Grey Horse Corporation
TSX : GHC

Grey Horse Corporation

June 08, 2006 13:00 ET

Grey Horse Capital Corporation: Equity Transfer and Trust Company-Canada's Newest Trust Company

TORONTO, ONTARIO--(CCNMatthews - June 8, 2006) -

Grey Horse Completes Private Placement; Subsidiary Receives Federal Trust Charter

Grey Horse Capital Corporation (TSX:GHC)("Grey Horse" or "the Corporation"), a financial services company headquartered in Canada, today announced that its wholly-owned subsidiary, Equity Transfer Services Inc, was granted letters patent from the Office of the Superintendent of Financial Institutions ("OSFI") to continue as a federal trust company under the federal Trust and Loans Companies Act and, effective immediately, operates under the name Equity Transfer and Trust Company ("Equity"). Providing transfer agency services to issuers in the North American capital markets since 1990, Equity now adds a full range of corporate trust services to its suite of services.

Grey Horse President and CEO Kevin Reed said, "We are very pleased with the granting of a federal Trust Charter to Equity as this represents a significant milestone in the company's development and a natural extension of its core business. With an established brand and loyal customer base, Equity has an excellent foundation on which to build a strong and vibrant national trust company."

Concurrent with the granting of the trust charter, Grey Horse announced the completion of a private placement wherein funds raised were used to meet federal regulatory capital requirements for Equity, to retire or convert all funded debt and to provide additional working capital.

"The elimination of Grey Horse's funded debt closes the initial chapter in the Corporation's history related to the leveraged buy-out of Equity Transfer Services Inc. in December 2004 and leaves the Corporation with a strong balance sheet to address future strategic initiatives. One of the immediate benefits of this recapitalisation is the elimination of some $800,000 in annual interest expense and amortisation," commented Grey Horse EVP and Chief Financial Officer, Paul G. Smith.

The Grey Horse private placement, led by Dundee Securities Corporation ("Dundee"), raised gross proceeds of approximately $4,086,749 via the sale of 710,739 units priced at $5.75 per unit. Each unit consists of one common share of Grey Horse (GHC: TSX), together with one-half share purchase warrant. Two half share purchase warrants will entitle the holder thereof to acquire one additional common share of Grey Horse at a price of $7.00 until June 7, 2008. Provisions of the warrant agreement allow Grey Horse to accelerate the exercise of the warrants at any time after December 8, 2006, providing Grey Horse's common shares have traded above $9.00 per share for fifteen consecutive days prior to the Corporation's announcement of the forced conversion. The TSX has conditionally accepted the private placement.

Grey Horse paid an amount of $285,992 to Dundee in agent's fees representing approximately 7% of the aggregate gross proceeds of the Private Placement. In addition, Dundee received agent's warrants to purchase 49,738 Common Shares of the Corporation at an exercise price of $7.00 per Common Share. The agent's warrants will entitle the holder thereof to acquire one additional common share of Grey Horse at a price of $7.00 until June 7, 2008. Provisions of the warrant agreement allow Grey Horse to accelerate the exercise of the warrants at any time after December 8, 2006, providing Grey Horse's common shares have traded above $9.00 per share for fifteen consecutive days prior to the Corporation's announcement of the forced conversion.

Four related parties of Grey Horse have purchased units in the private placement at the subscription price of $5.75 per unit. Kevin Reed purchased 4,348 Units and now beneficially owns, directly or indirectly, or exercises control or direction over 308,681 common shares of Grey Horse. On the completion of the private placement, Mr. Reed's holding represents approximately 5.1% of the outstanding common shares of Grey Horse. Paul G. Smith purchased 4,500 units and now beneficially owns, directly or indirectly, or exercises control or direction over 311,333 common shares of Grey Horse. On the completion of the private placement, Mr. Smith's holding represents approximately 5.2% of the outstanding common shares of Grey Horse. Tom Cryer purchased 4,348 units and now beneficially owns, directly or indirectly, or exercises control or direction over 4,348 common shares of Grey Horse. On the completion of the private placement, Mr. Cryer's holding represents approximately 0.07% of the outstanding common shares of Grey Horse. Richard Barnowski purchased 4,000 units and now beneficially owns, directly or indirectly, or exercises control or direction over 4,000 common shares of Grey Horse. On the completion of the private placement, Mr. Barnowski's holding represents approximately 0.07% of the outstanding common shares of Grey Horse.

In conjunction with the granting of the trust charter and the completion of the private placement, Grey Horse also retired and fully reimbursed its Convertible Secured Debenture with Roynat Capital Inc. ("Roynat") on June 7, 2006. Details of the transaction involve the conversion by Roynat of $890,000 of the outstanding principal amount of the debenture into 593,333 common shares of Grey Horse at a conversion price of $1.50 per common share. Grey horse repaid the remaining outstanding principal amount of the debenture (in the amount of $260,000), together with an additional amount of $71,652.62, representing the prepayment interest penalty required under the debenture. The funds used for the transaction were taken from cash on hand.

About Grey Horse

Through its wholly owned subsidiary, Equity Transfer and Trust Company, Grey Horse Capital provides transfer and corporate trust services to issuers in the North American capital markets. The Corporation's shares trade on the Toronto Stock Exchange under the symbol GHC. As at June 8, 2006, the Corporation had 6,016,786 common shares issued and outstanding.

Certain information included in this press release is forward-looking and may involve risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors that might cause a difference include, but are not limited to, competitive developments, risks associated with Grey Horse Capital's growth, the state of the financial markets, regulatory risks and other factors. Unless otherwise required by applicable securities laws, Grey Horse Capital disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about potential factors that could affect Grey Horse Capital's financial and business results is included in public documents Grey Horse Capital files from time to time with Canadian securities regulatory authorities.

The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release.

Contact Information

  • Grey Horse Capital Corporation
    Kevin Reed
    President & CEO
    (416) 361-0930 x271
    or
    Grey Horse Capital Corporation
    Paul G. Smith
    EVP & Chief Financial Officer
    (416) 361-0930 x270