Savary Capital Corp.
TSX VENTURE : SCA.P

June 20, 2008 13:08 ET

Savary Capital Corp.: News Release

EDMONTON, ALBERTA--(Marketwire - June 20, 2008) - Savary Capital Corp. (TSX VENTURE:SCA.P) (the "Company"), an Alberta capital pool company, is pleased to announce that it has entered into a letter of intent (the "LOI") with Pan Asia Biofuels Corp. ("Pan Asia"), a Vancouver-based private company in the biodiesel business focusing in Southeast Asia.

Pursuant to the LOI, the Company will acquire all of the outstanding shares of Pan Asia and in consideration thereof the Company will issue an aggregate of 67,766,217 Series A Special Warrants to the shareholders of Pan Asia (the "Acquisition"). Each Series A Special Warrant is convertible into one common share of the Company, convertible any time before the earlier of 4 months from closing or the 5th business day following the date a final prospectus is receipted by a Canadian securities commission allowing the underlying common shares of the Series A Special Warrants to become free trading (the "Conversion Date"). On closing, the Company will be the sole shareholder of Pan Asia. Pan Asia is arm's length to the Company.

Pursuant to the LOI, the Company has agreed to advance a non-refundable deposit of $25,000 Pan Asia, which deposit will be advanced upon dissemination of this news release.

The Company also proposes to complete a brokered private placement (the "Concurrent Financing") of a minimum of $20 million and a maximum of $25 million, Series B Special Warrants at an issue price of $0.40 per special warrant, to close concurrently with the Acquisition. Each Series B Special Warrant is convertible into one common share and one share purchase warrant of the Company on or before the Conversion Date. Each share purchase warrant will entitle the holder to acquire one common share of the Company for a period of five years from closing, at a price of $0.80 per share.

Pan Asia has procured an engagement letter and subsequent extension letter from Research Capital Corporation for the Concurrent Financing. The Concurrent Financing is subject to standard terms and market conditions.

The Company agrees to file a prospectus in the provinces of BC, Alberta and Ontario to qualify the common shares issuable upon exercise of the Series A Special Warrants and the common shares and share purchase warrants issuable upon exercise of the Series B Special Warrants.

The Acquisition is subject to, among other things that are customary to such a Qualifying Transaction, the Company being satisfied with its due diligence of Pan Asia and the obtaining of applicable shareholder, director and regulatory approvals. As a further condition of closing, the Concurrent Financing must close concurrently with the Acquisition.

Research Capital Corporation, subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

About Pan Asia Biofuels Corp.

Pan Asia is building an integrated biofuel business combining "upstream" cultivation and growing of feedstock crops with "downstream" refining operations in South East Asia.

On November 22, 2006, Pan Asia was incorporated under the BC Business Corporations Act. Its head office is located at 24th Floor, 1111 West Georgia Street, Vancouver, BC V6E 4M3. Since its incorporation, it has raised $2.4 million, including $2 million contributed by Kyoto Planet Group Inc. With this early development funding, Pan Asia set up two subsidiaries in Cambodia and Thailand and has paid a deposit towards the purchase of land in Cambodia.

On November 17, 2007, Pan Asia signed an agreement to obtain the concession rights to 8,692 hectares of land in Cambodia by acquiring 100% of the outstanding shares of Cambodia Agro-Industry Group Co., Ltd., a limited liability Cambodian company, for US$1,999,160. Pan Asia made a US$300,000 (CAD$297,649) deposit when the share transfer was executed, and subsequently Pan Asia made another payment of US$145,000 towards the purchase price. The remaining balance of US$1,554,160 is payable when an Economic Land Concession for a term of 99 years is executed between Pan Asia and the Ministry of Agriculture, Forestry and Fisheries of Cambodia.

Pan Asia intends to obtain concession rights to a further 56,000 hectares for US$230 per hectare for a total purchase price of US$12,880,000. These 56,000 hectares will be received in 6 separate parcels. The balance of the purchase price for each parcel will be paid upon execution of the concession agreement. Pan Asia has paid US$600,000 as a deposit on the 6 parcels of land and commenced the application process for acquiring the concession rights to these 6 parcels.

At present Pan Asia is utilizing 20 hectares of land in Cambodia, made available by the government, for agronomic testing, research and development activities on crop production and soil management, plant breeding and other related activities. In Thailand, local farmers are planting jatropha seedlings, a biofuel feedstock, supplied by Pan Asia, on approximately 2,500 hectares of the 25,000 hectares allocated by the Agricultural Land Reform Office.

Pursuant to its audited financial statements, Pan Asia has assets of $1,094,428 and current liabilities of $63,313 as of December 31, 2007.

