Himalayan Capital Corp.
TSX VENTURE : HIM.P

November 18, 2010 17:25 ET

Himalayan Capital Corp. Announces the Signing of a Letter of Intent to Enter into a Business Combination with PyroGenesis Canada Inc.

CALGARY, ALBERTA--(Marketwire - Nov. 18, 2010) -

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Himalayan Capital Corp. ("Himalayan" or the "Corporation") (TSX VENTURE:HIM.P) is pleased to announce that it has entered into a letter of intent dated November 17, 2010 (the "Letter of Intent") with PyroGenesis Canada Inc. ("PyroGenesis"), a private corporation existing under the laws of Canada, with respect to a proposed business combination of Himalayan and PyroGenesis (the "Transaction").

Pursuant to the terms of the Letter of Intent, the principal terms of the Transaction are as follows:

  • Prior to the Transaction, PyroGenesis will complete a brokered private placement (the "Private Placement") of subscription receipts by no later than December 17, 2010 for aggregate gross proceeds of up to $5,000,000, but in no case less than $3,000,000;
  • Prior to the closing of the Private Placement, PyroGenesis will complete a stock split on the basis of approximately 21.0233 common shares of PyroGenesis for each common share in the capital of PyroGenesis previously issued and outstanding (the "Stock Split");
  • Immediately prior to the Transaction, Himalayan will complete a share consolidation on the basis of one common share of Himalayan for each two common shares in the capital of Himalayan previously issued and outstanding (the "Consolidation") and change its name to "PyroGenesis Canada Inc." or such other name as may be determined by PyroGenesis (the "Name Change"). The outstanding options to purchase common shares of Himalayan and common share purchase warrants of Himalayan shall be adjusted in accordance with their terms to reflect the Consolidation;
  • The Transaction will be structured as an amalgamation (the "Amalgamation") between PyroGenesis and a wholly-owned subsidiary of Himalayan ("Himalayan Sub"), whereby the securities of PyroGenesis will be exchanged for like-securities of Himalayan on a one-for-one post-Consolidation basis and PyroGenesis and Himalayan Sub will form an amalgamated entity ("Amalco"); and
  • The board of directors of the Corporation will be increased to up to 5 directors to be reconstituted all with nominees of PyroGenesis.

The Corporation is a capital pool company and intends for the Transaction to constitute the "Qualifying Transaction" of the Corporation as such term is defined in the policies of the TSX Venture Exchange (the "Exchange"). The Transaction is an arm's length transaction and upon completion thereof, it is expected that the Corporation will be a Tier 2 Technology/Industrial Issuer.

Amalgamation

PyroGenesis and Himalayan shall enter into a business combination agreement (the "Business Combination Agreement") whereby such parties shall agree to enter into a business combination structured in the form of an amalgamation under the laws of Canada between PyroGenesis and Himalayan Sub, whereby each post-Stock Split common share of PyroGenesis shall be exchanged for one post-Consolidation common share of Himalayan.

Upon completion of the Stock-Split and completion of the Private Placement and concurrent non-brokered private placement as further described below, assuming the financings are fully subscribed, PyroGenesis shall have approximately 59,687,593 common shares issued and outstanding which shall be exchanged for 59,687,593 post-Consolidation common shares of Himalayan issued at a deemed price of $0.80 per share. Currently, there are 2,350,000 common shares of Himalayan issued and outstanding which will be consolidated into 1,175,000 common shares of Himalayan. Upon completion of the Transaction, it is anticipated that the holders of Pyrogenesis common shares and current holders of Himalayan common shares will own approximately 98.1% and 1.9%, respectively, of the issued and outstanding post-Consolidation common shares of the resulting issuer. The post-Consolidation shares to be issued pursuant to the proposed Transaction will be subject to the escrow requirements of the Exchange, if applicable.

As a result of the Transaction, Amalco will become a wholly-owned subsidiary of the Corporation and Himalayan will carry on the business of PyroGenesis as currently constituted. The Business Combination Agreement will contain representations and warranties between the parties that are customary for transactions of a similar nature.

