporation and CCL. As well, Mr. Yu is a major shareholder of Cassel Developments Ltd., which will hold more than 20% of the common shares of Regent upon closing the Transaction.

Pursuant to the Letter of Intent, Regent will pay to the shareholders of CCL a refundable deposit of $25,000 which will be returned to Regent should the proposed Transaction not be completed. The Transaction is subject to: (i) approval by the directors and shareholders of each of Regent and CCL; (ii) approval by the Exchange and applicable regulatory authorities; and (iii) completion of a due diligence review. Regent is required to obtain majority of the minority approval of the shareholders for the Transaction.

About CCL

CCL is a commercial real estate development located at 2607 Ellwood Drive SW, Edmonton, Alberta (the "Property"). CCL was formed to carry on the business of acquiring, developing, selling and/or leasing income-producing properties and all other business ancillary or incidental to any of the foregoing. CCL's business has focused on development of the Property. Upon completion of the Qualifying Transaction, Regent will pursue the expansion plan proposed by CCL and additional acquisitions of corporations in the real estate and related industry in China and Canada.

The plan for the Property is to develop a three-storey, suburban retail and office building with gross leaseable/saleable space of approximately 72,936 square feet. The first floor will contain approximately 36,874 square feet of leaseable/saleable space and the second and third floor of the office building will have approximately 18,031 square feet each. The underground parkade will accommodate approximately 80 vehicles, with additional above ground parking.

It is planned that the main floor of the building will comprise of 11 commercial units. Five of the commercial units will have outside access as well as their own washroom facilities. Six of the commercial units will have a common entrance that leads to a lobby area with two elevators, one staircase, and common washrooms. It is planned that the second and third floors will each have seven office units with common washroom facilities for each floor. The underground parkade will be heated and will have mechanical and storage areas. The basic construction for the facility is planned to comprise of engineered steel beams and columns over the underground parkade with a concrete foundation. The upper floors are to be built with steel columns, beams, and open web steel joists topped with metal decking and concrete.

Construction of the Property is underway and approximately 70% to 75% complete.

The resulting issuer will have sufficient funds to complete the construction of the building. CCL has secured total financing of $3,578,500 to fund the construction of the building. This financing will be used to replace the existing mortgages and will also provide CCL with $1,300,000 required to complete the construction of the Property.

Summary of the Transaction

The proposed qualifying transaction consists of the purchase of 55% the issued and outstanding shares of CCL at a deemed price of $8,800,000 to be paid by the issuance of: (a) 18,000,000 common shares of Regent at a deemed price of $0.10 per common share; (b) 55,000,000 preferred shares at a deemed value of $0.10 per preferred share, which may be converted into common shares at a conversion price of $0.10 per common share at the option of the preferred shareholders before the fifth anniversary year after the completion date of the qualifying transaction.; and (c) a convertible debenture in an amount of $1,500,000. This amount will be repayable on or before the end of the fifth anniversary year after the completion date of the proposed transaction plus interest at a rate of seven (7%) percent compounded annually commencing after one year from the date of closing. The convertible debenture is secured by the assets of CCL and may be converted to common shares at a conversion price of $0.10 per common share at the option of the debenture holder before the fifth anniversary after the completion date of the qualifying transaction.

The original terms of the Letter of Intent disclosed in the Initial Release were amended as a result of the purchase of only 55% of the issued and outstanding shares of CCL and not all the issued and outstanding shares as originally announced. Consequently, the purchase price was reduced from $12,000,000 to $8,8000,000 as well the issuance of the preferred shares was increased to 55,000,000 and the amount of the convertible debenture was finalized to $1,500,000. The issuance of common shares remained the same.

Only the common shares of the Principals, as defined in Exchange Policy 1.1, will be subject to escrow.

A general policy of the Exchange requires that a sponsor be retained to prepare a sponsor report in compliance with Exchange Policy 2.2. Regent has made an application for an exemption from sponsorship requirements, however, there is no assurance that Regent will obtain this exemption. If a sponsorship exemption is not obtained, Regent will be required to engage a sponsor.

Trading in the common shares of Regent was suspended on July 21, 2010 for failing to complete its qualifying transaction within the required twenty-four (24) month period in accordance with Exchange policies

The resulting issuer intends to apply for listing as a Tier 2 Real Estate issuer.

