Springrock Capital Inc.
TSX VENTURE : SGK.P

December 02, 2013 17:26 ET

Springrock Capital Inc. to Enter Into a Business Combination With ThermoCeramix, Inc.

TORONTO, ONTARIO--(Marketwired - Dec. 2, 2013) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES. THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

Springrock Capital Inc. (TSX VENTURE:SGK.P) ("Springrock") is pleased to announce that it has signed a letter of intent dated November 28, 2013 to enter into a business combination (the "Qualifying Transaction") with ThermoCeramix, Inc. ("ThermoCeramix").

Description of ThermoCeramix

ThermoCeramix is a privately held Delaware corporation that specializes in the development of heating solutions for industrial, commercial and residential applications. These solutions utilize TCX™ film heater technology for which ThermoCeramix holds a broad patent portfolio. TCX™ technology is a system of multilayer coatings that can be applied to almost any material by the method of thermal spray. Together, these coatings form an electric element that delivers rapid, uniform heating in a minimum of space with efficiency superior to that of conventional wire heaters.

ThermoCeramix is a technology licensing company. Its technology is a novel and proven approach to delivering heat across a range of consumer, commercial and industrial applications. The technology includes coating formulations, manufacturing processes and the precise regulation of the heat delivered. This technology is energy efficient, and therefore yields a lower overall product cost than current technology, is scalable and is adaptable to almost any size and shape.

ThermoCeramix's heaters are applied as a coating of electro-resistive material directly to the surface requiring heat, which is then incorporated into consumer and industrial products. The TCX™solution is revolutionary and disruptive, in that it:

  • Saves space by eliminating a separate electrical heating element adjacent to a heated part;
  • Achieves higher temperatures and more even heat than the current technology; and
  • Allows a greatly increased range of size, shape, heating density and distribution thereby making innovative applications practical.

In 2010, the estimated electric element market, by application class, was as follows:

  • Total Market Size - $5 billion
  • Industrial and Other Non-residential - $3.5 billion
  • Consumer Appliance & Other Residential - $1.5 billion
  • Oven Market Size - 6.2 million units sold (2009)
  • Clothes Dryer Market Size - 6.4 million units sold (2009)
  • BBQ Market Size - 15 million units sold (2009)

A strong and broad portfolio of patents protects ThermoCeramix's intellectual property.

To date, ThermoCeramix has attracted approximately U.S. $11 million in the form of equity financing, from predominantly institutional investors.

ThermoCeramix, Inc. was incorporated in Delaware, U.S., on January 16, 2002. The company was initially headquartered in Shirley, Massachusetts, U.S. It was relocated to its present headquarters at Boucherville, Quebec, in April, 2009. Its U.S. office is located in Boston, Massachusetts, U.S.

ThermoCeramix currently has 837,121 common shares (the "Common Shares") and 19,012,288 preferred shares (convertible into 19,012,288 Common Shares) issued and outstanding. ThermoCeramix also has options, warrants and rights issued and outstanding to acquire an aggregate of 3,821,167 Common Shares and 53,100 preferred shares (which are convertible into 53,100 Common Shares).

Financing

A private placement equity financing of common shares from treasury of ThermoCeramix of approximately CDN$2,000,000 (the "Financing") is intended to be completed in connection with, and as a condition to, the Qualifying Transaction. ThermoCeramix has engaged Hampton Securities Limited and BT Global Growth Inc., as co-agents in connection with a brokered private placement offering of common shares of ThermoCeramix, at an issue price of $0.50 per share, for gross proceeds of up to $2,000,000. The offering will be made to "accredited investors" pursuant exemptions from prospectus requirements in Canadian securities laws.

The net proceeds of the Financing will be used to support:

  1. The ThermoCeramix's product development efforts (through continuing research and development on several applications of our technology),
  2. Optimization of the ThermoCeramix's manufacturing processes, and
  3. General corporate purposes.

Springrock

Springrock is a capital pool company and intends for the acquisition of ThermoCeramix to constitute its Qualifying Transaction as such term is defined in the policies of the TSX Venture Exchange (the "Exchange"). The Qualifying Transaction is not a non-arm's length transaction pursuant to the policies of the Exchange.

