Nordex Explosives Ltd.
TSX VENTURE : NXX

Nordex Explosives Ltd.

July 28, 2016 13:59 ET

Nordex Explosives Announces Mailing of Proxy Materials for Its Annual and Special Meeting of Shareholders

KIRKLAND LAKE, ONTARIO--(Marketwired - July 28, 2016) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Nordex Explosives Ltd. ("Nordex" or the "Company") (TSX VENTURE:NXX) is pleased to announce that it has filed its meeting materials in connection with its upcoming annual and special meeting of shareholders (the "Meeting") to be convened on August 18, 2016 under its profile at www.SEDAR.com. Nordex has commenced mailing the meeting materials to its shareholders, including the management information circular dated July 25, 2016 (the "Circular") and form of proxy in relation to the Meeting, along with the letters of transmittal, prepared in connection with its previously announced change of control transaction (the "Change of Control Transaction") and a going private transaction (the "Going Private Transaction", and together with the Change of Control Transaction, the "EPC Transactions") with Société Anonyme d'Explosifs et de Produits Chimiques ("EPC"), as more particularly described in the Company's news releases of June 15, 2016 and July 18, 2016.

The Change of Control Transaction would be effected by the issuance to EPC (or an affiliate thereof) of 41,445,449 common shares of the Company from its treasury such that EPC would beneficially hold 67% of the outstanding common shares, at a price of $0.12 per share, for aggregate gross proceeds to Nordex of approximately $5,000,000. EPC has also committed to provide $780,000 in low-cost loans to the Company. Nordex would use the proceeds of these financings primarily to repay its high-interest unsecured debt and certain secured bank debt facilities, with the remainder of approximately $2,400,000 to be used for working capital and investments. It is important to note that the price per share payable by EPC in connection with the Change of Control Transaction represented a 33.3% premium to the closing price of the common shares on the day prior to the announcement of the Change of Control Transaction and an approximately 73% premium to the weighted average closing price for the 30 day period prior to such announcement.

Pursuant to the Going Private Transaction, Nordex would amalgamate with a wholly-owned subsidiary of EPC under the Canada Business Corporations Act and, upon completion of that transaction, all of the issued and outstanding common shares of Nordex, other than those held by EPC or its affiliates, will be exchanged, on a one-for-one basis, into redeemable preference shares ("Redeemable Shares") of the amalgamated corporation ("Amalco"). The Redeemable Shares will then be immediately redeemed by Amalco in exchange for $0.18 per share payable in cash, representing a 100% premium to the closing price on the day prior to the announcement of the Going Private Transaction and an approximately 160% premium to the weighted average closing price for the 30 day period prior to such announcement.

It is also important to note that the Going Private Transaction and Change of Control Transaction are separate transactions and not conditional on the closing of each other. The cash consideration to be received by Nordex shareholders for their common shares in connection with the Change of Control Transaction is in addition to the significant cash injection that EPC will make in Nordex pursuant to the Change of Control Transaction.

Having undertaken a thorough review of, and carefully considered the transactions with EPC, the Board of Nordex has unanimously concluded that the Change of Control Transaction and the Going Private Transaction are each in the best interests of Nordex and are fair to the shareholders of Nordex. The Board unanimously recommends that the shareholders of Nordex vote in favour of each of the EPC Transactions as they represent significant benefits to the Company and its stakeholders.

How To Vote

Nordex shareholders are encouraged to vote as soon as possible following the directions and various mechanisms as described in the form of proxy which accompanies the Circular. To ensure that your vote is counted, shareholders will need to vote at least 48 hours before the time of the Meeting. If you have any questions or need assistance voting your proxy, please contact D.F. King, our proxy solicitation agent, by telephone at 1-800-761-6707 (toll free in North America) or 1-201-806-7301 (Collect Outside North America), or by email at inquiries@dfking.com.

