Opta Minerals Inc. Announces Definitive Agreement with respect to Acquisition by Speyside Equity

WATERDOWN, ONTARIO--(Marketwired - Feb. 12, 2016) - Opta Minerals Inc. ("Opta Minerals") (TSX:OPM) announced today that it has entered into a definitive acquisition agreement (the "Acquisition Agreement") with Speyside Equity Fund I LP ("Speyside") pursuant to which a subsidiary of Speyside will acquire (the "Acquisition") all of the issued and outstanding common shares of Opta Minerals (the "Opta Shares"), as further described below.

The Acquisition Agreement was negotiated and entered into following an extensive review and examination of potential strategic alternatives by the board of directors (the "Board") and management of Opta Minerals. In connection with the strategic review process, the Board established a special committee of independent directors (the "Special Committee") to review and consider potential strategic alternatives and Opta Minerals retained Houlihan Lokey Capital, Inc. as financial advisor to assist the Board and the Special Committee in connection with the strategic review process.

Description of the Acquisition

It is anticipated that the Acquisition will be completed by way of amalgamation of Opta Minerals and a subsidiary of Speyside (the "Acquiror") pursuant to Section 181 of the Canada Business Corporations Act (the "Amalgamation"). Pursuant to the Amalgamation, all of the issued and outstanding Opta Shares, other than those held by the Acquiror, will be converted, on a one-for-one basis, into redeemable shares ("Redeemable Shares") of the amalgamated corporation ("Amalco"). The Redeemable Shares will then be immediately redeemed by Amalco in exchange for: (i) approximately C$0.52 per share payable in cash (the "Cash-only Consideration"); or (ii) at the election of the shareholder, approximately C$0.35 per share payable in cash plus an unsecured subordinated promissory note of Amalco (a "Note") in the principal amount of approximately C$0.17 per share (the "Cash and Note Consideration"). Shareholders who fail to make an election will receive the Cash-only Consideration as the default option. The aggregate cash consideration and principal amount of Notes payable to shareholders (excluding the Rollover Shareholder) pursuant to the Amalgamation will be approximately C$9.18 million.

The Notes will be unsecured direct obligations of Amalco, will not be guaranteed by any party and will be subordinate in right of payment to senior indebtedness of Amalco. The Notes will bear interest at a rate of 2% per annum, mature 30 months following the date of issuance and be subject to prepayment (in whole or in part), at any time, at the option of Amalco, and mandatory partial prepayments in certain circumstances. The Notes will not be transferable by the holders thereof (other than to affiliates). The Notes will not be listed on any stock exchange and there is no market through which the Notes may be sold.

The consideration payable per Redeemable Share pursuant to the Acquisition remains subject to adjustment pursuant to the terms of the Acquisition Agreement based on the amount of transaction expenses related to the Acquisition incurred by Opta Minerals. The final Cash-only Consideration and Cash and Note Consideration will be determined and publicly disclosed prior to the mailing of the management information circular in respect of the Meeting (as described in greater detail below).

The Acquisition is subject to customary closing conditions as specified in the Acquisition Agreement.

Rollover Shareholder

Stormvalley Investments B.V. (the "Rollover Shareholder"), an entity which is associated with Mr. Bernhard Rumbold (an officer and director of Opta Minerals), has entered into an agreement with a subsidiary of Speyside which will hold all of the shares of Amalco post-Amalgamation (the "Acquiror Parent"), pursuant to which the Rollover Shareholder has agreed to exchange all of the Opta Shares held by it for shares of Acquiror Parent (which shares will subsequently be transferred by Acquiror Parent to Acquiror in consideration for common shares of Acquiror), immediately prior to the effective time of the Amalgamation. As a result, the Rollover Shareholder will continue to hold an interest (indirectly through Acquiror Parent) in Amalco following the completion of the Amalgamation. The Rollover Shareholder holds approximately 2.6% of the outstanding Opta Shares.

Shareholder Approval Requirement

The Amalgamation will require approval of 66 2/3% of the votes cast by shareholders of Opta Minerals, voting in person or by proxy, at a special meeting of the shareholders of Opta Minerals to be called to consider the Amalgamation (the "Meeting") and will also require "majority of the minority" approval under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). For the purposes of the "majority of the minority" approval requirement under MI 61-101, the votes cast by the Rollover Shareholder in respect of the Amalgamation will be excluded.

