RMS Systems Inc.
TSX VENTURE : RMS

RMS Systems Inc.

April 23, 2013 19:00 ET

RMS Systems Inc. Announces Non-Brokered Private Placement and Bridge Loan Financing

CALGARY, ALBERTA--(Marketwired - April 23, 2013) -

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RMS Systems Inc. ("RMS" or the "Corporation") (TSX VENTURE:RMS) is pleased to announce that it has agreed to raise approximately $3,000,000 in a non-brokered private placement financing (the "Offering") by issuing 20,000,000 common shares (the "Common Shares") at a price of $0.15 per Common Share to PHX Energy Services Corp. ("PHX"). RMS and PHX have also agreed to enter into a bridge financing for $1,000,000 (the "Bridge Loan") upon receipt of the conditional acceptance of the Offering by the TSX Venture Exchange ("TSXV"). PHX is the Corporation's joint venture partner in its 50% subsidiary RigManager International Inc. Closing of the Offering is subject to, among other things, the approval of the shareholders of RMS, excluding those shares currently held by PHX, and the approval of the TSXV.

Upon closing of the Offering, PHX will hold 31,501,000 Common Shares, or approximately 39.8% of the outstanding Common Shares, which will result in the creation of a new control person of RMS, as defined in the rules of the TSXV, and as such requires approval of at least 50% of "disinterested" shareholders of RMS.

The proceeds of the Bridge Loan and the balance of the net proceeds from the Offering will be used to fund RMS' capital expenditures and for general working capital purposes.

The board of directors of RMS has considered and has unanimously approved the Offering, with the exception of John Hooks, a director and the President and Chief Executive Officer of PHX, and Mike Buker, the Sr. VP North America of PHX, who abstained from voting due to their respective positions with PHX, and will recommend the approval of the Offering to the shareholders of RMS at the Corporation's upcoming annual general and special meeting on May 27, 2013 (the "Meeting"). As interested parties to the Offering, the Common Shares held by PHX, John Hooks and Mike Buker are not entitled to be voted on the resolution approving the Offering. Each of the directors and officers of RMS, except for John Hooks and Mike Buker, holding in the aggregate approximately 19.7% of the outstanding Common Shares, and approximately 25.4% of the outstanding Common Shares entitled to vote on the Resolution, have entered into lock-up agreements to vote their shares in favour of the Offering. The parties intend to complete the Offering as soon as practicable following the Meeting, subject to receipt of final approval of the TSXV. The Common Shares issued pursuant to the Offering will be subject to a four month hold period.

The funding of the Bridge Loan will occur upon RMS obtaining conditional approval for the Offering from the TSXV. The Bridge Loan will be used to fund capital expenditures and for general working capital purposes until the closing of the Offering. Upon closing of the Offering the Bridge Loan will be repaid in full. The Bridge Loan will bear interest at an annual interest rate of 8% and shall be repaid upon the earlier of the closing of the Offering or within 90 days upon demand by PHX.

The securities described herein have not been registered under the U.S. Securities Act of 1933 (the "Act"), as amended, and may not be offered or sold in the United States unless registered under the Act or unless an exemption from registration is available.

Cautionary Statements

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects, including the use of proceeds from the Offering and the Bridge Loan, the approval of the Offering by shareholders of the Corporation, the completion of the Offering and Bridge Loan, the anticipated closing date of the Offering and the ability of the Corporation to repay the Bridge Loan that constitute forward looking statements.

These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Although RMS believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. The closing of the Offering may not be completed if definitive documentation cannot be finalized, the shareholders of RMS do not approve the Offering at the Meeting, or RMS is unable to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned or if some other condition to the closing is not satisfied. Accordingly, there is a risk that the Offering will not be completed within the anticipated time, on the terms currently proposed, or at all, and the ability and timing of the Corporation to repay the Bridge Loan may change. The intended use of the proceeds of the Offering by RMS might change if the board of directors of RMS determines that it would be in the best interests of RMS to deploy the proceeds for some other purpose. The forward looking statements contained in this press release are made as of the date hereof and RMS undertakes no obligations to update publically or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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.

Contact Information

  • RMS Systems Inc.
    Mr. Dave Hall
    Bay 10, 3491 12th Street NE
    Calgary, Alberta T2E 6S6
    (403) 717-9694