Shareholders Meeting

Since the Qualifying Transaction is at arm's length, Springrock is not required to obtain shareholder approval of the transaction. However, Springrock will hold a special meeting of shareholders (in combination with its upcoming annual meeting) to approve, among other matters, the following: (i) the consolidation of the common shares of Springrock on the basis of one new share for each 2.5 existing shares, such that the Qualifying Transaction can be effected on a one-for-one share basis; (ii) a name change of Springrock to "ThermoCeramix Corporation"; and (iii) the adoption of a new stock option plan. The special meeting will be combined with Springrock's next annual meeting to be held in connection with its fiscal year ended August 31, 2013.

Terms of the Qualifying Transaction

Pursuant to the terms of the letter of intent, completion of the Qualifying Transaction will be subject to a number of conditions, including execution of a definitive acquisition or merger agreement (the "Definitive Agreement"), completion of satisfactory due diligence and receipt of applicable regulatory and shareholder approvals. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

The Qualifying Transaction will be completed by way of a securities exchange or amalgamation of a new subsidiary of Springrock and ThermoCeramix whereupon the shareholders of ThermoCeramix will receive one common share of Springrock (on a post-consolidated basis) for each share of ThermoCeramix.

Any outstanding options, warrants and similar rights to acquire shares of ThermoCeramix will be exchanged for analogous options, warrants and similar rights to acquire common shares of Springrock, subject to compliance with the policies of the Exchange. Additionally, the securities to be issued by ThermoCeramix pursuant to the Financing will be exchanged, under the Qualifying Transaction, for securities of Springrock on the same basis as any currently issued and outstanding ThermoCeramix securities. Accordingly, Springrock will issue to the security holders of ThermoCeramix: (a) 24,849,409 common shares, (b) 1,501,167 options, (c) 53,100 warrants, (d) 320,000 agent's warrants, and (e) 500,000 agent's performance warrants to be issued upon a liquidity event. These securities will be issued pursuant to exemptions from prospectus and registration requirements in Canadian and U.S. securities laws.

It is not contemplated that Springrock will pay any cash or other non-share consideration for ThermoCeramix under the Qualifying Transaction.

Consequently, upon completion of the Qualifying Transaction (and after completion of the maximum amount of the Financing, being $2,000,000), the resulting issuer will have the following securities outstanding:

Security Holder - Type of Security Number of Common Shares1 Number of Convertible Securities1
Escrowed Shareholder(s) of Springrock 400,000
Options held by Springrock's Directors 80,000
Agent for Springrock's IPO 40,000
Public Shareholders of Springrock 400,000
Shares to be issued under the Financing 4,000,000
Shares to be issued for conversion of a previously issued note 1,000,000
Agent's Warrants under the Financing 320,000
Agent's Performance Warrants (to be issued upon a liquidity event) 500,000
ThermoCeramix Security holders - Options 1,501,1672
ThermoCeramix Security holders - Shares 19,849,409
ThermoCeramix Warrant holder - Warrant 53,100
Total: 25,649,409 2,494,267

Notes:

(1) Post-Consolidation figures.

(2) In addition, ThermoCeramix has reserved for issuance an additional 1,165,254 options under its option plan and 1,500,000 common shares for issuance in exchange of TSE Class C Shares.

Upon completion of the Qualifying Transaction and the Financing, ThermoCeramix will become a wholly-owned subsidiary of Springrock.

In conjunction with the Qualifying Transaction, the four holders of an aggregate of 1,000,000 common shares of Springrock that are currently subject to escrow prescribed by the Exchange (the "Escrowed Shares") have agreed to transfer the Escrowed Shares within escrow to ThermoCeramix (or another party that will be identified by ThermoCeramix) for an aggregate consideration of $150,000.

Trading of the securities of Springrock will be halted until the completion of the Qualifying Transaction.

All information in this press release relating to ThermoCeramix is the sole responsibility of ThermoCeramix.

