Thornapple Capital, Inc.
TSX VENTURE : THN.P

August 29, 2013 17:35 ET

Thornapple Capital, Inc. Enters Into Definitive Agreement Relating to Qualifying Transaction

TORONTO, ONTARIO--(Marketwired - Aug. 29, 2013) -

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Thornapple Capital, Inc. (TSX VENTURE:THN.P) (the "Corporation" or "Thornapple") is pleased to announce that it has entered into a definitive merger agreement with Agility Health Holdings, Inc. ("Agility Health") dated August 28, 2013 (the "Merger Agreement") in respect of its previously announced proposed merger of Agility Health and Thornapple, which transaction (the "Qualifying Transaction") is intended to constitute the Corporation's "Qualifying Transaction" under the applicable policies of the TSX Venture Exchange (the "Exchange"). The Merger Agreement and the Qualifying Transaction are described in greater detail below.

Information Concerning Agility Health

Agility Health is a privately-held healthcare services company existing under laws of the State of Delaware with its headquarters in Grand Rapids, Michigan. Through its subsidiary and principal operating entity, Agility Health, LLC, Agility Health operates a multi-state network of outpatient rehabilitation clinics and provides contracted services to hospitals, nursing homes and other institutional clients, providing care and treatment for orthopedic-related disorders, sports-related injuries, preventative care, rehabilitation of injured workers, and a variety of other injuries and conditions. In addition, Agility Health provides a number of ancillary services related to physical rehabilitation, including practice management software systems and custom orthotics. As of March 31, 2013, Agility Health operated 47 outpatient rehabilitation clinics in eight states. Agility Health's contract therapy services business provided rehabilitative services to 29 hospitals and inpatient rehabilitation units, 47 nursing homes, long-term care facilities and other service locations in 13 states.

There is currently no public market for the securities of Agility Health.

Information Concerning the Corporation

Thornapple Capital, Inc. is an exempted company incorporated with limited liability under the laws of the Cayman Islands and formed as a "capital pool company" under the policies of the Exchange. The Corporation is a "reporting issuer" in the Provinces of Ontario, British Columbia and Alberta. The principal business of Thornapple is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses for the completion of a Qualifying Transaction and, once identified and evaluated, to negotiate an acquisition or participation subject to receipt of shareholder approval, where required, and acceptance for filing by the Exchange.

The voting common shares of Thornapple (the "Voting Common Shares") were listed for trading on the Exchange on September 28, 2011 upon completion of the Corporation's initial public offering. On March 19, 2013, the Corporation entered into a letter of intent, as amended, with Agility Health with respect to the proposed Qualifying Transaction. Trading of the Voting Common Shares was halted on March 19, 2013 in connection with the announcement of the proposed Qualifying Transaction and trading of the Voting Common Shares may not resume until completion of the Qualifying Transaction.

The Corporation will hold an extraordinary general meeting of the shareholders (the "Meeting") on September 26, 2013 to consider, and, if deemed appropriate, approve the Qualifying Transaction and certain matters in contemplation of the Qualifying Transaction which include: (a) approval of a new stock incentive plan of the Corporation; and (b) amending the amended and restated articles of Thornapple to: (i) increase the authorized capital; (ii) approve a consolidation of the Voting Common Shares on a 1 (new) for 2 (old) basis; (iii) change the name of Thornapple to "Agility Health, Inc."; (iv) authorize the directors of Thornapple to fill vacancies on the board of directors in between annual general meetings of shareholders without a limitation on the number; (v) allow for the conversion of Voting Common Shares to restricted voting common shares in the capital of Thornapple ("Restricted Voting Common Shares"); (vi) restrict the transfer of Restricted Voting Common Shares in the event of an offer to purchase Restricted Voting Common Shares, unless concurrently with such offer, an offer to purchase voting common shares is made on the same terms and conditions; and (vii) remove voting rights associated with the Restricted Voting Common Shares.

Further details with respect to the matters to be approved at the Meeting are contained in the information circular prepared in connection with Meeting and available for review on the Corporation's SEDAR profile at www.sedar.com.

Private Placement

Prior to the completion of the Qualifying Transaction, Agility Health intends to complete a private placement (the "Private Placement") of shares in the common stock of Agility Health ("Agility Shares") at a price of $59.11 per Agility Share for gross proceeds to Agility Health of approximately $200,000. Pursuant to the Qualifying Transaction, each Agility Share issued under the Private Placement will be exchanged for Voting Common Shares on the basis of 592.12 Voting Common Shares for each Agility Share at a deemed price of $0.10 per Voting Common Share. Agility Health is completing the Private Placement in order for the Resulting Issuer to meet the Tier 1 initial listing requirement of 250 public shareholders as required by the policies of the Exchange.

Information Concerning the Qualifying Transaction and the Merger Agreement

On August 28, 2013, the Corporation, Agility Health and Agility Acquisition Co., a wholly owned subsidiary of the Corporation ("Thornapple Subco") entered into the Merger Agreement. Subject to any regulatory or other approvals that may be required and the satisfaction of other conditions contained in the Merger Agreement, the merger will occur via a reverse triangular merger under the General Corporation Law of the State of Delaware. Pursuant to the terms and conditions of the Merger Agreement, Thornapple Subco will amalgamate with Agility Health and become a wholly-owned subsidiary of Thornapple (to be renamed "Agility Health, Inc." pursuant to a special resolution of the shareholders of Thornapple to be passed at the Meeting). The Corporation, on a post-Qualifying Transaction basis, is hereinafter referred to for convenience as the "Resulting Issuer". Upon completion of the Qualifying Transaction, the Resulting Issuer will continue to carry on the business currently conducted by Agility Health.