The Acquisition is exempt from the formal valuation requirement set out in MI 61-101 pursuant to section 4.4(b) of MI 61-101.

Support and Voting Agreements

In connection with the execution of the Acquisition Agreement:

1. all of the directors and officers of Opta Minerals (other than Mr. Austin Beutel), collectively holding approximately 0.7% of the outstanding Opta Shares, have entered into support and voting agreements with Acquiror and Acquiror Parent pursuant to which they have agreed to support and vote in favour of the Amalgamation at the Meeting, subject to the right to terminate such agreements if the Acquisition Agreement is terminated or the Board makes a Change of Recommendation upon receipt of a Superior Proposal (as such terms are defined in the Acquisition Agreement); and
   
   
2. SunOpta Inc. ("SunOpta"), which holds approximately 65.8% of the outstanding Opta Shares, and the Rollover Shareholder, which holds approximately 2.6% of the outstanding Opta Shares, have entered into irrevocable support and voting agreements with Acquiror and Acquiror Parent pursuant to which they have agreed to support and vote in favour of the Amalgamation at the Meeting. Such support and voting agreements cannot be terminated in the event of a Superior Proposal.
   
   

The directors and officers, SunOpta and the Rollover Shareholder who are subject to support and voting agreements collectively hold approximately 69.2% of the outstanding Opta Shares and the votes of such persons in favour of the Amalgamation will be sufficient to satisfy all shareholder approval requirements required for the Amalgamation under the Canada Business Corporations Act and MI 61-101.

Under the terms of the Acquisition Agreement, Opta Minerals has agreed that it will not solicit or initiate any inquiries or discussions regarding any other business combination or acquisition proposal, subject to the ability of the Board to change its recommendation in the event of an unsolicited superior proposal in accordance with its fiduciary duties.

SunOpta has further agreed under its support and voting agreement to certain indemnification obligations in favour of Acquiror and Acquiror Parent and has also irrevocably agreed to elect to receive the Cash and Note Consideration pursuant to the Acquisition.

Amendments to Credit Facilities

In connection with the Amalgamation, Opta Minerals has entered into an amendment agreement with respect to its credit facilities with a syndicate of banks in order to extend the maturity of such facilities to a date that is 24 months from the closing of the Amalgamation, to provide additional flexibility to Opta Minerals with respect to certain financial covenants set forth in the credit agreement for the facilities and to mandate repayment in part of the credit facilities upon the sale of certain subsidiaries or assets. Such amendments are conditional upon (i) the repayment of certain amounts outstanding under the credit facilities as of closing of the Amalgamation, which repayments will be funded by Speyside, and (ii) the closing of the Amalgamation occurring no later than April 14, 2016. The amendments to the credit facilities are also conditional upon the closing of the Amalgamation and will only be effective only as of the closing of the Amalgamation.

The closing of the Amalgamation is conditional upon all conditions precedent to the amendments to the credit facilities being satisfied as of the closing of the Amalgamation such that the amendments to the credit facilities will be effective upon closing of the Amalgamation.

In connection with the Amalgamation, the syndicate of banks has also agreed to waive certain defaults under financial covenants of the credit facilities, such waiver being effective until the earlier of the closing of the Amalgamation, the termination of the Acquisition Agreement and April 14, 2016, and (ii) extend the maturity date of the revolving term credit facility of Opta Minerals until the earlier of the closing of the Amalgamation, the termination of the Acquisition Agreement and April 14, 2016, subject in each case to the satisfaction of certain conditions.

Board Approval and Recommendation

The Board (with Mr. Rumbold abstaining as an interested director), following the receipt and review of recommendations from the Special Committee, has approved the Acquisition Agreement and the Amalgamation and has determined that the Amalgamation is fair to shareholders of Opta Minerals (other than the Rollover Shareholder and shareholders who elect to receive the Cash and Note Consideration pursuant to the Amalgamation) and is in the best interests of Opta Minerals, and recommends to shareholders that they vote in favour of the Amalgamation.