ThermoCeramix

ThermoCeramix, Inc. is a U.S. engineering company, incorporated under the Delaware General Corporation Law, engaged in the development of heating solutions for industrial, commercial and residential applications to customers worldwide based on patented and proprietary technology. These solutions utilize TCX™ film heater technology for which ThermoCeramix holds a broad patent portfolio.

A licensee of ThermoCeramix, ThermoScience Enercoatings Inc., a company incorporated under the Canada Business Corporations Act and located at the Industrial Materials Institute of the National Research Council (NRC) of Canada, provides research and development support.

Once products are developed, ThermoCeramix offers customers the opportunity to manufacture the products themselves through a license or to acquire them from a licensed contract manufacturer.

ThermoCeramix delivers:

  • Engineered heating solutions that utilize proprietary, patented TCX™ film heater technology.
  • Custom manufacturing cells for volume production of film heaters.
  • Development of new film heating materials and methods.
  • Development of new manufacturing processes for film heater production.

Milestones Reached to Date

  • Obtained UL and CSA certifications for product using TCX™ technology
  • Commenced production in manufacturing plant
  • Celebrated 5 years of sales to a leading global manufacturer of electronic analytical instruments
  • Launched product with Lynx and Williams-Sonoma
  • Collaboration with leading appliance manufacturers
  • Development contract with an aerospace industry manufacturer
  • Development contract with option to license to a top bathtub and shower manufacturer

The Technology

TCX™ technology is a system of multilayer coatings, which together form an electric heating element - in effect, creating electric heaters in the form of coatings. Proprietary materials are deposited as coatings, on almost any material, using thermal spray technology. An electric current is passed through the coating that is deposited on the part to be heated. The heaters deliver rapid, uniform heating in a minimum of space with efficiency superior to conventional wire heaters. Advanced, automated manufacturing also forms part of the technology.

TCX™ patented heaters are applied as coatings of electro-resistive materials directly to the surface requiring heat. The TCX™ solution is a green technology that is revolutionary and disruptive, in that it:

  • Saves space by eliminating a separate electrical heating element adjacent to a heated part;
  • Achieves uniform heat with less power than conventional wire-heating elements; and
  • Allows for a greatly increased range of sizes, shapes, heating density and power distribution that makes innovative applications practical.

Characteristics of ThermoCeramix's thermal coatings:

  • Distribute power over surface, uniformly or non-uniformly
  • Conform to shape of part
  • Occupy almost no space and have almost no mass
  • Successfully deposit on all engineering materials (subject to heat requirements): metals, ceramics, mica, glass, polymers
  • Can be used with all common voltages, single-, multiple- or split-phase, AC or DC
  • Heaters can be predominantly conductive, radiative or convective
  • Wide range of power: demonstrated 0.16 W/cm2 - 100 W/cm2 (1 W/in2 - 650 W/in2)
  • Temperatures demonstrated to 1000°C (1832°F)
  • Range of Temperature Coefficient of Resistivity (TCR)

Advantages / benefits of ThermoCeramix's thermal coatings include the following:

  • Proven efficiency in conductive, convective and radiative applications
  • Performance typically superior to conventional wire elements
  • Fast, uniform heating and fast temperature response to variations in load
  • Efficient heat transfer to the load and high temperature capabilities - to 1000°C (1832°F)
  • High power densities
  • Heaters run cooler than conventional wire units, typically close to temperature of load
  • Elements can be easily designed for fail-safe operation
  • Robust performance, and Small size and lack of mounting hardware enables simple, efficient designs
  • Many connector options and made in compact, automated cell that can be placed in user's factory
  • Fewer parts therefore easier and less costly to assemble

Research and Development

ThermoCeramix's research and development has been sub-contracted to a licensee, ThermoScience Enercoatings Inc. ("TSE"), a company incorporated under the Canada Business Corporations Act. TSE's research premises are located in Boucherville, Québec, Canada, on the campus of the National Research Council Canada's ("NRC") Industrial Materials Institute. TSE has entered into a multi-year collaborative agreement with the NRC, pursuant to which:

  • Several highly qualified engineers and technical experts are made available to TSE on research projects, complementing its own research team; and
  • TSE is given access to the NRC's state-of-the-art research and development facility.

