Schwabo Capital Corporation

March 19, 2010 13:33 ET

Schwabo Capital Corporation and CREAC One, Inc. Announce Agreement to Complete Business Combination

CONCORD, ONTARIO--(Marketwire - March 19, 2010) - Schwabo Capital Corporation (TSX VENTURE:SBO) ("Schwabo") is pleased to announce that it has entered into a letter of intent dated March 10, 2010 (the "Letter of Intent") with CREAC One, Inc. ("CREAC One"), whereby the parties have agreed to complete negotiations and enter into a definitive agreement for a business combination, which is expected to be effected through an amalgamation of the two companies under a plan of arrangement, which would constitute a reverse takeover transaction.

Schwabo presently has 2,833,333 common shares issued and outstanding of which 1,333,333 were issued to Schwabo founders at the time of incorporation and 1,500,000 that were issued pursuant to a public offering. Under the proposed transaction, and subject to regulatory requirements, the 1,333,333 shares held by the founders of Schwabo will be purchased by directors and management of CREAC One for $160,000 ($0.12 per share), payable at closing. These shares will remain subject to original Schwabo CPC escrow conditions and, similar to the other outstanding shares of Schwabo not held by Schwabo founders, will be changed under the amalgamation into shares of the amalgamated company, to be called "CREAC One, Inc.", whereby Schwabo shareholders will receive one share of the amalgamated company for each 53.333 common shares of Schwabo held by them before the amalgamation. Directors and management of CREAC One who purchased the 1,333,333 Schwabo common shares from the Schwabo founders will receive 25,000 shares of the amalgamated company and Schwabo shareholders with the 1,500,000 Schwabo common shares issued pursuant to the public offering will receive 28,125 shares of the amalgamated company. The proposed business combination between Schwabo and CREAC One is an arm's length transaction.

It is intended that such transaction will be the "Qualifying Transaction" for Schwabo under the applicable policies of the TSX Venture Exchange (the "TSXV").

CREAC One is a renewable energy company focused on developing renewable energy resources for the Electric Reliability Council of Texas market ("ERCOT"). CREAC One intends to develop an integrated renewable generation model that blends wind and solar thermal assets together with a thermal support system. The business will initially be to construct, manage and operate a multi-phase power generation facility located in west Texas. Phase 1 of the project will develop a blended solar thermal, wind and thermal support resource with an estimated capacity to provide 85 MW solar thermal power and 135 MW of wind power supported by a thermal support system to generate electricity when required to firm load or meet the needs of the wholesale electric market in Texas (the "Project"). This combination of generating resources at a single site will allow CREAC One to combine the complementary load profiles of wind and solar thermal generation with the stability of a thermal support system to create a renewable energy product that is not subject to the natural variability of stand alone wind or solar generation. CREAC One intends to execute its strategy by developing a multi-phase power generation facility in west Texas that will interconnect through the development of a private transmission line into its target market of southern Texas. In doing so, CREAC One will develop the first commercial utility scale solar installation in ERCOT. This solar thermal resource will create what management believes is the first viable large scale renewable alternative to wind-only generation resources in the Texas market. CREAC One's interests in the Project will be held through a wholly-owned US holding company (Pondera Energy, Inc.), incorporated under the laws of Texas, which in turn will hold a 100% interest in a US operating company (Viento De Sol Energy, Inc.) to be operated under the laws of Texas that will own and operate the project.

CREAC One was incorporated on August 12, 2009 under the Canada Business Corporations Act, and has not yet commenced significant business operations and has no history of operations or financial history. It has engaged Wellington West Capital Markets Inc. as its agent to conditionally offer, on a best efforts basis, a private placement of 3,000,000 units, each unit comprised of one common share at US$10 each and three subscription receipts at US$10 each for total consideration of US$40 per unit. CREAC One intends to complete the equity financing issue of common shares and subscription receipts for gross proceeds of US$120,000,000 (US$111,500,000 net of estimated expenses of the financing amounting to US$8,500,000 including, but not limited to, agent's commissions amounting to 6% of gross proceeds and legal fees), prior to the completion of the transaction with Schwabo. As part of the implementation of Phase 1 of the Project, Viento De Sol Energy, Inc. will purchase the land required for the Project for $5,900,000 to be paid from proceeds of the equity financing. An additional $2,700,000 of the proceeds of the financing will be used to pay for the US legal, accounting, consulting, engineering, transmission rights of way, and other related expenses incurred. CREAC One intends to use the remaining net proceeds from the financing, in conjunction with debt financing to be arranged subsequent to completion of the private placement, to fund the development and construction of Phase 1 of the project.