In making their respective determinations, the Board and the Special Committee considered, among other things, an opinion provided to the Board by Houlihan Lokey Capital, Inc. to the effect that, as of February 11, 2016, and based upon and subject to the limitations, assumptions and qualifications and other matters considered in connection with the preparation of such opinion, the cash redemption consideration to be received by the holders of Opta Shares (other than the Rollover Shareholder and shareholders who elect to receive the Cash and Note Consideration) pursuant to the Amalgamation is fair, from a financial point of view, to the holders of Opta Shares (other than the Rollover Shareholder and shareholders who elect to receive the Cash and Note Consideration pursuant to the Amalgamation). A complete copy of the opinion will be included in the information circular to be mailed to shareholders in connection with the Meeting. The opinion was furnished solely for the use of the Board (solely in its capacity as such) in connection with its evaluation of the Acquisition and may not be relied upon by any other person or entity (including, without limitation, security holders, creditors or other constituencies of Opta Minerals) or used for any other purpose.

In making the foregoing recommendation, the Board focused on the Cash-only Consideration. Shareholders considering the election of the Cash and Note Consideration pursuant to the Amalgamation are urged to consult their own financial, tax and legal advisors having regard to their own particular circumstances.

All of the directors and officers of Opta Minerals (other than the Rollover Shareholder) intend to elect to receive the Cash-only Consideration pursuant to the Amalgamation.

Additional Information

Complete details of the terms and conditions of the Acquisition are set out in the Acquisition Agreement, which will be filed by Opta Minerals under its profile on SEDAR at www.sedar.com.

In addition, further information regarding the Acquisition will be contained in the management information circular in respect of the Meeting which will be filed on SEDAR at the time that it is mailed to shareholders. All shareholders are urged to read the information circular once it becomes available, as it will contain additional important information concerning the Acquisition. Opta Minerals expects to mail the information circular to shareholders on or before March 2, 2016 and to hold the Meeting on or before April 1, 2016. The parties expect that the Amalgamation will be completed shortly after the Meeting, subject to satisfaction of all conditions to closing set out in the Acquisition Agreement.

In connection with the Acquisition, Opta Minerals has engaged Houlihan Lokey Capital, Inc. as its financial advisor and Wildeboer Dellelce LLP as its legal advisor, the Special Committee has engaged Bennett Jones LLP as its legal advisor and Speyside has engaged Stikeman Elliot LLP as its legal advisor.

About Opta Minerals

Opta Minerals is a vertically integrated provider of custom process solutions and industrial mineral products used primarily in the steel, foundry, loose abrasive cleaning, water-jet cutting and municipal water filtration industries. Opta Minerals has production and/or distribution facilities in Ontario, Quebec, Saskatchewan, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, Ohio, Idaho, France, Slovakia and Germany.

About Speyside Equity

Formed in 2005, Speyside Equity employs an operationally intensive approach to investing in specialty chemicals, industrials/metal forming and food ingredients businesses. It targets companies with a history of strong revenue, a defensible position in their respective markets, and a core group of managers that can move the business forward. Speyside prefers situations where there are opportunities to leverage its operating expertise to improve financial performance and create sustainable long-term value.

Since its formation, Speyside has successfully executed numerous platform investments and add-on acquisitions using its own capital. The team made its first investment in Sweet Ovations, a food ingredient company, in 2005 and had its first exit in 2010 when it sold Stahl Specialty Company. This principal-driven investment philosophy and approach will continue in its $130 million institutional fund closed in January 2016, Speyside Equity Fund I LP.

http://speysideequity.com.

Forward Looking Information

Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements in this press release include, without limitation, statements relating to: the Acquisition and the proposed Amalgamation under the Acquisition Agreement; proposed adjustments to the consideration payable in respect of the Redeemable Shares; the ability of the parties to satisfy the conditions to closing of the Acquisition; the expectation that the Rollover Shareholder will become a shareholder of Acquiror Parent; the mailing of the management information circular in connection with the Meeting and anticipated timing thereof; and the anticipated timing of the completion of the Acquisition. Words such as "may", "would", "could", "should", "will", "anticipate", "believe", "plan", "expect", "intend", "potential" and similar expressions may be used to identify these forward-looking statements although not all forward-looking statements contain such words.

Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including risks associated with the Acquisition and acquisitions generally, such as the failure to satisfy the closing conditions contained in the Acquisition Agreement, the absence of material adverse changes or other events which may give the parties a basis on which to terminate the Acquisition Agreement, and the ability of the parties to complete and mail the information circular in respect of the Meeting and hold the Meeting within the time frames indicated. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by this press release. These factors should be considered carefully and reader should not place undue reliance on the forward-looking statements. These forward-looking statements are made as of the date of this press release and, other than as required by law, Opta Minerals does not intend to or assume any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.