NAPEC Inc.
TSX : NPC

NAPEC Inc.

November 24, 2016 09:39 ET

NAPEC Inc. Completes $15 Million Bought Deal Public Offering and $8.3 Million Concurrent Private Placement

DRUMMONDVILLE, QUEBEC--(Marketwired - Nov. 24, 2016) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES

NAPEC Inc. ("NAPEC" or the "Corporation") (TSX:NPC) today announces that it has completed its previously announced bought deal public offering of 15,500,000 subscription receipts (the "Subscription Receipts") for aggregate gross proceeds of $15,035,000 (the "Public Offering"). The Public Offering was completed through a syndicate of underwriters led by Desjardins Securities Inc., and including Canaccord Genuity Corp. and Laurentian Bank Securities Inc. (collectively, the "Underwriters").

The Subscription Receipts will begin trading today on the Toronto Stock Exchange under the symbol "NPC.R".

The Subscription Receipts will be exchangeable, for no further consideration or action to be taken, at the ratio of one Subscription Receipt for one unit, each unit consisting of one common share of NAPEC and one-half of one common share purchase warrant upon satisfaction of all conditions precedent to the closing of the previously announced transaction to acquire the assets of PCT Contracting, LLC (the "Acquisition"). Each whole warrant is exercisable at a price of $1.30 at any time until November 24, 2018.

Certain officers and directors of the Corporation have subscribed for a total of 330,600 Subscription Receipts in connection with the Public Offering (the "Insider Subscriptions").

The Corporation hereby also announces that it has completed a concurrent private placement of Subscription Receipts (the "Private Placement") with Caisse de dépôt et placement du Québec and Fonds de solidarité des travailleurs du Québec (F.T.Q.) (the Public Offering and the Private Placement are collectively named the "Offering"), for aggregate gross proceeds of $8,300,000. Pursuant to the Private Placement, the Corporation issued an aggregate of 8,556,701 Subscription Receipts. The Subscription Receipts issued under the Private Placement include the same terms and conditions as the Subscription Receipts issued under the Public Offering. The Subscription Receipts and underlying securities issued under the Private Placement are subject to a four month and one day resale restriction from the closing date of the Private Placement, expiring on March 25, 2017.

The Subscription Receipts were issued pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement"), whereby the gross proceeds of the Offering, less 50% of the Underwriters' fee in connection with the Public Offering (the "Underwriters' Fee"), 50% of the Underwriters' advisory fee in connection with the Private Placement (the "Placement Fee") and all costs and expenses of the Underwriters, (the "Escrowed Proceeds") were deposited in escrow and will be held by Computershare Trust Company of Canada (the "Subscription Receipt Agent") and invested under the direction of the Corporation in short-term obligations of, or guaranteed by, the Government of Canada (and other permitted investments) until the earlier of: (i) the satisfaction or waiver of all conditions to the Acquisition (the "Escrow Release Conditions"); and (ii) the date on which a termination event occurs in connection with the Acquisition. The Acquisition is scheduled to close during the fourth quarter of 2016.

If the Escrow Release Conditions are satisfied or waived prior to the occurrence of a termination event, the Subscription Receipt Agent will release the Escrowed Proceeds to the Corporation, together with applicable interests pursuant to the Subscription Receipt Agreement, less the remaining 50% of the Underwriters' Fee and the remaining 50% of the Placement Fee.

If a termination event occurs, each Subscription Receipt shall be automatically cancelled without any further action and holders of the Subscription Receipts shall be entitled to receive from the Subscription Receipt Agent, and the Corporation where applicable, a repayment of an amount equal to $0.97 multiplied by the number of Subscription Receipts held by such holder, plus the holder's pro rata entitlement to applicable interests pursuant to Subscription Receipt Agreement, less any applicable withholding taxes.

The Escrowed Proceeds, when released by the Subscription Receipt Agent pursuant to the Subscription Receipt Agreement, will be used by the Corporation to pay a portion of the purchase price of the Acquisition. The remaining portion will be paid through new credit facilities.

The Insider Subscriptions and the Private Placement constitute "related party transactions" within the meaning of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions ("Regulation 61-101"). However, the Corporation has determined that the exemptions from formal valuation and minority approval requirements provided for, respectively, under subsections 5.5(a) and 5.7(1)(a) of Regulation 61-101 can be relied on as neither the fair market value of the Subscription Receipts issued nor the fair market value of the consideration paid exceed 25% of the Corporation's market capitalization. None of the Corporation's directors has expressed any contrary views or disagreements with respect to the foregoing.

A material change report in respect of these related party transactions will be filed by the Corporation but could not be filed earlier than 21 days prior to the closing of the Offering due to the fact that the terms of the participation of each of the non-related parties and the related parties in the Offering were not confirmed.

The securities offered 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 U.S. State securities laws and may not be offered or sold, directly or indirectly, within the United States or its territories or possessions or to or for the account of any U.S. person (as defined in Regulation S under the U.S. Securities Act) other than under an available exemption from the registration requirements of the U.S. Securities Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any such securities within the United States, or its territories or possessions, or to or for the account of any U.S. person, nor shall there be any sale of the securities in any territory in which such offer, solicitation or sale would be unlawful.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that reflect management's current expectations regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management assumes no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.

OVERVIEW OF THE CORPORATION

NAPEC is a company operating in the energy sector. The Corporation is a leading provider of construction and maintenance services to the public utility and heavy industrial markets, mainly in Québec, Ontario, and the eastern United States. NAPEC and its subsidiaries build and maintain electrical transmission and distribution systems and natural gas networks. The Corporation also installs gas-powered and electric-powered heavy equipment for utilities, gas-fired industrial power plants, petrochemical facilities, and solar panel farms in North America. The Corporation also offers environmental construction and road matting services.

Additional information on NAPEC can be found in the SEDAR database (www.sedar.com) and on the Corporation's website, at www.napec.ca.

Contact Information