Humboldt Capital Corporation
TSX VENTURE : HMB

Humboldt Capital Corporation

May 24, 2016 09:00 ET

Humboldt Capital Corporation Reports on its Financial Results for the Three Months Ended March 31, 2016 and Announces Entering Into Definitive Agreement With Respect to Going Private Transaction

CALGARY, ALBERTA--(Marketwired - May 24, 2016) - Humboldt Capital Corporation ("Humboldt" or the "Company") (TSX VENTURE:HMB) is pleased to announce the results of the three months ended March 31, 2016. Humboldt reported earnings of $514,000 for the period compared with a loss of $2.9 million for the same period in 2015. Humboldt's net asset value increased to $14.2 million, or $1.19 per share, at March 31, 2016.

Subsequent to the end of the period Management liquidated a large portion of Humboldt's portfolio in preparation for the proposed going private transaction announced in Humboldt's press release of April 27, 2016. As at May 20, 2016 Humboldt had increased its cash position to over $12.7 million or $1.07 per share.

Humboldt also reports that further to the going private proposal, it has entered into an arrangement agreement (the "Arrangement Agreement") with Lamond Investments Ltd. ("Lamond Investments") pursuant to which Lamond Investments will acquire all of the issued and outstanding common shares ("Humboldt Shares") of Humboldt not currently owned by Lamond Investments and Robert W. Lamond ("RWL") by way of a plan of arrangement under the Business Corporations Act (Alberta). If the plan is approved, as set forth below, shareholders will receive their proportionate share of the assets of the Company, being $1.075 cash per share and 1.4074 common shares ("Tuscany Shares") of Tuscany Energy Ltd. for each Humboldt Share held (the "Arrangement Consideration") (the "Arrangement").

Based on the volume weighted average trading price of the Tuscany Shares on the TSX Venture Exchange ("TSXV") for the five day period ended May 20, 2016, the consideration for the Humboldt Shares represents a 73% premium over the last closing price of the Humboldt Shares on the TSXV prior to the announcement of the proposal on April 27, 2016, being $0.66 per share.

The Arrangement Consideration represents Shareholders' proportionate share (based on the number of Humboldt Shares held by a Shareholder and the total number of outstanding Humboldt Shares) of: (i) Humboldt's cash, cash equivalents and receivables, including the net proceeds realized from the liquidation of Humboldt's investment portfolio (net of the estimated transaction costs of the Arrangement and Humboldt's other outstanding liabilities); (ii) the Tuscany Shares held by Humboldt; (iii) the estimated value of the remaining securities in Humboldt's investment portfolio (other than the Tuscany Shares); and (iv) the estimated value of Humboldt's other assets. RWL and Lamond Investments currently own approximately 72% of the outstanding Humboldt Shares.

The Arrangement Agreement contains customary representations and warranties of each party, interim operations covenants by Humboldt, and is subject to customary conditions for a transaction of this nature, which include court and regulatory approvals (including the TSXV) and the approval of 66 2/3% of the votes cast by Humboldt shareholders represented in person or by proxy at a meeting of Humboldt shareholders called to consider the Arrangement, and the approval of a majority of the votes cast by Humboldt shareholders represented in person or by proxy at the meeting after excluding the votes required to be excluded in determining minority approval of a business combination.

In connection with the requirement for shareholder approval, Humboldt's annual and special meeting of shareholders (the "Shareholders' Meeting") is scheduled to take place on June 22, 2016. An information circular (the "Information Circular") regarding the Arrangement and the other matters to be considered at the Shareholders' Meeting is expected to be mailed to shareholders on or about June 1, 2016. Provided all of the conditions to closing are satisfied, closing of the Arrangement is expected to occur on June 24, 2016.

A copy of the Arrangement Agreement and the Information Circular will be filed on Humboldt's SEDAR profile and will be available for viewing at www.sedar.com.

Based upon, among other things, the recommendation of the Special Committee of the Board of Directors of Humboldt appointed to consider the Arrangement, and after consulting with its legal advisors, Humboldt's Board of Directors (with RWL abstaining), has unanimously approved the Arrangement and unanimously determined that the Arrangement is fair to Humboldt shareholders and is in the best interest of Humboldt. The Board of Directors of Humboldt unanimously recommends (with RWL abstaining), that Humboldt shareholders vote in favour of the Arrangement at the Shareholders' Meeting.

All of the directors and officers and certain shareholders of Humboldt (including Lamond Investments and RWL), representing an aggregate of approximately 79% of the issued and outstanding Humboldt Shares, have agreed to, among other things, support the Arrangement and vote their Humboldt Shares in favour of the Arrangement, subject to the terms of the applicable support agreements and the Arrangement Agreement.

Interim report for the three months ended March 31, 2016

Humboldt also reports that it has filed the Company's interim financial statements and MD&A for the three months ended March 31, 2016 on it's SEDAR profile and they are available for viewing at www.sedar.com. A summary of the results is as follows:

Three months ended March 31, 2016 2015
($ thousands, except per share amounts, unaudited)
Net realized loss on disposal of investments (1,638) (12)
Net unrealized gains (loss) on investments 2,588 (2,772)
Total revenue 709 (2,755)
Earnings (loss) for the period 514 (2,963)
Earnings (Loss) per share, basic and diluted 0.04 (0.25)
As at March 31, 2016 2015
Share capital 2,050 2,052
Retained earnings 11,482 15,408
Total Shareholders' Equity 14,152 18,085
Total assets 14,214 18,161
Cash and cash equivalents 7,332 6,801
Shares outstanding 11,876 11,886
Net asset value per share, basic 1.19 1.52
Net asset value per share, diluted 1.19 1.52

Forward-Looking Information

Certain information set forth in this press release, including information and statements which may contain words such as "could", "plans", "should", "anticipates", "expects", "believes", "will" and similar expressions and statements relating to matters that are not historical facts, contains forward-looking statements, including but not limited to statements regarding the proposed acquisition of Humboldt by Lamond Investments pursuant to a plan of arrangement and the anticipated timing of closing, and mailing of the information circular related to the annual and special meeting of Humboldt and the timing thereof. By their nature, forward- looking statements are subject to numerous risks and uncertainties, some of which are beyond Humboldt's control. Completion of the Arrangement is subject to a number of conditions which are typical for transactions of this nature. Failure to satisfy any of these conditions, the emergence of a superior proposal or the failure to obtain approval of the Humboldt shareholders may result in the termination of the Arrangement Agreement. The foregoing list is not exhaustive. Additional information on these and other risks that could affect completion of the Arrangement will be set forth in the Information Circular, which will be available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The actual results, performance or achievement of Humboldt could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Humboldt will derive therefrom. Humboldt disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Service 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

  • HUMBOLDT CAPITAL CORPORATION
    R.W. Lamond
    Chairman of the Board
    (403) 269-9889
    (403) 269-9890 (FAX)

    HUMBOLDT CAPITAL CORPORATION
    C.A. (Tony) Teare
    Executive Vice President
    (403) 269-9889
    (403) 269-9890 (FAX)
    www.humboldtcapital.com