Description of PyroGenesis

PyroGenesis is a leader in the design, development, manufacture and commercialization of advanced plasma waste destruction and waste to energy systems. In addition to development and engineering services, the Company offers plasma torches, and two distinct systems that use the intense energy of plasma to rapidly and efficiently gasify and vitrify any type of waste without the need for pre-sorting. PyroGenesis' plasma systems serve the marine vessel market and a variety of land-based unit markets, and its end-users include a number of high-profile customers, including the U.S. Navy and the U.S. Air Force.

The only shareholders of PyroGenesis who each hold a controlling interest in PyroGenesis are Photis Peter Pascali of Montreal, Quebec, who is a principal of PyroGenesis and is currently a director and the President and Chief Executive Officer of PyroGenesis and Peter P. Pascali of Cyprus.

Summary of Financial Information

Financial statements, as required by the Exchange, were not available at the time of this press release. The financial statements and summary financial information will be disclosed at a later date in accordance with the policies of the Exchange.

Private Placement

In connection with the Transaction, PyroGenesis has engaged Cormark Securities Inc. and Versant Partners Inc. (the "Agents"), to act as co-lead agents in a syndicate for purposes of an offering, by way of the Private Placement, of subscription receipts for aggregate gross proceeds of up to $5,000,000, but in no case less than $3,000,000, at a price of $0.80 (the "Issue Price") per subscription receipt. Each such subscription receipt will entitle the holder to acquire one common share in the capital of PyroGenesis upon satisfaction of the Release Conditions (as defined below). The Private Placement will be completed on a best efforts basis. The Agents shall receive a cash commission equal to 7.0% of the gross proceeds (the "Agency Fee") and shall receive that number of broker warrants (the "Broker Warrants") that is equal to 7.0% of the number of subscription receipts issued pursuant to the Private Placement. Each Broker Warrant shall entitle the holder to purchase one common share in the capital of PyroGenesis for a period of 12 months from the date of issuance at the Issue Price. PyroGenesis will reimburse the Agents for reasonable fees and disbursements of the Agents' legal counsel and reasonable "out-of-pocket" expenses of the Agents.

The gross proceeds raised in the Private Placement will be deposited into escrow with an escrow agent. Upon receipt of the conditional approval of the Transaction by the Exchange and confirmation from Himalayan and PyroGenesis that all conditions under the Business Combination Agreement have been satisfied or waived (the "Release Conditions"), the Agency Fee and the Agents' expenses shall be paid to the Agents and the remainder of the gross proceeds and any interest payable thereon shall be released to PyroGenesis. In the event that the Release Conditions are not satisfied within 90 days of the closing of the Private Placement, the gross proceeds shall be returned to the subscribers to the Private Placement. If the Private Placement is not completed because PyroGenesis enters into an alternative transaction which prevents the completion of the Transaction, then PyroGenesis shall be required to pay the Agents a fee of $300,000, as well as the reasonable expenses of the Agents incurred to that time.

Concurrent to the brokered Private Placement, PyroGenesis shall undertake a non-brokered private placement of up to $2.75 million in common shares of PyroGenesis at a price of $0.80 per share. The gross proceeds raised from the non-brokered private placement will be immediately available to PyroGenesis upon closing of such offering.

Management and Board of Directors

Subject to and following the completion of the Transaction and all necessary approvals, the following individuals are expected to be the directors and officers of the Corporation:

Photis Peter Pascali (proposed President, Chief Executive Officer and director)

Mr. Pascali is the original founder of PyroGenesis and is the President and Chief Executive Officer and a director of PyroGenesis. In this capacity, he is responsible for the overall vision of PyroGenesis as well as the day-to-day development and execution of its business strategy. Prior to his involvement with PyroGenesis, Mr. Pascali spent 12 years in the investment banking business. Mr. Pascali holds a Bachelor of Science and an MBA from McGill University.

