Lonestar Capital Corp.
TSX VENTURE : LON.P

Lonestar Capital Corp.

July 16, 2008 19:05 ET

Lonestar Capital Corporation Announces Qualifying Transaction

HOUSTON, TEXAS and VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 16, 2008) - Lonestar Capital Corporation (TSX VENTURE:LON.P) ("Lonestar" or the "Company"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), is pleased to announce that it has entered into agreements to acquire two leading California solar companies (the "Acquisitions"). It is anticipated that the Acquisitions will constitute the Company's Qualifying Transaction under the Exchange's Policy 2.4 - Capital Pool Companies (the "CPC Policy").

The Acquisitions

Effective June 29, 2008, Acro Energy Technologies, LLC, a Texas limited liability company and wholly-owned subsidiary of Lonestar formed on June 24, 2008 ("Acro Energy Technologies") entered a Stock Purchase Agreement (the "Acro Agreement") to acquire all of the issued and outstanding common shares of Acro Electric, Inc., a California corporation ("Acro"). The aggregate purchase price payable is approximately U.S.$5,400,000 (the "Arco Purchase Price") and will be payable by a combination of cash and common shares in the capital of the Company, as further described below (the "Acro Acquisition"). Mr. Steve Vella is currently the President and sole shareholder of Acro.

Effective July 3, 2008, Lonestar, through Acro Energy Technologies, entered a Stock Purchase Agreement (the "NextEnergy Agreement") to acquire all of the issued and outstanding common and preferred shares of NextEnergy Corp., a California corporation ("NextEnergy"). The aggregate purchase price payable is approximately U.S.$3,600,000 (the "NextEnergy Purchase Price") and will be payable by a combination of cash and common shares in the capital of the Company, as further described below (the "NextEnergy Acquisition"). Mr. Randy Kauffman is currently the President and majority shareholder of NextEnergy.

For each of the Acro Acquisition and the NextEnergy Acquisition, the Company has further agreed to pay an Additional Purchase Price - Earn Out in the event that certain prescribed milestones are achieved in the twelve-month period following completion of the Acquisitions. Acro and NextEnergy are each full service solar integrators specializing in the design and installation of residential and commercial photovoltaic (PV) solar energy systems.

Acro, Mr. Vella, NextEnergy and Mr. Kauffman are each at arm's length to the Company and the Acquisition is therefore not a "Non Arms Length Qualifying Transaction" for the purpose of the CPC Policy.

Acro is headquartered in Oakdale, California. Based on unaudited financial information prepared by its management, Acro had revenues, Earnings Before Interest, Taxes, Depreciation, Amortization, Other Expenses and Provisions ("EBITDA")(i) and net income of approximately U.S.$6.8 million, approximately U.S.$800,000 and approximately U.S.$(574,000), respectively, for the twelve-month period ended May 31, 2008. Residential installations account for approximately 95% of Acro's revenues, with commercial installations accounting for the remainder. With 28 employees located in Oakdale, California, in the Central Valley region, Acro installs solar power systems statewide with an emphasis in the Central Valley.

NextEnergy's headquarters are in Concord, California. Based on unaudited financial information prepared by its management, NextEnergy had revenue, EBITDA(i) and net income of approximately U.S.$5.8 million, approximately U.S.$600,000 and approximately U.S.$(16,000), respectively, for the twelve-month period ending May 31, 2008. NextEnergy has 22 employees in its offices in Concord and San Francisco. Although NextEnergy has installed solar power systems throughout the state of California, its main focus is the Northern California territory. Residential installations account for 90% of NextEnergy's revenues with small business installations accounting for the remainder.

Private Placement and Use of Proceeds

It is intended that the Company will complete, in conjunction with the completion of the Acquisitions, a private placement financing for common shares of the Company for minimum gross proceeds of $8,000,000 and maximum gross proceeds of $12,000,000 (the "Private Placement", and together with the Acquisitions, the "Transaction").

At this time, no registered dealer or advisor has been retained by the Company to act as the agent for the Private Placement. While the Company does not currently anticipate engaging any such agent for the Private Placement, the Company expressly reserves the option and the right to do so, subject to the approval of the Exchange.

The Company intends to use a portion of the net proceeds of the Private Placement to satisfy the: 1) cash component of the Acro Purchase Price payable at closing of approximately U.S.$3,780,000; and 2) cash component of the NextEnergy Purchase Price payable at closing of approximately U.S.$2,520,000.

Approximately U.S.$270,000 of the Acro Purchase Price will be placed in escrow upon closing, to be released based on prescribed conditions as set out in the Acro Agreement, with the balance of the Acro Purchase Price of approximately U.S.$1,350,000 payable by way of the issuance to Mr. Vella, the current sole Acro shareholder, of approximately 1.73 million common shares of the Company based on a value of $0.78 per share.

