Leezamax Capital Corp.
TSX VENTURE : LZX.P

November 22, 2007 13:38 ET

Leezamax Capital Corp to Acquire Australian Biodiesel Company Axiom Energy Limited as Part of Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Nov. 22, 2007) - Leezamax Corp (TSX VENTURE:LZX.P) ("Leezamax" or the "Corporation") is pleased to announce that it has entered into a Term Sheet Agreement dated November 19, 2007 (the "Agreement") pursuant to which the Corporation will acquire all of the issued and outstanding common shares of Axiom Energy Limited ("Axiom"), an Australian biodiesel company, based in Melbourne, Victoria, Australia, in exchange for the issuance of common shares ("Common Shares") in the capital of the Corporation (the "Axiom Acquisition"). The Axiom Acquisition constitutes a "Qualifying Transaction" for the Corporation as such term is defined in the policies of the TSX Venture Exchange Inc. (the "Exchange").

In addition, pursuant to the terms of the Agreement, it is intended that the Corporation will in conjunction with the completion of the Axiom Acquisition: (i) complete a private placement financing of units for gross proceeds of $15,000,000, with a minimum of $10,000,000 and a maximum of $17,000,000 (the "Private Placement"), (ii) obtain through Axiom, a Project Debt Facility in the amount of A$15,000,000 - 20,000,000 to complete the construction and commissioning of a 150 million liter per annum biodiesel facility at the Geelong Port, Victoria, Australia (the "Project Debt Facility") (iii) obtain through Axiom, a Term Bank Facility (the "Term Bank Facility") in the amount of A$10,000,000 for working capital purposes. (Collectively, the Axiom Acquisition, the Private Placement, the Project Debt Facility, and the Term Bank Facility are referred to herein as the "Transaction"). In addition, subject to the approval of the shareholders of Leezamax, it is expected that the Corporation will change its name to "Axiom Energy Corporation" (the "Name Change").

A special meeting of the shareholders of Leezamax (the "Meeting") will be held to consider and approve certain aspects of the Qualifying Transaction in accordance with the policies of the Exchange and the Business Corporations Act (Alberta), including the appointment of the new board of the resulting issuer and the Name Change. Management of Leezamax will prepare a filing statement to be disclosed on SEDAR outlining details of the Transaction, including the Axiom Acquisition, and an information circular to be mailed to shareholders of Leezamax in conjunction with the Meeting. There can be no guarantee that the shareholders of Leezamax will approve any of the foregoing.

It is the intention of Leezamax to maintain the current halt status with respect to trading of the shares of the Corporation until completion of the Transaction.

All information contained in this news release with respect to Axiom was supplied by Axiom for inclusion herein, and with respect to such information, Leezamax and its board of directors and officers have relied on Axiom.

HIGHLIGHTS OF THE TRANSACTION

The Parties

The Corporation was incorporated on April 9, 2007 under the provisions of the Business Corporations Act (Alberta) and is based in Surrey, British Columbia.

Leezamax is a Capital Pool Company governed by the policies of the Exchange and trades on the Exchange under the trading symbol of (TSX VENTURE:LZX.P). Leezamax's principal business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction.

Axiom is an Australian company existing under the laws of the State of Victoria with an operational office located in Melbourne, Victoria, Australia. Axiom is a biodiesel company which is building a new state-of-the-art 150 million liter per year biodiesel plant (with the ability to upgrade to 300 million liters per year) at the Geelong Port in the State of Victoria, Australia. Engineering work has begun, permitting and EPA approvals are in place and commissioning is expected in Q1 2009. The Geelong Plant is strategically located to integrate into the well established distribution channels for diesel fuel in Victoria and the Plant Site is in close proximity to Shell Australia's largest refinery. The superior logistical access to the Geelong Plant via water, rail and road facilities provides efficient feedstock sourcing and biodiesel distribution on a global basis. A dedicated 30 million liter liquid bulk storage terminal will be built exclusively for Axiom by Terminals Pty Ltd, one of Australia's largest storage and terminal operators. Axiom has an offtake arrangement with a large International Trade Group and has already developed relationships with some large Victorian diesel users. In addition, in Sydney, New South Wales, Australia, Axiom, in conjunction with Terminals Pty Ltd, has completed preliminary layouts for the future construction of up to a 300 million litre per annum Biodiesel facility utilizing Terminals Pty Ltd's Port Botany facility with its well established infrastructure.