Gillian Holcroft (proposed Chief Operating Officer and director)

Ms. Holcroft joined PyroGenesis in 2003 and currently serves as the Chief Operating Officer and a director of PyroGenesis. Ms. Holcroft oversees Pyrogenesis' team of engineers and technicians in the execution of its various contracts. Ms. Holcroft is also responsible for furthering strategic growth, partnerships and new business opportunities at PyroGenesis. Prior to joining PyroGenesis, Ms. Holcroft worked for over 12 years at Noranda Inc. (now Xstrata), in which she was involved in many aspects of the company's operations, including the start up of a $750 million production facility. Ms. Holcroft holds Bachelor's and Master's degrees in Chemical Engineering from McGill University.

Pierre Carabin (proposed Chief Engineer)

Mr. Carabin joined PyroGenesis in 1998 as an R&D Engineer and was instrumental in the original development, design and engineering of the company's waste to energy systems. Presently serving as Chief Engineer of PyroGenesis, Mr. Carabin is responsible for building and motivating the company's engineering team, as well as overseeing the process engineering product design at PyroGenesis. Mr. Carabin has 20 years of experience in the chemical process and process development. He has authored nearly 40 technical papers and presentations. Mr. Carabin holds a Bachelor's and Master's degree in chemical engineering from McGill University.

Aida Kaldas (proposed Technology Development Manager)

Ms. Kaldas joined PyroGenesis in 2001 and is the Technology Development Manager at PyroGenesis. In this capacity, Ms. Kaldas leads the technology development activities for both marine and land-based plasma gasification systems. Her responsibilities include assessing new ideas for process improvement, managing all of the contract research activities and providing recommendations to the engineering team for improvement to PyroGenesis' commercial installations. Ms. Kaldas has over 20 years of technology development experience and is the author of numerous technical publications. Prior to joining PyroGenesis, Ms. Kaldas spent many years managing development programs for Orica (formerly ICI Explosives) where she led a team of engineers, scientists and technicians in the research, development and implementation of technologies. Ms. Kaldas holds a Bachelor's degree in chemical engineering from Cairo University and a Master's degree in engineering science from the University of Western Ontario.

Alan Curleigh (proposed director)

Mr. Curleigh has managed the responsibilities of the Chair of the Board of the Canadian Commercial Corporation for seven years until November, 2009. During this term, he, together with ten board colleagues, oversaw the affairs of this federal Crown Corporation. Mr. Curleigh is currently the Chair of the Audit Committee for the Department of Veterans Affairs Canada. Mr. Curleigh also sits on the board of Northstar Trade Finance Inc., a Canadian financial institution engaged in the financing of Canadian export transactions. Mr. Curleigh has spent many years as a senior executive and board member of a major Canadian engineering contracting firm and has participated in representing Canadian exporter interests in Canada's evolving international trade agenda which led to his engagement as a board member and then chair of one of Canada's leading manufacturing and international trade advocacy groups. Mr. Curleigh has also sat on the steering committee of the Public Enterprise Governance Centre in Ottawa and has been a member of the Advisory Board of the Business Faculty of the University of New Brunswick, his alma mater, and is a visiting faculty member at the Directors College, a corporate governance institution established through the collaboration of the Conference Board of Canada and McMaster University.

John Kubricky (proposed director)

Mr. Kubricky presently serves as a member of the scientific advisory board of NanoInk, Inc., an emerging growth technology company specializing in nanometer-scale manufacturing and applications development for the life sciences, engineering, pharmaceutical, and education industries. Mr. Kubricky is the former U.S. Deputy Under Secretary of Defense (Advanced Systems and Concepts), a position he held from 2006 to 2009. During his tenure, Mr. Kubricky was responsible for the U.S. Department of Defense (DoD) applied technology programs that demonstrated urgently needed defense capabilities, comparative tests of domestic and foreign defense systems, technology transition and acceleration programs, and defense manufacturing research and development. Previously, he served as the U.S. Department of Homeland Security's Director of Systems Engineering and Development within the Science & Technology Directorate. In this position, he was responsible for integrating technologies into systems for demonstration, operational test and evaluation, and pre-production prototypes. He also served as the Director of the U.S. Homeland Security Advanced Research Projects Agency, which manages more than 100 advanced technology programs under contracts with the private sector.