Similarly, approximately U.S.$180,000 of the NextEnergy Purchase Price will be placed in escrow upon closing, to be released based on prescribed conditions as set out in the NextEnergy Agreement, with the balance of the NextEnergy Purchase Price of approximately U.S.$900,000 payable by way of the issuance to the current NextEnergy shareholders of approximately 1.15 million common shares of the Company based on a value of $0.78 per share.

The Company intends to use the balance of the net proceeds of the Private Placement to pay for costs and expenses associated with the Transaction, to identify, evaluate and fund the acquisition of additional solar integrators in the United States and for general corporate and working capital purposes.

Completion of the Transaction is subject to the satisfaction or waiver of a number of conditions, including but not limited to: (1) completion of satisfactory due diligence by Lonestar on Acro and NextEnergy and by Acro and NextEnergy on Lonestar; (2) completion of the Private Placement; (3) approval of the Transaction by the Exchange and if applicable pursuant to the requirements of the Exchange, majority of the minority shareholder approval; and (4) the listing for trading on the Exchange of common shares of the Company issuable in connection with the Transaction, as well as all other necessary regulatory, director, shareholder or other approvals as may be required. Where applicable, the Transaction cannot close until the required shareholder approval is obtained, and there can be no assurance that the proposed Transaction (or any part thereof) will completed as proposed or at all.

The Company

Lonestar is a capital pool company listed on the Exchange. The principal business of Lonestar is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction. The Company has not commenced commercial operations and has no assets other than cash.

The following sets out a brief overview and background of the directors and officers of Lonestar and its wholly-owned subsidiary Acro Energy Technologies upon the completion of the Transaction.

Mr. Harry J. Fleming, currently the Chief Executive Officer and a Director of the Company, will continue in these roles upon the completion of the Transaction. As a lawyer with over twenty years of experience at law firms in Houston and Boston, Mr. Fleming's background includes venture capital representation, business strategy consulting, public company representation, mergers and acquisitions with high tech firms in Houston and Boston. Mr. Fleming has also acted as General Counsel and Chief Financial Officer for several companies with an emphasis on start-up and growth strategies. Mr. Fleming received his Juris Doctorate from the University of Houston Law Center in 1983 and was awarded a M.B.A. in finance from The Carroll Graduate School of Management at Boston College in 1999. Mr. Fleming is admitted to practice law in the State of Texas and the Commonwealth of Massachusetts, and is also admitted to practice before the U.S. Supreme Court.

Mr. Christopher Mulgrew will be the Chief Financial Officer of the Company. Prior to joining Lonestar, Mr. Mulgrew was a partner at Pimuro Capital Partners, LLC, a boutique investment bank focused on micro and middle market companies, where he oversaw engagements relating to consumer products and services, telecommunications, real estate, healthcare, and energy. Mr. Mulgrew has also served as Chief Financial Officer for private equity/hedge fund backed companies in the business of medical services and devices, alternative risk finance, telecommunications and high-tech, and is currently a strategic advisor to BioHouston, Inc., a non-profit organization focused on establishing the Houston region as a global competitor in life science and biotechnology. Mr. Mulgrew is a member of the Canadian Institute of Chartered Accountants and holds a Master of Business Administration (MBA) degree from the Jesse H. Jones Graduate School of Management at Rice University and Bachelor of Business Administration (BBA) degree from Simon Fraser University. Mr. Mulgrew is a member of Financial Executives International (FEI), Association for Corporate Growth (ACG) and Turnaround Management Association (TMA).

Mr. Kenneth J. Klein, currently a Director of the Company, will continue to serve on the board of directors of the Company. Mr. Klein currently serves as the Chief Financial Officer and Corporate Secretary of Northstar. Mr. Klein has more than 19 years of finance and healthcare experience and has held positions with several other healthcare organizations in Houston, Texas, including The Menninger Clinic, Memorial Hermann Southeast Hospital, Texas Children's Hospital, Castle Dental Centers and Fisher Healthcare. Mr. Klein earned his Bachelors of Science degree in Accounting from Sacred Heart University in Fairfield, Connecticut and is a Certified Public Accountant (Texas). In addition, Mr. Klein is an active member of Healthcare Financial Management Association.

Mr. Steve Vella, currently the President and sole shareholder of Acro, will be the Chief Operating Officer of Acro Energy Technologies. Mr. Vella, a licensed electrician, has been involved in the electrical trade and the solar industry for over thirty-five years. As President of Acro, Mr. Vella has installed 400 solar power systems in California. His knowledge and experience has given Mr. Vella a unique and productive management approach that continues to be extremely effective throughout the growth of Acro. Mr. Vella speaks at numerous trade shows throughout the United States and has been a popular advocate for solar power throughout the United States from the time that he founded Acro in 2000.