Axiom has been active in the biodiesel development business since 2004.

Upon completion of the Transaction, Axiom will be a wholly owned subsidiary of the Corporation. Leezamax, through Axiom, will seek to become one of Australia's premier biodiesel company. It is anticipated that Leezamax will be a Tier 2 Issuer under the policies of the Exchange.

The AXIOM Acquisition and Related Transactions

In connection with the AXIOM Acquisition, it is intended that the Corporation will complete the Private Placement and further obtain the Project Debt Facility and the Term Bank Facility, each of which is summarized below.

The Private Placement

Concurrently with, and as a condition of the Transaction, Leezamax will complete the Private Placement for gross proceeds of $15,000,000, with a minimum of $10,000,000 and a maximum of $17,000,000. The net proceeds of the Private Placement will be used for part of the plant infrastructure construction and general working capital.

Pursuant to the Private Placement, the Corporation will issue up to 37,750,000 units of Leezamax (the "Units") at an estimated price of $0.40 per Unit. Each Unit will be comprised of one (1) Common Share and one-half ( 1/2) Common Share purchase warrant ("Warrant"). Each full Warrant will entitle the holder to purchase one (1) Common Share at a price of $0.60 per share for a period of two years following the closing of the Private Placement.

Haywood Securities Inc ("Haywood") will act as the Corporation's Sponsor for the Transaction. Silverbridge Capital Inc ("Silverbridge") will act as the agent for the Private Placement. It is currently anticipated that a cash commission of 10% will be payable on the gross proceeds of the Private Placement to the agent and that the agent will receive warrants entitling it to purchase that number of Common Shares equal to 10% of the number of Units sold pursuant to the Private Placement, exercisable for a period of two years at a price of $0.40 per share (the "Agent's Warrants"). Haywood will be paid a sponsorship fee consisting of CDN$100,000 cash as well as be issued a further warrant to purchase up to 100,000 shares of Leezamax on the same terms as the Agent's Warrants.

The Project Debt Facility

Axiom is currently sourcing an A$15 - 20 million Project Debt Facility to construct and commission the Geelong Plant.

The Term Bank Facility

Axiom is currently sourcing as part of its Project Finance Package an A$10,000,000 Term Bank Facility for working capital, specifically for the purchase of raw materials.

The AXIOM Acquisition

Subject to the completion of satisfactory due diligence, a definitive share exchange agreement and receipt of applicable regulatory approvals, the Corporation intends to acquire all of the outstanding and issued common shares of AXIOM such that AXIOM will be a wholly owned subsidiary of Leezamax upon completion of the AXIOM Acquisition.

The consideration for the AXIOM Acquisition will be the issuance of 55,000,000 Common Shares (the "Purchase Shares") at a deemed price of $0.40 per share for a total deemed value of $22 million. It is anticipated that those Purchase Shares to be issued to the current shareholders of AXIOM, which include some of the officers of the Corporation following completion of the AXIOM Acquisition, will be subject to a Tier 2 Value Security Escrow Agreement under the policies of the Exchange, pursuant to which the Purchase Shares will be released over a 36-month period from the date of completion of the AXIOM Acquisition.

A finder's fee of 2 million common shares of the Corporation will be paid to Surefund Capital Corporation. Mr Gary Perkins is the President and Director of SureFund Capital Corporation. The approximate valued of the finder's fee based on the deemed value of the transaction will be $800,000.

Share Capital of the Corporation

The Corporation currently has approximately 2,833,333 Common Shares issued and outstanding. Assuming the completion of the Transaction, namely: (i) the issuance of 55,000,000 Purchase Shares as consideration for the AXIOM Acquisition; (ii) the issuance of 37,750,000 Common Shares pursuant to the Private Placement; and (iii) the 2,000,000 common shares issued for the Finders fee, the Corporation will have approximately 97,333,333 Common Shares issued and outstanding, of which the former shareholders of AXIOM will own approximately 56.7 %.