Benefits of the EPC Transactions

The Company has entered into binding agreements with EPC with respect to each of the Change of Control Transaction and the Going Private Transaction. The benefits and advantages of the EPC Transactions to Nordex and its stakeholders are considerable and include the following:

  • Provide Significant Premium to Shareholders and Nordex: At the time the EPC Transactions were agreed to, the per share price of $0.12 for the Change of Control Transaction represented a 33.3% premium to the prior trading day closing price, and the share price of $0.18 per share for the Going Private Transaction represented a 100% premium to the prior trading day closing price. The Company believes such premiums are exceptional.
  • Shareholders and Nordex realize immediate and certain cash value without delay: In addition to the significant cash injection in Nordex, the consideration to be paid to shareholders under the Going Private Transaction is all cash and not subject to any financing condition. The Going Private Transaction can be completed immediately after the Meeting on August 18, 2016 without any undue delay to seek regulatory approvals or negotiate with the Company's lenders.
  • Regulatory approvals are well underway: The required regulatory approvals for the completion of the EPC Transactions have either been obtained or are well underway, clearing the way to complete the EPC Transactions quickly. These approvals include conditional approval of the TSX Venture Exchange and making the requisite notices under the Investment Canada Act and to the Explosives Regulatory Division of Natural Resources Canada.
  • Agreements with lenders are secured: EPC has diligently entered into satisfactory agreements with all of the Company's major lenders, thus clearing a significant hurdle to completion of the EPC Transactions and the elimination of high-interest debt that has been an impediment to the Company's growth and development.
  • Strong shareholder support: EPC has entered into voting support agreements with a major shareholder of Nordex and all of its directors and officers. As a result, shareholders holding approximately 20% of the outstanding common shares have already agreed to support the EPC Transactions.
  • Change of Control Transaction ensures the long-term survival of Nordex: The Change of Control Transaction, which will inject significant capital into the Company by way of (non-repayable) equity, rather than debt, will enable Nordex to significantly "clean up" its balance sheet and pay out all of its high interest debt obligations. EPC has committed to inject approximately $5,000,000 in equity in Nordex to ensure the Company's long term survival and has committed to provide a further $780,000 in low-cost loans to improve the Company's cash flow position and ensure its stability in both the short and long term.
  • Benefits all stakeholders including the Kirkland Lake community: EPC has indicated it will bring the benefit of its experience as well as its considerable resources to bear on the operations of Nordex, which will be of considerable benefit to Nordex and its stakeholders, particularly the employees and the community of Kirkland Lake and surrounding areas. Nordex shareholders will benefit from a clean balance sheet and a strong international partner that understands its business and can provide synergises, operational support and assistance with opening new markets, even if the Going Private Transaction is not completed.
  • Strong foothold in North America will lead to growth for Nordex. EPC already has a foothold in the North American explosives-related markets and there are fundamental synergies that will benefit Nordex. EPC's significant presence in the U.S. would be expected to immediately add significant synergistic benefits to Nordex.

As noted, the Change of Control Transaction and the Going Private Transaction are not linked; if the latter does not proceed, the former would leave the Company in a financially solid position with a strong Board. Shareholders would be able to participate in the upside of Nordex along with EPC, and the financially strong resulting company will serve the interests of all of Nordex's stakeholders, including the community of Kirkland Lake and surrounding areas, to which EPC is committed.

Nordex and EPC are in a position to close the EPC Transactions immediately following receipt of the necessary shareholder approvals. Complete details of the terms and conditions of the Change of Control Transaction and the Going Private Transaction are set out in the share purchase agreement and the amalgamation agreement, respectively, which are available under the Company's SEDAR profile at www.SEDAR.com. The Change of Control Transaction and Going Private Transaction require a simple majority and a two-thirds majority, respectively, of those shares voted at the Meeting. Assuming that such approvals are received at the Meeting, funds can begin to flow to both Nordex and the shareholders well before the end of August.

Omnia Holdings Limited Purported Offer

The Company takes note of Omnia Holdings Limited's most recent press release dated July 20, 2016 regarding its intention to make an offer to acquire all of the outstanding commons shares of Nordex through its mining division ("BME"). Although the Company is strongly of the view that BME continues to make misleading and deceptive statements in its public communications, the Company does not believe it is appropriate to address these statements until such time as BME actually makes an offer that is capable of being considered by shareholders. It is very important that the Company's stakeholders understand that while BME has indicated it intends to launch its offer by the end of July, there is currently no offer from BME that is available to shareholders. Despite the multiple press releases, BME is under no obligation to follow through on its current stated intentions to launch an offer and there is no assurance that if an offer is ever launched that it will be capable of being completed without undue delay, or at all.