Mr. Randall Kauffman, currently the President and majority shareholder of NextEnergy, will be the Chief Technical Officer of Acro Energy Technologies. Mr. Kauffman is a San Francisco native with over 30 years of experience in the Mechanical HVAC and Solar Energy fields. Mr. Kauffman started NextEnergy in 2000 and the company has grown under his leadership to become one of the top residential solar energy companies in the United States. Mr. Kauffman has been an innovator and developer of energy efficient technologies throughout his career and his experience includes Norman-Wright Mechanical Equipment Company and Servamatic Corporation. Mr. Kauffman also has hands on experience as a Journeyman Steamfitter, is a PG&E Certified Home Energy Efficiency Rater, and is also certified with the California Energy Commission for Installing Solar Electric Energy. Mr. Kauffman is a Member and past Secretary of CALSEIA (California Solar Energy Industries Association) and a member of ASHRAE (American Society of Heating, Refrigeration and Air-Conditioning Engineers).

Douglas Samuelson, currently a Director of the Company, will be the Executive Vice President, General Counsel and a Director of the Company. Mr. Samuelson is a principal with a mid-sized law firm in Houston, Texas focusing on business and construction related matters and brings over 20 years of legal experience to the Company. Mr. Samuelson is also Board Certified in Civil Trial Law by the Texas Board of Legal Specialization. Mr. Samuelson holds a Juris Doctor degree from the University of Houston and a Bachelor of Science degree from the University of Wisconsin-River Falls. Mr. Samuelson served as the lead U.S. counsel in connection with the initial public offering of Northstar Healthcare Inc. ("Northstar") on the Toronto Stock Exchange and continues to act as U.S. counsel for Northstar.

Peter Lynch will continue as the Executive Vice President of Strategic Development of the Company. Mr. Lynch is a Wall Street analyst and private equity authority on investing in renewable energy. During the last 30 years, Mr. Lynch has raised or assisted in raising well over U.S.$500 million in investment capital for early stage solar energy-related companies and other types of renewable energy technologies and is a highly sought after advisor on solar industry technologies. Mr. Lynch is regularly featured in national and international news outlets and brings to Lonestar a wealth of diverse financing options and credibility for its clients. Mr. Lynch holds a Bachelor of Arts in Economics from Villanova University and a Master of Business Administration (MBA) in Finance from SUNY Albany.

Investors are cautioned that, except as disclosed in the filing statement to be prepared by the Company in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should therefore not be relied upon by investors. Trading in the securities of a capital pool company such as those of the Company should be considered highly speculative.

(i) Lonestar defines EBITDA as earnings before interest, taxes, depreciation, amortization, other expenses and provisions for, or recovery of impairments, of investments and other assets. EBITDA is not a recognized measure under Canadian or U.S. GAAP. Management believes that, in addition to net income, EBITDA is a useful supplemental measure, as it provides investors with an indication of the performances of Acro and NextEnergy. EBITDA is used by the Company to analyze performance and compare profitability between periods. Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net income determined in accordance with GAAP. The method of calculating EBITDA used by Lonestar, Acro and NextEnergy may differ and may also differ from other companies and, accordingly, EBITDA may not be comparable to measures used by other companies.

This press release contains forward looking statements within the meaning of applicable securities laws which are subject to risks, uncertainties and assumptions. Such forward-looking information includes, among other things, information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions, the completion of the Private Placement, the Acquisitions, as well as the activities, operations, strategy and financial performance of the Company, Acro Energy Technologies, Arco and NextEnergy. These statements can generally be identified by use of words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe", "continue" as well as the negatives thereof and similar variations.

Although the directors of the Company currently believe that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct, and the results or events anticipated or predicted in any such forward-looking information may differ materially from actual results. Forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations and are based on assumptions that may prove to be incorrect. Some of the factors and risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include the impact of general economic conditions, industry conditions, government regulation, environmental risks, competition from other industry participants, stock market volatility, the ability to access sufficient capital from internal and external sources. A full description of these risks and uncertainties with regards to a capital pool company can be found in the Company's prospectus dated February 28, 2008 which is available electronically at www.sedar.com.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included herein are made as of the date hereof and are subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to do so, it does not undertake any obligation to, any time, publicly update such forward-looking statements to reflect new information, subsequent events or otherwise.

The 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. The Exchange does not accept responsibility for the adequacy or accuracy of this press release.

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