Conditions Precedent to Completion of the Transaction

Completion of the Transaction is subject to a number of conditions, including but not limited to:

(i) the completion of satisfactory due diligence by Leezamax on AXIOM and by AXIOM on Leezamax and receipt of satisfactory tax advice;

(ii) completion and execution of a formal share exchange agreement between Leezamax and AXIOM in form and content satisfactory to each of them;

(iii) Leezamax through AXIOM obtaining conditional approval of the Project Debt financing;

(iv) completion of the Private Placement;

(v) Leezamax through AXIOM obtaining indicative approval of the Term Bank Facility;

(vi) receipt of a conditional offer for the $12 million letter of credit or bank guarantee or performance bond ("bonding") in favour of Terminals (Pty) Limited;

(vii) completion of the Financing;

(viii) Axiom shareholder approval;

(ix) approval or consent of any third party whose consent is required by Leezamax to complete the Transaction; and

(x) approval of the transaction by the Exchange, and all other necessary regulatory, director, or other approvals as may be required.

Arm's Length Transaction

Under the policies of the Exchange, the AXIOM Acquisition was negotiated as and is being completed as an arm's length transaction.

PROPOSED MANAGEMENT

Upon completion of the Transaction, it is anticipated that Leezamax's board of directors will change with the appointment of Axiom's nominees, namely Mr. Julian Vear (Non Executive Director), Mr. Andrew Moffat (Non Executive Director) and Mr. Danny Goldman (Managing Director). Mr. Glenn Laing will be appointed to the board of directors of Leezamax on a non-executive basis. A further independent director will also be recruited.

The background of each of the members of the board of directors and management of Leezamax on a post-Transaction basis is as follows:

Mr. Danny Goldman

Managing Director - Melbourne, Australia

Danny Goldman is an experienced corporate executive with extensive operational and finance experience. Prior to his appointment as Managing Director, Danny was the Chief Operating Officer of the Company from May 2005. From January 2003 to February 2005, Danny was General Manager of Electrical, Furniture & General Merchandise at Myer Stores Ltd, then a division of Coles Myer Limited. Previously, Danny was the Chief Financial Officer and Company Secretary of Country Road Limited, an ASX listed apparel retailer and wholesaler. Danny has also held various operational, finance and accounting roles in South Africa within Woolworths Holdings Limited and Ernst & Young Chartered Accountants. Danny is a qualified Chartered Accountant, with a Bachelor of Commerce Honours degree in Accounting Science from the University of South Africa and a Bachelor of Commerce from the University of Cape Town.

Mr. David Vinson

Technical Director: Axiom Energy Limited (Australia)

Melbourne, Australia

David Vinson is the Technical Director of Axiom Energy. He is a seasoned executive in the Australian biodiesel industry. David joined Axiom in its formative stages and has spearheaded its project development and operational initiatives. He is recognized internationally as an expert in biodiesel project development and operations. David has been instrumental in launching and operating numerous companies in the chemical, marketing services and recycling industries, including managing the construction and operations of one of Australia's first biodiesel plants. Prior to joining Axiom, he was the General Manager of Oil Master Recycling, a division of The Victor Smorgon Group. Oil Master Recycling is the largest collector and processor of used cooking oil in Victoria, Australia. David graduated from Purdue University with a degree in Chemical Engineering and has wide experience in the design, construction and operations of chemical and polymer facilities.

Mr. Andrew Nurse

Engineering & Operations - Melbourne, Australia

Andrew Nurse is a formally qualified Chemical Engineer with extensive practical and managerial experience in demanding manufacturing and production environments with multi-national groups and oil companies. His experience covers the entire range of project development from planning and construction through commissioning and operational management. Andrew's operational experience has been gained across a broad range of facilities, including large continuous plants, batch processing plants, petroleum refining and offshore oil production. Prior to joining the Group, Andrew held various positions with companies such as Valspar, Orica, Krebs Petroleum and Cabot International.

