Aqueous Capital Corp.

July 19, 2007 10:58 ET

Industrial Real Estate Investment Trust and Aqueous Capital Corp. Announce Proposed Arrangement Which Will Constitute a Change in Control and Reverse Takeover of Aqueous

CALGARY, ALBERTA--(Marketwire - July 19, 2007) -


Proposed Arrangement

Industrial Real Estate Investment Trust ("Industrial REIT" or the "Trust") and Aqueous Capital Corp. ("Aqueous" or the "Company") (TSX VENTURE:AQS.P) are pleased to announce that they have entered into an agreement in principle pursuant to which Industrial REIT and Aqueous will proceed with a plan of arrangement (the "Arrangement") such that each former shareholder of Aqueous will receive trust units of Industrial REIT in exchange for their common shares of Aqueous. The final exchange ratio for the transaction has yet to be finalized, and will be based on the estimated value of Industrial REIT upon execution of a definitive agreement. However, the parties anticipate that, in setting the exchange ratio, the deemed value of the common shares of Aqueous will be $0.80 per share.

Aqueous and Industrial REIT expect to enter into a definitive arrangement agreement prior to finalizing and mailing the information circular for the meeting of shareholders of Aqueous, where Aqueous shareholders will be asked to approve the Arrangement. Through the Arrangement, Aqueous will become a wholly owned subsidiary entity of Industrial REIT. Pursuant to the policies of the TSX Venture Exchange, Inc. (the "Exchange"), the Arrangement is expected to qualify as Aqueous' qualifying transaction as a capital pool company and the trust units will be listed in substitution of the common shares of Aqueous on the Exchange. As discussed above, the final exchange ratio for the transactions has yet to be determined, and will be based on a number of factors including, but not limited to, the debt to be assumed and the securities of Industrial REIT issued pursuant to the property acquisitions by Industrial REIT prior to closing.

The Arrangement will constitute a reverse take-over of Aqueous. After completion of the Arrangement, Industrial REIT will be subject to the Exchange policies. The Arrangement is a non-arm's length transaction, as the directors and officers of Aqueous are the same as the directors and officers of the manager of Industrial REIT, and all board members of Aqueous are also securityholders of Industrial REIT. Marco DeDominicis, the President and Chief Executive Officer of Aqueous, currently holds 16.19% of the common shares of Aqueous and also indirectly holds a controlling interest in Industrial REIT.

Pro Forma Capitalization

The total number of trust units issued and outstanding following the Arrangement will depend on the final exchange ratio of trust units to be issued for the Aqueous common shares, as well as the number of trust units (including convertible securities issuable into trust units) which may be issued pursuant to acquisitions made by the Trust prior to the Arrangement. In completing acquisitions, the Industrial REIT will from time to time issue exchangeable limited partnership units of a wholly owned subsidiary, Industrial REIT Limited Partnership, which are the economic equivalent of trust units, and exchangeable on a one-for-one basis for trust units. Exchangeable partnership units will also have the same voting attributes as trust units. Industrial REIT also has issued outstanding options to acquire trust units to its directors, officers and key employees, which will continue in place following the completion of the Arrangement. On closing, the Industrial REIT may issue further options to its directors, officers and key employees, in a number up to 10% of the outstanding trust units and exchangeable limited partnership units of the Industrial REIT, which will be priced at a value equal to the value ascribed to the trust units issued through completion of the proposed transactions. There are currently 350,000 Aqueous options to purchase common shares outstanding which will be exchanged for comparable convertible securities of Industrial REIT. In addition, there are currently 150,000 agent's options to purchase Aqueous common shares outstanding which will be exchanged for comparable convertible securities of Industrial REIT.

Information about Industrial REIT

Industrial REIT is a real estate investment trust established under the laws of the Province of Alberta pursuant to a trust indenture dated March 1, 2007 among the settlor of the Trust, Industrial REIT Management Inc., the manger of the Trust, Olympia Trust Company as trustee (the "Trustee"), and Trevor Haynes, as settlor.