Prior to completion of the private placement, CREAC One has one significant shareholder, David Spalding of Texas, holding approximately 46% of the shares. Mr. Spalding is not presently an officer or director of CREAC One and will not be an officer or director of the amalgamated company. In addition, he will not be a Control Person subsequent to the private placement. CREAC One presently has no other Control Persons.

Under the terms of the business combination, approximately 15,022,500 shares of the amalgamated company will be issued to the shareholders of CREAC at a deemed price of US$10.00 per share. Following the private placement and the business combination with Schwabo, it is expected that the amalgamated company's share capital will consist of approximately 15,085,625 common shares (assuming the issuance of 3,000,000 units under the private placement and the exercise of all subscription receipts to common shares) of which the shareholders of CREAC One will hold over 99% of the outstanding common shares.

Schwabo will be preparing and filing an information circular for a special meeting of shareholders disclosing the particulars of its transaction with CREAC One. Among other things, shareholders of Schwabo will be asked to approve the continuation of Schwabo from Alberta to the jurisdiction of Canada and to approve of the proposed transaction as the Qualifying Transaction for Schwabo.

Following completion of the business combination, the following persons will be the directors and senior officers of the amalgamated company:

Amin T. Bishara, Hurst, Texas (President and Chief Executive Officer and Director) - Mr. Bishara brings to CREAC One, Inc., over 30 years of wide-ranging experience in the energy industry. This includes experience in change and supply chain management, generation, transmission, shared services, international project development, and business strategies. Mr. Bishara served as Vice President and Global Leader of the energy & utility division for Capgemini, a consulting, technology and outsourcing company with over 80,000 employees worldwide. Before joining Ernest & Young as a Senior Sales Executive, Mr. Bishara was a Vice President at Metzler & Associates, a leading management consulting company that focused solely on the energy industry. Mr. Bishara was also the founder and CEO of Plant Technical Services (PTS), selected by Inc. Magazine in 1990 as the 24th fastest growing private company in the US. He earned a B.S. and a Master's Degree in mechanical engineering from New York Poly University.

Richard Giel, Toronto, Ontario (Chief Financial Officer) - Mr. Giel brings to CREAC One, Inc. over 25 years of senior level financial and operations management experience in the renewable energy, mining, communications and information services industries and significant experience filing on the Toronto Stock Exchange (TSX) for public companies. He has served as CFO of NiCo Mining Limited, a publicly-traded junior resource company and completed a long term finance assignment with AIM Powergen, a developer and operator of wind farms in Canada, as well as other assignments with publicly-traded mining companies. Previously, Mr. Giel served as Chief Financial Officer and member of the Board of CNW Group for a four year period. Mr. Giel is a Chartered Accountant (CA) and started his career at Deloitte & Touche LLP in Toronto after obtaining a Bachelor of Commerce degree from the University of Windsor and a Bachelor of Science degree from the University of Waterloo, Ontario, Canada.

Kathy Boutin, Calgary, Alberta (Director) - Kathy Boutin has 8 years of energy industry experience, mostly in renewables. Most recently, Ms. Boutin held the position of CFO for Canadian Hydro Developers, Inc. (KHD), and prior thereto, held positions of VP Finance and Manager of Finance with KHD and senior accountant with Deloitte & Touche LLP in Calgary. KHD was the largest and most diversified developer, owner, and operator of 21 renewable energy generation facilities in Canada totalling 694 MW of capacity in operation, 160 MW in and nearing construction, and 6,060 MW in development at the time of the company's acquisition by TransAlta in 2009. Kathy graduated from the University of Saskatchewan with a Bachelor of Commerce in Accounting and is a member of the Institute of Chartered Accountants of Alberta.

Roger McOmber, Colleyville, Texas (Director) - Mr. McOmber has held numerous positions in the investment banking and hedge fund industry including at: Nomura Securities Co. Ltd. where he was a managing director and built and managed an energy hedge fund, Carlson Capital, L.P. managing a larger utility book, Salomon Brothers, Oppenheimer & Co., Brown Brothers, and Lehman Brothers as the Senior Utility Research Analyst. Mr. McOmber has published numerous reports and articles on the electric power industry. Mr. McOmber received a BA in American Studies from Brigham Young University and an MBA from Utah State University.