Shareholders' Meeting

The Meeting will be held at the offices of Wildeboer Dellelce LLP, Suite 800, Wildeboer Dellelce Place, 365 Bay Street, Toronto, Ontario, on August 18, 2016 commencing at 10:00 a.m. (Toronto time). Shareholders are encouraged to attend the Meeting in person or to vote their common shares by completing and submitting the form of proxy accompanying the Circular. If a shareholder is not registered as the holder of their common shares but holds them through a broker or other intermediary, they should follow the instructions provided by their broker or other intermediary to vote their common shares.

The letters of transmittal accompanying the Circular explain how registered holders of Nordex common shares can deposit and obtain payment for their Nordex common shares upon completion of the Going Private Transaction. Registered holders of Nordex common shares must return their duly completed letters of transmittal to TSX Trust Company, the depositary appointed in connection with the Going Private Transaction, in order to receive the consideration to which they will be entitled for their Nordex common shares upon completion of the Going Private Transaction. Non-registered holders of Nordex common shares should carefully follow the instructions from the broker, investment dealer, bank, trust company, custodian, nominee or other intermediary that holds Nordex common shares on their behalf.

About EPC

EPC Groupe (epc-groupe.com), a pioneer in France in manufacturing and distributing industrial explosives, is one of the leading independent players in the core business of explosives and drilling and blasting in Europe, the Middle East and Africa. With total annual revenues of approximately Cdn$480,000,000 and nearly 2,000 employees, the EPC Groupe is currently active in more than 20 countries on 5 continents. For over 120 years, the EPC Groupe has been committed to providing solutions for its customers: geographically, technically and commercially. This commitment is demonstrated both by its global and expanding presence as well as by its development of innovative technologies. For Olivier Obst, Chairman and CEO of EPC, "the integration of Nordex within the EPC Groupe is a synergy driven operation. It is a unique opportunity as it will both allow EPC to develop its presence in North America and will provide Nordex with a wider range of technologies, products and services in order to consolidate its existing activity and access new market segments".

About Nordex Explosives

Nordex Explosives Ltd. is a Canadian based manufacturer and distributor of explosives for the mining, quarry and construction industries since 1970. Its manufacturing operations and distribution centre is strategically located in one of the world's largest mining regions near Kirkland Lake, Ontario. Nordex is the exclusive supplier of the "Buttbuster" perimeter control explosive products in Canada. Additional information can be found at: www.nordexexplosives.com

Disclosure Regarding Forward-Looking Statements

This press release contains certain "forward-looking statements" within the meaning of applicable securities legislation relating to the proposal to complete the Change of Control Transaction and the Going Private Transaction and associated transactions, including statements regarding the terms and conditions of the EPC Transactions and the use of proceeds from the Change of Control Transaction. The information about EPC contained in this press release has not been independently verified by Nordex. We use words such as "might", "will", "should", "anticipate", "plan", "expect", "believe", "estimate", "forecast" and similar terminology to identify forward looking statements and forward-looking information. Such statements and information are based on assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments as well as other factors which it believes to be reasonable and relevant. Forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied in the forward-looking statements and information and, accordingly, readers should not place undue reliance on such statements and information. Although the Company believes, in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. In evaluating forward-looking statements and information, readers should carefully consider the various factors which could cause actual results or events to differ materially from those expressed or implied in the forward looking statements and forward-looking information depending on, among other things, the risk that the Change of Control Transaction or the Going Private Transaction and/or other associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities or that the parties determine not to proceed). The statements in this press release are made as of the date of this release. The Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, EPC, BME or their respective financial or operating results (as applicable).

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.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release is intended for distribution in Canada only and is not intended for distribution to United States newswire services or dissemination in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

All information contained in this press release relating to EPC was provided by EPC to Nordex for inclusion herein. Nordex has not independently verified such information and shall bear no liability for any misrepresentation contained therein.

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