Management

Concurrent with the closing of the Acquisition and Concurrent Financing, Harvey Lalach, Mansoor Anjum and Sanjay Sharma, current directors of the Company, will enter into an agreement whereby they will sell 1,000,000 escrowed shares to the directors of Pan Asia at $0.10 per share. Messrs. Lalach, Anjum and Sharma will retain their 300,000 stock options. Following closing of the Acquisition and Concurrent Financing, Messrs. Lalach, Anjum and Sharma will resign as directors of the Company in favour of three nominees from Pan Asia. The new board of directors will then appoint a fourth director to the Company. The resulting board of the Company will be composed of Messrs. Paul Hughes, Tom Kordyback, David Smalley and Art Wilms.

The biographies and municipalities of residence of the Company's proposed directors and key officers are as follows:

Paul Hughes - Director, Chief Executive Officer and President - (Vancouver, British Columbia)

Paul Hughes is the President and CEO of Pan Asia. Mr. Hughes has many years of experience in the securities market, corporate finance, regulatory compliance and marketing of public companies. Mr. Hughes holds a Bachelor of Commerce from the University of British Columbia.

Tom Kordyback - Director and Chief Financial Officer - (Vancouver, British Columbia)

Tom Kordyback is a retired certified accountant and CFO. Mr. Kordyback has served as a director and chief financial officer of public companies for many years, including Extreme CCTV Inc. and CREO Products Inc. Mr. Kordyback holds a Bachelor of Arts in Economics from the University of Victoria and is a member of the British Columbia Institute of Chartered Accountants.

David Smalley - Director and Secretary - (Delta, British Columbia)

David Smalley is a practicing securities lawyer. Mr. Smalley has served as a director and corporate secretary of public companies for a number of years, including chairing the governance and merger and acquisition committees for Extreme CCTV Inc., a company formerly listed on the Toronto Stock Exchange prior to its buy-out. Mr. Smalley holds a Bachelor of Arts from the University of Victoria and a Bachelor of Laws from the University of British Columbia.

Art Willms - Director - (Vancouver, British Columbia)

Art Willms has many years of senior corporate leadership in the energy field, most recently as the past president of Westcoast Energy Inc. In addition Mr. Willms sits on the board of Union Gas Limited, PenBen Oilfield Services Ltd., Accenture Business Services, BC Lotteries Corporation and Angiotech Pharmaceuticals. Mr. Willms holds a Bachelor of Arts in Mathematics and Master of Arts in Economics.

Graham Heal - Managing Director - (Bellingham, Washington State)

Graham Heal is Pan Asia's Managing Director and has been instrumental in establishing Pan Asia's business in Cambodia and Thailand and in identifying business development opportunities. Mr. Heal has many years experience in marketing and business development in Asia and North America and holds a Bachelor of Arts in Geography from the University of British Columbia.

Kyoto Planet Group Inc. holds more than 10% of the shares of Pan Asia and will own more than 10% of the outstanding shares of the Company after closing of the Acquisition and Concurrent Financing. Kyoto Planet Group is a private company of which Damien Reynolds is the CEO and John Icke is the President and COO. Messrs. Reynolds and Icke are also directors of Pan Asia. Mr. Reynolds owns 24% of the voting securities of Kyoto Planet Group.

Kyoto Planet Fund holds more than 10% of the shares of Pan Asia, but is expected to own less than 10% of the outstanding shares of the Company after closing of the Acquisition and Concurrent Financing. Kyoto Planet Fund is a registered mutual fund.

Biodiesel

The term "biofuels" refers to a range of biological based fuels including biodiesel, synthetic diesel and ethanol. As a renewable resource, biodiesel offers a number of environmental benefits. Using biodiesel instead of petrodiesel reduces net emissions of carbon dioxide and other green house gases, which are associated with global climate change.

Jatropha

Pan Asia has identified the jatropha plant as its primary feedstock for the production of biodiesel within its operations. Pan Asia will utilize the entire fruit of the jatropha plant for several valuable products including: 1) oil crushed from the seed for biodiesel refining, 2) seedcake, the residual left after crushing for biomass energy production, 3) glycerol, for use as a heat accelerant or for high valued pharma-grade glycerine if further refined and 4) dried husks, a high nutrient natural fertilizer. Jatropha trees produce harvest-ready volumes of oilseeds after just 18 months, and reach maturity at three years.

Completion of the transaction is subject to a number of conditions, including, but not limited to, Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

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

The TSX Venture Exchange Inc. 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 TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Savary Capital Corp.
    Harvey Lalach
    President
    (250) 764-9701