Robert A. Bondy, Toronto, Ontario (Director) - Mr. Bondy graduated from the University of Windsor in 1967 with a B.A. degree and from Osgoode Hall Law School in 1968 with an LL.B. degree. Mr. Bondy was admitted to the Ontario Bar in 1970 at which time he joined, and subsequently became a Partner of, Blake, Cassels & Graydon LLP where he practiced in the Securities and Corporate Law Group until his retirement January, 2007. He remains a partner emeritus of Blakes, the law firm of the Company. Mr. Bondy is a Director of Guyana Goldfields Inc., Canuc Resources Corporation and NiCo Mining Limited.

Timothy R. Crichfield, New York, New York (Director) - Mr. Crichfield is a seasoned business and finance professional with over 25 years experience in consulting, business development, operations and finance for companies in the utilities, energy, manufacturing and consumer products sectors. As Managing Director at Capgemini, he led the Central Business Unit, covering 18 states where he directed a team of over 1,000 employees. He was previously CFO of CGEY Americas and responsible for all accounting and financial reporting matters of the $1.7B entity. Mr. Crichfield holds a BS in Business Administration from the Ohio State University and an MS and PhD in Accounting, Finance and Quantitative Methods from Cornell University.

Mike Greenough, Granbury, Texas (Director) - Mr. Greenough was formerly the Chairman, President, and CEO of SSA Global. During his five years at the helm, he acquired at least a dozen software companies, including Baan, Epiphany, EXE, Infinium, and Marcam. In May 2006, he sold SSA Global to Infor Global Solutions for $1.4B in cash. Mike Greenough serves as advisory on some Cerberus Capital Management boards. Mr. Greenough was a Fellow at the Institute of Chartered Accountants of England and Wales and graduated in 1972, subsequently in 1976, became a member of the Institute of Chartered Accountants of Ontario to which he is still a member in good standing.

John Loyack, Southlake, Texas (Director) - Mr. Loyack is currently President and CEO of Optim Energy, an independent power producer in the ERCOT market in Texas. Optim Energy owns interests in three generating facilities in Texas, totaling 1,180 megawatts (MW). Mr. Loyack has more than 20 years of experience in strategy, wholesale power and gas markets, generation management, business operations, and finance. His past experience includes serving as President and CEO of CPG International, a manufacturer of highly engineered building products. Prior to this, Loyack served as SVP&CFO for PNM Resources, a diversified energy holding company with regulated and unregulated electric and gas operations in the Southwest U.S. Mr. Loyack also serves as the audit and compensation committee chairperson for AMCON Distributing Company. Mr. Loyack holds an MBA from Lehigh University and a BS in accounting from King's College and is a Certified Public Accountant.

Nicholas Rahn, Southlake, Texas (Director) Mr. Rahn currently serves as SVP of Generation for Optim Energy. Rahn oversees the operation of Optim Energy's generation, asset acquisition and development. Prior to his role at Optim, Rahn served as a Vice President with PacifiCorp, a MidAmerican Energy Holdings Company. In that position, he was responsible for $1 billion in construction projects annually, 2,000 megawatts of joint owned facilities and the development and construction of clean air projects, gas-fired resources, wind and geothermal generation. Prior to becoming Vice President with PacifiCorp, Rahn was the senior director of engineering for Northern Natural Gas. Rahn was appointed by Governor Dave Freudenthal to serve on the Wyoming Infrastructure Authority. Mr. Rahn holds a Bachelor of Science in engineering from Clemson University.

Gary Oliver, Toronto, Ontario (Director) - Mr. Oliver graduated from the University of Windsor in 1971 with an Honours Bachelor of Commerce degree. Mr. Oliver was most recently President and COO of Novus Communications Inc. Prior to joining Novus Communications Inc., Mr. Oliver was Executive Vice President of Metronet Communications and previous to that office was the President and COO of Rogers Telecom Inc. Mr. Oliver is presently a director of Breken/YLM and has over 35 years experience in senior management positions in sales, marketing and general management.

The proposed transaction remains subject to numerous conditions: including the completion of satisfactory due diligence by each of the parties, receipt of all necessary and material regulatory approvals, completion of private placement equity financings by CREAC One of at least U.S. $100 million and receipt of Schwabo and CREAC One shareholder approvals.

Wellington West Capital Markets Inc., 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.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. 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 management information circular or 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.

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