Industrial REIT is in the business of investing in income generating industrial and commercial real estate properties. Since inception, Industrial REIT has completed, and is continuing to make, a number of acquisitions of income generating industrial and commercial real estate property in exchange for the assumption of mortgages of the properties and the issuance of trust units or exchangeable partnership units. A number of the acquisitions have been, or will be, made from directors or officers of Industrial REIT, or affiliates of directors or officers of Industrial REIT, and therefore such acquisitions are considered non-arm's length transactions pursuant to Exchange policies. Industrial REIT will be obtaining independent valuations of all the properties acquired, and to be acquired, since inception. The following table provides details on the acquisitions that Industrial REIT anticipates completing prior to the Arrangement.

Property Address Property Description Price(1)(2)
5929 - 6(th) Street N.E., Single tenant industrial property $ 6,475,000
Calgary, Alberta

10036 - 100 Street Multiple tenant commercial property $ 775,000
Peace River, Alberta

96 Railway Avenue Single tenant commercial property $ 775,000
Drumheller, Alberta

2840 - 58(th) Avenue S.E. Single tenant commercial property $ 2,070,000
Calgary, Alberta

6912 Farrell Road S.E. Single tenant commercial property $ 1,860,000
Calgary, Alberta

13421 St. Albert Trail Multiple tenant commercial property $ 2,600,000
Edmonton, Alberta

1221 & 1675 Inkster Blvd. Single tenant industrial property $ 5,000,000
Winnipeg, Manitoba

3131 - 57(th) Avenue S.E. Single tenant industrial property $ 8,140,000
Calgary, Alberta

Property Address Property Description Price(1)(2)
8801- 102 Street Single tenant industrial property $ 9,650,000
Clairmont, Alberta

8901 - 102 Street Single tenant industrial property $ 4,375,000
Clairmont, Alberta

11311 - 215 Street Single tenant raw land $ 3,315,000
Edmonton, Alberta

8815 - 44(th) Street S.E. Multiple tenant industrial property $ 3,850,000
Calgary, Alberta

1415 - 28(th) Street N.E. Multiple tenant industrial property $ 7,000,000
Calgary, Alberta

235A, 237, 239, 241 Single tenant industrial property $ 6,000,000
Mayland Place N.E.
Calgary, Alberta


(1) Consideration for the purchase price of the properties will include the
issuance of trust units or exchangeable partnership units and the
assumption of mortgages.
(2) Final purchase prices are subject to normal course adjustments.

Industrial REIT may make further acquisitions prior to mailing the information circular for the Aqueous shareholders' meeting to approve the Arrangement.

The current directors of the Administrator are Marco DeDominicis, David Hall, Trevor Haynes, J.G. (Jeff) Lawson and Mark Waldron. The current officers of the Administrator are Marco DeDominicis as President and Chief Executive Officer and Mark Waldron as Vice President, Finance and Chief Financial Officer.

Information about Aqueous

Aqueous was incorporated pursuant to the provisions of the Business Corporations Act (Alberta) on November 20, 2006. Since incorporation, the business of Aqueous has been to identify and evaluate assets or businesses with a view to completing a qualifying transaction as a capital pool company pursuant to Exchange policies. The directors and officers of Aqueous are the same as the directors and officers of the manager of the Industrial REIT. Prior to completion of the Arrangement, the only persons who may be considered principal shareholders of Aqueous are Marco DeDominicis, Trevor Haynes and DSH Partnership (a Partnership in which David Hall is a partner) who each own, directly or indirectly, or exercise control or direction over, approximately 16.2% of the outstanding Aqueous shares.

Board of Directors of Industrial REIT

The following is a brief description of the background of the key management, directors and the promoters of the Administrator upon completion of the Arrangement:

Marco DeDominicis, President, Chief Executive Officer and a Director

Mr. DeDominicis is the President of Octagon Properties Ltd, a private real estate investment company founded in 1997, and is President and Founder of Navigator Developments Ltd, a private real estate development company founded in 2005. Since 1994 Mr. DeDominicis has been President and a Principal of Con-Forte Contracting Co. Ltd, a cast in place concrete contractor and construction company located in Calgary, Alberta. Mr. DeDominicis holds a BA from Carleton University in Ottawa, Ontario.

Mark Waldron, Vice President, Chief Financial Officer and a Director

Mr. Waldron is the Chief Financial Officer of Arcticor Structures Inc. He was the founder and CEO of Emergent Group Inc., a publicly traded medical services company based in California. He is a board member of Emergent Group and a principal investor in several private investment and real estate development companies. He was a Vice President in Corporate Finance with J.P. Morgan & Co. from 1993 through 1998. Mr. Waldron holds an MBA from Northwestern University's Kellogg School of Management, and a BA (Honours) from the University of Western Ontario's Ivey School of Business.