Financial Information

The following selected financial information is derived from the financial statements of Cassel Centre Ltd. as at and for the three month period ended March 31, 2010 and the years ended December 31, 2009 and December 31, 2008 and has been prepared based on Regent purchasing fifty-five (55%) percent of CCL.

Category As at March 31, 2010 and for the period ended March 31, 2010   As at December 31, 2009 and for the year ended December 31, 2009   As at December 31, 2008 and for the year ended December 31, 2008  
  (unaudited ) (audited ) (audited )
             
Assets 10,296,229   9,255,747   6,188,138  
Liabilities 5,138,646   4,098,164   4,493,128  
Working Capital 116,738   390,178   148,214  
Shareholders' Equity 5,157,583   5,157,583   1,695,010  
Retained Earnings 5,273   5,273   -  
Revenue -   2,386,000   -  
Gross Profit -   6,132   -  
Income before Income Taxes -   6,132   -  
Net income -   5,273   -  

Directors and Officers

The board of directors of Regent currently consists of Eddie W.W. Yu, David Yu, Edward (Ted) Power and David S. Tam. It is intended that the current directors will remain on the board of directors of the resulting issuer following completion of the Transaction. Eddie W.W. Yu is the sole director and officer of CCL and a 50% shareholder, directly and indirectly, of CCL.

The biographies and municipalities of residence of the Corporation's proposed directors and key officers are as follows:

Eddie W.W. Yu – President, Chief Executive Officer and a Director – (Edmonton, Alberta)

Eddie Yu is the President of Cassel Developments Ltd., a property development and management company for commercial and multi-family construction projects. He has held this position since September 1997. Eddie Yu has overseen the development of multiphase residential and commercial development projects in Edmonton, Alberta. Eddie Yu has also been a real estate agent, a broker and the owner of Royal LePage Summit Realty in Edmonton Alberta since September 1999. Eddie Yu is 59 years of age.

David Yu – Chief Financial Officer and a Director – (Edmonton, Alberta)

David Yu is the Operations Manager of Cassel Developments Ltd., a development and management company for commercial and multi-family construction projects. David Yu has held this position from June 2003 to June 2004 and July 2005 to the present. From July 2004 to June 2005 David Yu worked as a research intern for Sangikyo Corporation in Yokohama, Japan. David Yu is 30 years of age.

William (Bill) Smith – Director – (Edmonton, Alberta)

Bill Smith is President of Bill Smith and Associates, a government relations consultancy. He is the Honorable Lieutenant Colonel of the 20th Field Artillery and Chairman of the Board of Petro Energy Trust. Mr. Smith is also the senior Vice President of Marketing of BioNeutra, Inc. Mr. Smith is the former mayor of Edmonton, Alberta, the capital city of Alberta, who served three consecutive terms from 1995 to 2004. Bill Smith is 74 years of age. Mr. Smith intends to devote 10 percent of his time to the Resulting Issuer.

Edward (Ted) Power – Director – (Edmonton, Alberta)

Ted Power has a history as a successful businessman and community leader. He was a Regional Finalist for Ernst & Young's Entrepreneur of the Year in 2000 and in 2002 he was awarded the Queen's Jubilee Medal for public service. Since March 2004, Ted Power has been the President of Trace Applications Inc., a company which delivers specialized document management software for quality assurance and quality control. Ted Power's vision helped create MetalTrace® and TraceAbility® internationally acclaimed software for tracking and handling of quality assurance and quality control documents. Since October 2002, Ted Power has been an Associate Broker for North American Realty Inc. Ted Power is 56 years of age.

David S. Tam – Secretary and a Director – (Edmonton, Alberta)
David Tam has been a partner of the firm Parlee McLaws LLP since 1999 and practices in the areas of securities and corporate law. David Tam obtained a degree in pharmacy in 1985 and a degree in law in 1989 from the University of Alberta. David Tam was admitted to the bar in Alberta in 1990. He is a member of the board of directors of several private and public corporations. David Tam is 47 years of age.

Regent is a capital pool company whose principal shareholders are Eddie W.W. Yu, David Yu, David S. Tam and Ted Power and 1072438 Alberta Ltd.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance, shareholder approval on a majority of the minority basis and agreement by the two financial institutions to continue with Regent's current financing arrangements. 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 management information circular 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.

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

  • Regent Pacific Properties Inc.
    Eddie W.W. Yu
    President and Chief Executive Officer
    (780) 424-9898
    (780) 437-9899 (FAX)
    info@cassel.ca