Sponsorship of Qualifying Transaction

The Corporation anticipates that the Transaction will be exempt from the Exchange's sponsorship requirement pursuant to Section 3.4 of Policy 2.2 – Sponsorship and Sponsorship Requirements of the Exchange's Corporate Finance Manual.

Non-solicitation

During the term of the Letter of Intent, neither PyroGenesis nor Himalayan shall, directly or indirectly, solicit, discuss, encourage or accept any offer for their purchase or the purchase of their business or assets.

Conditions to closing

The execution and delivery of the Business Combination Agreement and the completion of the Transaction shall be subject to the satisfaction of a number of conditions, including, but not limited to: i) completion of satisfactory due diligence investigations; ii) delivery of legal opinions, officer's certificates and other standard closing documentation; iii) conditional approval of the Transaction by the Exchange; iv) the approval of the Stock Split and Amalgamation by a special majority of the shareholders of PyroGenesis and the approval of the Consolidation, Name Change and Continuance by a special majority of shareholders of Himalayan; v) receipt of all required regulatory and third party approvals, consents, waivers and compliance with all other applicable regulatory requirements and conditions; vi) Himalayan having maintained its current listing on the Exchange; vii) the completion of the Private Placement; and viii) the absence of any material adverse effect on the financial and operational conditions or the assets of PyroGenesis or Himalayan.

Termination Provisions

The Letter of Intent shall terminate with the parties having no obligations to each other, other than in respect of certain provisions pertaining to expenses and confidentiality, on the date as follows: i) automatically if the Amalgamation Agreement is not executed on or before 5:00 pm (Vancouver time) on December 17, 2010 or such later date as the parties may agree upon in writing; ii) automatically if all required regulatory approvals are not received on or before 5:00 pm (Vancouver time) on January 31, 2011, or such later date as the parties may agree upon in writing; iii) automatically if the Transaction is not closed on or before 5:00 pm (Vancouver time) on February 15, 2011, or such later date as the parties may agree upon in writing; iv) by the Corporation, upon providing written notice to PyroGenesis by no later than 11:59 pm (Vancouver time) on December 17, 2010 or such later date as the parties may agree upon in writing, that acting reasonably and in good faith, it has determined that as a result of its due diligence review it is not prepared to complete the Transaction; and v) by PyroGenesis, upon providing written notice to the Corporation by no later than 11:59 pm (Vancouver time) on December 17, 2010 or such later date as the parties may agree upon in writing, that acting reasonably and in good faith, it has determined that as a result of its due diligence review it is not prepared to complete the Transaction.

Other Information and Updates

The Corporation's shares are currently listed for trading on the Exchange. In accordance with Exchange policy, however, the Corporation's shares are currently halted from trading and will remain halted until such time as determined by the Exchange, which, depending on the policies of the Exchange, may or may not occur until the completion of the Transaction.

The Corporation will provide further details in respect of the Transaction, in due course by way of press release. However, the Corporation will in due course make available to the Exchange all financial information as required by the Exchange, and will disclose at a later date summary financial information derived from such statements, in accordance with the policies of the Exchange.

Cautionary Statements

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to the intention of the parties to enter into the Business Combination Agreement, the completion of the Stock Split, Private Placement and the Amalgamation and the completion of the Consolidation and Name Change. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Corporation. The material factors and assumptions include the parties to the Business Combination Agreement being able to obtain the necessary director, shareholder and regulatory approvals; Exchange policies not changing; and completion of satisfactory due diligence. Risk Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: conditions imposed by the Exchange, the failure to obtain the required directors' and shareholders' approval to the Amalgamation; changes in tax laws, general economic and business conditions; and changes in the regulatory regulation. The Corporation cautions the reader that the above list of risk factors is not exhaustive. The forward-looking information contained in this release is made as of the date hereof and the Corporation is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

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, 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 management information circular or 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.

Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the Transaction and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.

Contact Information

  • Himalayan Capital Corp.
    K. Peter Miller
    President and Chief Executive Officer
    (604) 689-1428