David Hall, Director

Mr. Hall has been a director and officer of Marble Point Energy Ltd. since June 2005. From October 2002 to April 2005, Mr. Hall was the President and Director of Argo Energy Ltd. From June 1998 to February 2002, Mr. Hall was a Director and Vice President of Argonauts Group Ltd. From June 1998 to January 2000, Mr. Hall held the position of Manager, Operations of Anglo Albania Petroleum. Mr. Hall is a professional engineer.

Trevor Haynes, Director

Mr. Haynes is President, Chief Executive Officer and a Director of Black Diamond Group Inc., the manager of Black Diamond Income Fund. Mr. Haynes is also President of Kettleby Group Inc. a private real estate investment and finance company, and a principal and director of CF Construction Services Inc., a residential concrete company, and President of Claryn Equities Inc. a private investment company. Mr. Haynes holds a Bachelor of Arts degree from the University of Toronto.

J.G. (Jeff) Lawson, Director

Mr. Lawson is a Partner at the law firm of Burnet, Duckworth & Palmer LLP, located in Calgary, Alberta. Mr. Lawson specializes in securities law and has extensive experience in both private and public offerings and merger and acquisitions activities. He acts as counsel to a number of industrial and resources companies, is a director or officer of a number of publicly listed entities, and serves as a director of certain non profit and charitable organizations. Mr. Lawson received an LLB from the University of Alberta in 1993.

Principal Securityholders of Industrial REIT

On completion of the Arrangement, Mr. DeDominicis will be a principal securityholder and a "control person", as that term is defined in the Securities Act (Alberta), of Industrial REIT. Mr. DeDominicis may in the future take such actions in respect of his securityholdings as he deems appropriate in the light of the circumstances then existing, including the purchase of trust units or other securities of Industrial REIT through open market purchases or privately negotiated transactions, or the sale of all or a portion of his holdings in the open market or privately negotiated transactions to one or more purchasers.

Requirements to Completion of the Arrangement

Completion of the proposed Arrangement is subject to a number of conditions, including but not limited to, Exchange acceptance, shareholder approval and approval of the Alberta Court of Queen's Bench. To be implemented, the proposed transaction will require approval by two-thirds of the votes of shareholders of Aqueous. The transactions will also require approval by a simple majority of votes cast by holders of Aqueous common shares, other than any "related parties", "interested parties" and "joint actors". The transactions are subject to certain required regulatory approvals and satisfaction of other customary closing conditions. There can be no assurance that the proposed Arrangement will be completed as proposed or at all. In addition, sponsorship of the Arrangement transaction may be required in accordance with Exchange policies, but has not yet been obtained.

Trading of the common shares of Aqueous has been halted in connection with the dissemination of this press release, and the shares will not begin trading until such time as sponsorship is obtained or it is determined that the transaction is exempt from the sponsorship requirements. Aqueous will seek the approval of its shareholders for the Arrangement at a meeting of its shareholders, which is expected to occur in September or October of 2007.

Investors are cautioned that, except as disclosed in the publicly disseminated press releases of the Company and the management information circular to be prepared in connection with the Arrangement, any information released or received with respect to the proposed Arrangement may not be accurate or complete and should not be relied upon. Trading in the securities of Aqueous, a capital pool company, and Industrial REIT, should be considered highly speculative at this time based on the information contained herein.

Cautionary Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the proposal to complete the Arrangement, including statements regarding the terms and conditions of the proposed transaction, and the final exchange ratio for the proposed transaction. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the transactions, that the ultimate terms of the transactions will differ from those that currently are contemplated, and that the transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. We undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company or Industrial REIT, or their respective financial or operating results or their securities.

The TSX Venture Exchange, Inc. has in no way passed upon the merits of the proposed Arrangement and has neither approved nor disapproved of the contents of this press release.

Contact Information

  • Aqueous Capital Corp.
    Mr. Mark Waldron
    Vice President and Chief Financial Officer
    (403) 243-8170 Ext. 113
    Aqueous Capital Corp.
    c/o 1415 - 28th Street N.E.
    Calgary, Alberta T2A 2P6
    (403) 243-8170
    (403) 243-4024 (FAX)