Mr. Glenn Laing

Director - Oakville, Ontario

Mr. Laing holds a B.Sc Eng (Mining Geology) degree from the University of Witwatersrand, Johannesburg and an M.Sc (Mining Engineering) degree from Colorado School of Mines, Golden, Colorado, USA. Mr. Laing has been involved in the natural resources and financial sectors for over 30 years. Mr. Laing's experience in the mining and exploration industry began in 1973 with underground, surface mining, and exploration experience in Southern Africa, Europe, Central Asia and Canada. In the 1990s his experience extended to investment banking and financing to the mining and oil and gas sectors. From 1993 to 1995 he worked for TD Securities Inc. in Toronto, Ontario as Senior Mining Analyst. In 1999 he formed Silverbridge Capital Inc., a limited market dealer of which he is currently President. In total, he has over 25 years experience in a managing director and/or President / CEO position of publicly listed companies. He is a director of Prime Capital Finance Pty Ltd - an Australian Corporate Finance and Advisory firm, CEO and President of Glass Earth Limited (TSX-Venture), Jumbo Petroleum Corporation (TSX Venture) and Youandi Capital Corp. (TSX Venture) and a director St Andrew Goldfields Ltd. (TSX).

Mr. Julian Vear

Independent Non Executive Director - Mt. Eliza, Victoria, Australia

Julian has over 30 years of operational and financial experience in the energy and resources sector. Julian was Finance Director at North Limited, a listed diversified resources company that was taken over by Rio Tinto in 1999. Previously, Julian spent more than 30 years at BP where he worked in numerous operational and financial roles overseas and in Australia, culminating in his role as Executive Director Finance and Chief Financial Officer for all BP Companies operating in Australasia. Julian is a Chartered Accountant and prior to joining BP he was employed by Arthur Andersen in London.

Julian is a former Chairman of the Victorian chapter of the Financial Executives Institute and a Governor and Vice President of the national body, is a former Councillor and Treasurer of the Victorian Chapter of the Australia British Chamber of Commerce and a Trustee of CEDA.

Julian holds an MA (Honours) degree in Natural Science (Chemistry) from Oxford University, England and is a Fellow of the Institute of Chartered Accountants in England and Wales.

Mr. Andrew Moffat

Non Executive Director - Perth, West Australia, Australia

Andrew has more than 20 years of corporate and investment banking experience and is the sole principal of Cowoso Capital Pty Ltd, a company providing strategic corporate advisory services. Prior to establishing Cowoso capital in 2003, Andrew was a Director of Equity Capital Markets & Advisory for BNP Paribas Equities (Australia) Limited with principal responsibility for mergers and acquisition advisory services and a range of equity capital raising mandates including placements, initial public offerings, rights issues and dividend reinvestment plan underwritings. His corporate and investment banking experience was gained whilst working in the United Kingdom and Australia with Standard Chartered Bank Group, National Westminster Banking Group and BNP Paribas. Andrew is chairman of Pacific Star Network Limited (ASX code PNW), executive director of Ausron Limited (ASX code AUX)and a non-executive director of Infomedia Ltd (ASX code IFM) and Cash Converters International Limited (ASX code CCV).

THE AUSTRALIAN BIODIESEL INDUSTRY

Demand

A total of 15.8 billion liters of diesel was consumed in Australia in 2006, with consumption growing at a rate of 4% per annum fuelled by the expanding economy, growth in the natural resource sector and the growing demand for diesel passenger cars. Over 2.5 billion litres of diesel is sold in Victoria and over 3.5 billion litres is sold in New South Wales per annum. Over 75% of diesel sales occur through long term contracts with the balance sold at retail outlets from diesel pumps. The main users of diesel are road transport, rail, marine and agriculture industries.

Supply

Approximately 25 - 30% of Australia's diesel is imported due to the lack of refining capacity in the country. The concentration of end users allows for the development of large strategic off-take agreements. There is currently limited biodiesel supply capacity set up to service the south eastern states of Victoria and New South Wales.

The Australian Government has long term biodiesel industry support packages in place including the:

Cleaner Fuel Grant Scheme

- Under the Cleaner Fuel Grant Scheme, biodiesel manufacturers receive a rebate for the biodiesel they produce, as follows:

-- 2006 - 2011: Full rebate of $0.38 per liter.