ThermoCeramix Financial Statements

The financial statements of ThermoCeramix for the period ended September 30, 2013 have not yet been completed and will be included in the Filing Statement to be prepared and filed in connection with the Qualifying Transaction.

Insiders and Board of Directors of the Resulting Issuer

Upon completion of the Qualifying Transaction, all of the existing directors and officers of Springrock will resign and it is anticipated that management of the resulting issuer will include the persons identified in the section on new officers below. The board of directors of the resulting issuer will be increased in size to 5 directors and solely composed of the nominees of ThermoCeramix, of which 4 directors will be independent of management. The directors will be as follows:

  • Louis Desmarais (Chairman & C.E.O.)
  • Kimberly Holden
  • Robert Barton
  • Jean Bédard
  • Paul Beattie

The only shareholders of ThermoCeramix who own more than 10% of the outstanding Common Shares (or securities convertible into Common Shares) are St-Lawrence Capital, L.P. and St-Lawrence Capital, Inc. These shareholders are expected to own more than 10% of the common shares of Springrock after giving effect to the Qualifying Transaction (and therefore are expected to become insiders of Springrock), subject to the number of Common Shares that may be issued and sold as part of the Financing. In addition, the directors and officers of ThermoCeramix mentioned in this press release will become insiders of Springrock.

Further details with regard to the principal security holders, St-Lawrence Capital, LP and St-Lawrence Capital, Inc., are as follows:

St-Lawrence Capital, LP is based in Montreal, Quebec and its principal limited partners are:
1. FTQ Solidarity Fund
Montréal, Québec
2. Caisse de depot et placement du Quebec
Montréal, Québec
3. Investment Quebec
Montréal, Québec
4. Louis P. Desmarais
Montreal, Quebec
St-Lawrence Capital, Inc. is based in Montreal, Quebec and its principal shareholders are:
1. Louis P. Desmarais
Montreal, Quebec
2. Susan Desmarais
Montreal, Quebec

The Common Shares and preferred shares of ThermoCeramix are currently held by 56 shareholders (including certain directors and officers of ThermoCeramix), all of whom act at arm's length to Springrock.

Background on New Officers

Louis Desmarais - Chairman and Chief Executive Officer

Louis Desmarais is the founding partner of St-Lawrence Capital, L.P., an early-stage venture capital fund based in Montreal, Quebec. Mr. Desmarais was formerly a partner of Skypoint Capital and Wynnchurch Capital, a chartered accountant with Deloitte & Touche and a lawyer with McCarthy, Tétrault. Mr. Desmarais is currently Chairman, President and Chief Executive Officer of ThermoCeramix.

Joseph Mah - Chief Financial Officer

Joseph Mah is a Chartered Accountant and holds a CPA designation. Mr. Mah has over 20 years of business experience, including over 10 years in technology start-ups. Prior to joining ThermoCeramix, Mr. Mah held the position of CFO in various start-up technology and mining ventures, including VisualMED Clinical Systems Inc. and Birim Goldfields Inc.

Sponsorship of Qualifying Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with the Exchange policies. Given the size and nature of the qualifying transaction, Springrock will apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange.

Springrock will make a subsequent press release of information regarding summary financial information and details of the Financing.

Cautionary Note

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange 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.

Forward-Looking Statements

Certain information set forth in this press release may contain "forward-looking statements" or "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein may constitute forward-looking statements, which may include management's assessment of ThermoCeramix's future plans and operations based on ThermoCeramix's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. Any such statements are not guarantees of future performance and undue reliance should not be placed on them. Any such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause ThermoCeramix's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: ThermoCeramix's inability to secure purchase orders for its products; dependence on any third party suppliers; competition for, among other things, capital, skilled personnel, customers and suppliers; the effects of competition and pricing pressures in the market; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that any such forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. ThermoCeramix undertakes no obligation to update any such forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on any such forward-looking statements.

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 securities described in this press release have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person absent an available exemption from the registration requirements of such Act.

Contact Information