Scorpio Capital Corp.
TSX VENTURE : SCE

January 02, 2007 16:41 ET

Scorpio Capital Corp. Announces the Closing of its private placement and Qualifying Transaction with BDE Equities Inc.

TORONTO, ONTARIO--(CCNMatthews - Jan. 2, 2007) - SCORPIO CAPITAL CORP. (TSX VENTURE:SCE.P) -

Scorpio Capital Corp. ("Scorpio") is pleased to announce that effective January 1, 2007, and subject to final approval by the TSX Venture Exchange (the "Exchange"), Scorpio has completed its qualifying transaction with BDE Equities Inc. ("BDE"), as originally announced by press releases dated November 3, 2005, November 18, 2005, January 10, 2006, May 17, 2006, August 24, 2006, September 13, 2006, October 3, 2006 and December 4, 2006 (the "Qualifying Transaction"). Final materials have been submitted to the Exchange for final Exchange approval, which is pending and is expected to be obtained during the week of January 2, 2007. Scorpio will now carry on the businesses of BDE and, upon receipt of final Exchange approval, will no longer be a Capital Pool Company.

In connection with the Qualifying Transaction, BDE completed a private placement financing (the "BDE Financing"), raising aggregate gross proceeds of $1,200,000. The details of the BDE Financing are more fully described below.

With the completion of the BDE Financing and the Qualifying Transaction, Scorpio now has the following securities issued and outstanding, as more fully detailed below:



Common shares (each a "Scorpio Share")
issued and outstanding: 58,127,429
Scorpio Shares issuable upon conversion
of Convertible Debenture: 6,250,000
Options issued and outstanding: 3,171,049
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Fully Diluted: 67,548,478


For full disclosure regarding the Qualifying Transaction and the businesses of BDE, please refer to Scorpio's filing statement (the "Filing Statement") dated November 30, 2006, a copy of which can be accessed through Scorpio's profile on SEDAR (www.sedar.com).

The Qualifying Transaction

Pursuant to the terms of an amalgamation agreement (the "Amalgamation Agreement") between Scorpio, BDE and 2100691 Ontario Ltd., a wholly-owned subsidiary of Scorpio ("Scorpio Sub"), BDE and Scorpio Sub completed an amalgamation under the Business Corporations Act (Ontario), effective January 1, 2007, resulting in an amalgamated corporation being formed under the name of "BDE Equities Inc." Rather than receiving shares of the amalgamated corporation, the securityholders of BDE each received securities of Scorpio at a deemed price of $0.175 per Scorpio Share. In this regard, upon the closing of the Qualifying Transaction, Scorpio issued to the holders of BDE common shares ("BDE Share") one Scorpio Share for each issued and outstanding BDE Share for an aggregate of 53,455,605 Scorpio Shares. Scorpio also granted 2,750,000 stock options of Scorpio to certain officer, employees and consultants of BDE in exchange for the 2,750,000 options of BDE held by such persons. Such Scorpio options have been granted on the same terms as the BDE options. They have five year terms and are exercisable at prices between $0.16 and $0.50. In addition, a convertible debenture with a face value of $1,250,000 (convertible into a maximum of 6,250,000 Scorpio Shares) was issued by Scorpio in exchange for the cancellation of an outstanding convertible debenture issued by BDE. The terms of this new debenture are identical to those of the initial debenture issued by BDE.

Immediately prior to the completion of the Qualifying Transaction, an aggregate of $251,000 amount of outstanding debt owing by BDE was converted into a total of 1,255,000 BDE Shares at an ascribed price of $0.20 per BDE Share. These BDE Shares were replaced by 1,255,000 Scorpio Shares upon completion of the Qualifying Transaction.

In accordance with the policies of the TSX Venture Exchange, a total of 1,333,334 Scorpio Shares remain subject to Scorpio's original CPC escrow agreement, to be released over a period of three (3) years. In addition, an aggregate of 34,133,334 Scorpio Shares issued to the principal and certain other shareholders of BDE pursuant to the Qualifying Transaction have been deposited and are subject to a Tier 2 surplus security escrow agreement entered into as of January 1, 2007 with Equity Transfer & Trust Company (the "Surplus Escrow Agreement"). The Surplus Escrow Agreement provides for staged releases over a period of six (6) years.

As further disclosed in the Filing Statement, in conjunction with the closing of the Qualifying Transaction, the following individuals have been appointed as the directors and officers of Scorpio:



Name Position
----------------------------------------------------------------------
Frank Bellotti President, Chief Executive Officer and Director
David Tsubouchi Director and Chairman of Board
Luciano Grossi Director
G. Michael Newman Director
Julio DiGirolamo Director
Randy Koroll Chief Financial Officer
Danny Santapaga Vice-President, Call Centre
Julie Galati Vice-President, Mortgage Services


Fraser Mackenzie Limited acted as Sponsor for the Qualifying Transaction and received a sponsorship fee of $25,000 plus G.S.T, and reimbursement of its legal fees.

The BDE Financing

Immediately prior to the closing of the Qualifying Transaction, BDE completed the BDE Financing by issuing a total of 6,000,000 BDE Shares at a price of $0.20 per share, raising aggregate gross proceeds of $1,200,000. These BDE Shares were replaced by 6,000,000 Scorpio Shares upon completion of the Qualifying Transaction.

About Scorpio

Scorpio is the 100% parent of BDE Equities Inc. BDE is the owner of Kingside Mortgage Corporation, a mortgage brokerage business, and Kingside Homes Corporation, a residential and multi-residential home builder. BDE also holds interests in one property upon which Kingside Homes is planning on building residential units.

THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Scorpio Capital Corp.
    Frank Bellotti
    President and Chief Executive Officer
    (416) 867-4556
    (905) 780-2316 (FAX)