-- 2011 - 2015: Progressively reduced rebate, moving from $0.38 to $0.19 per liter.

-- 2015 - Beyond: Rebate of $0.19 per liter.

Fuel Tax Act

- End User implications: Where a particular fuel blend meets a fuel standard under the Fuel Quality Standards Act 2000 for petrol or diesel, the fuel tax credit payable will be calculated as though the blend was a fuel entirely of that standard. For example, high quality biodiesel blended up to 20% with petrol diesel (B20) will attract full credits.

State Mandates

- A majority of States are considering mandating minimum biofuel blend targets, generally at 5% by 2010. Such a requirement across all states would generate a minimum market demand of 800 million litres per annum of biodiesel Australia wide.

- Certain States have or are considering mandating the use of biofuel blends in Government fleet vehicles and public transport.

THE AXIOM PROJECTS

The following is a description of the two Axiom Biodiesel Projects.

Multiple Raw Materials

Axiom's biodiesel facilities will be capable of processing multiple types of renewable raw materials. The Company intends to source the supply of a range of different raw materials, including palm oil and tallow, primarily from two commodity trading companies. Axiom has entered into a formal agreement with Australia's largest tallow trader to supply tallow and a Term Sheet with a large International Trade Group to supply vegatable oils.

Project 1 Geelong Facility, Victoria

Axiom's first biodiesel project will be the construction and operation of a 150 million litre per year biodiesel facility located at the Port of Geelong, 100 kilometers south west of Melbourne, Australia.

Axiom has secured a long term (20 year) lease on a 2.5 acre site located on a Port of Geelong property. The site is located close to the port pier, which gives Axiom easy access for receiving raw materials and for distribution of biodiesel by road, rail and sea. Due to its size, the site is capable of housing a plant with double Axiom's proposed initial annual capacity, ie: 300 million liters.

In addition Axiom has an exclusive long term (20 year) lease for 30 million litres of dedicated tank storage for raw materials and biodiesel from Terminals Pty Ltd. This agreement includes access to existing loading and unloading facilities.

The Geelong facility is in close proximity to Shell Australia's largest refinery. The existing infrastructure and ship to shore interface provides for superior cost advantages for receipt of raw materials and fuel distribution.

Axiom has secured a Term Sheet with an International Trade Group to purchase 100% of the Company's biodiesel production of 150 million litres per annum as well as the 13,000 tonnes of the glycerol by product.

Axiom has chosen to use Safer Energy Group LLC technology which uses a cost effective modular system that has a 52 week delivery time. The technology has been successfully tested on multiple feedstocks. Planning permission and EPA approvals have been completed.

Project 2 Botany Bay Facility, Sydney, New South Wales

In addition in Sydney, New South Wales, Australia, Axiom in conjunction with Terminals Pty Ltd has completed preliminary layouts for the future construction of up to a 300 million litre per annum Biodiesel facility utilizing Terminals Pty Ltd's Port Botany facility with its well established infrastructure. The Terminals Pty Ltd facility is in proximity to Caltex Australia's refinery and is part of Sydney's largest bulk terminal precinct (Vopak and others).

Situated on Botany Bay, the facility is easily accessible by both vessel for both inbound and outbound product movements via established infrastructure.

Completion of the transaction is subject to a number of conditions, including TSX Venture Exchange acceptance. 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 Leezamax should be considered highly speculative.

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

Certain statements in this material may be "forward-looking statements" including outlook on oil and gas prices, estimates of future production, estimated completion dates of acquisitions and construction and development projects, business plans for drilling and exploration, estimated amount and timing of capital expenditures and anticipated future debt levels and royalty rates. Information concerning reserves contained in this material may also be deemed forward-looking statements as such estimates involve the implied assessment that the resources described can be profitably produced in the future. These statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated by Leezamax.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Leezamax Capital Corp.
    Terry Rogers
    President
    (604) 531-8113
    or
    Axiom Energy Limited
    Danny Goldman
    Managing Director
    +61-3- 9865 8883