Immediately prior to the effective time of the merger, all of the preference shares of Agility Health will be converted into Agility Shares in accordance with their terms. Pursuant to the Merger Agreement, among other things: (i) all of the issued and outstanding Agility Shares will be exchanged for Voting Common Shares or Restricted Voting Common Shares on the basis of 591.12 Voting Common Shares or Restricted Voting Common Shares, as applicable, per Agility Share; (ii) all of the issued and outstanding warrants of Agility Health will be exchange for warrants of the Resulting Issuer on the basis of approximately 591.12 Resulting Issuer warrants per warrant of Agility Health; and (iii) all issued and outstanding compensation options of Agility Health will be exchanged for compensation options of the Resulting Issuer on the basis of 11,896 Resulting Issuer compensation options per compensation option of Agility Health. The issuance of Voting Common Shares and Restricted Voting Common Shares is to occur at a deemed price of US$0.10 for aggregate deemed consideration of US$13,250,000.

It is currently anticipated that upon completion of the Qualifying Transaction (assuming completion of the Private Placement) there will be approximately 30,500,000 Voting Common Shares and 114,065,000 Restricted Voting Common Shares issued and outstanding. Former shareholders of Thornapple will hold 10,065,000 of the outstanding Voting Common Shares and former shareholders of Agility Health will hold 18,435,000 of the outstanding Voting Common Shares. Former shareholders of Agility Health will hold all of the issued and outstanding Restricted Voting Common Shares. The Restricted Voting Common Shares will not be listed on the Exchange.

Selected Agility Health Financial Information

The following table sets forth selected historical financial information for Agility Health for the three months ended March 31, 2013 and the financial years ended December 31, 2012, December 31, 2011 and December 31, 2010.

Income Statement Data Three Months Ended March 31, 2013 (unaudited)(1 ) Year Ended December 31, 2012
(audited)
(1
) Year Ended December 31, 2011
(audited)
(1
) Year Ended December 31, 2010
(audited)
(1
)
Total Revenues US$16,449,364 US$63,032,647 US$55,286,748 US$46,775,474
Income or (Loss) from Operations $ US(1,286,984 ) US$(540,102 ) US$(109,904 ) US$3,287,030
Net Income or (Loss) $ US(2,217,260 ) US$(2,810,424 ) US$(2,252,480 ) US$2,443,964
Balance Sheet Data Three Months Ended March 31, 2013 (unaudited)(1 ) As at December 31, 2012
(audited)
(1
) As at December 31, 2011
(audited)
(1
) As at December 31, 2010
(audited)
(1
)
Total Assets US$22,262,896 US$21,676,939 US$21,900,041 US$13,127,740
Total Liabilities US$24,511,422 US$21,558,205 US$18,981,800 US$7,204,365

Notes:

(1) Prepared in accordance with International Financial Reporting Standards.

Management and Board of Directors of the Resulting Issuer

The following is a brief description of each of the proposed members of management and directors for the Resulting Issuer.

Steven Davidson, Age 53, Chief Executive Officer, Director and a Promoter

Mr. Davidson has been the Chief Executive Officer of Agility Holdco for the previous 10 years. Mr. Davidson directs Agility's care delivery and quality initiatives, financial performance, strategic acquisitions and other business development activities.

Mr. Davidson held various senior executive roles at Agility's predecessor, Gary Nederveld and Associates, for 14 years, including positions covering regional business development, healthcare system and corporate client relations, and professional recruitment.

Mr. Davidson is a licensed physical therapist in Michigan and a member of the American Physical Therapy Association and its Private Practice Section. Mr. Davidson has a Bachelor of Arts degree in physical therapy from the College of St. Scholastica in Duluth, Minnesota and a Masters of Business Administration from the University of Chicago Booth School of Business.

Kenneth Scholten, Age 59, President, Director and a Promoter

Mr. Scholten is President of Agility Holdco and provides leadership in his business strategy development and client relationship management.

Having joined Agility in 1977, Mr. Scholten has dedicated his entire professional career to expanding and improving Agility's ability to serve its clients, partners and patients. Mr. Scholten's experience has included diverse clinical and management responsibilities, from those of staff therapist and clinical manager, to chief operating officer. His career began in contract therapy management, with oversight for establishing clinical service contracts with hospitals and skilled nursing facilities. In 1980, he launched the first of what would become Agility's multi-state group of owned and partnered outpatient clinics. Mr. Scholten was subsequently named Vice President of Operations, with a focus on managing clinical startup operations for new hospital contracts in Michigan and Illinois. Later, as Vice President of Human Resources, Mr. Scholten oversaw all professional staff recruitment and benefits administration, developed a new compensation management structure and established a system of international therapist recruitment.

Mr. Scholten is a licensed physical therapist in both Michigan and Indiana. Mr. Scholten earned a Bachelor of Science degree in physical therapy from Wayne State University in Detroit and has pursued graduate coursework in healthcare administration at St. Joseph's College of Maine.

Robert Herr, Age 68, Director

Mr. Herr is a retired certified public accountant having retired from Crowe Horwath LLP in 2007 after 40 years with the firm. Throughout his career with the firm, Mr. Herr worked with private and public clients in a variety of industries including manufacturing, retail, financial, service, healthcare, distribution, non-profit, and higher education. He has experience working with boards of directors and audit committees with a focus on strategic planning, transaction services, internal reporting, cash flow, and budget planning. Mr. Herr spent over 15 years as a member of Crowe Horwath LLP's financial institutions practice and his experience includes extensive regulatory interaction and knowledge of publicly traded bank holding companies. Mr. Herr has also been a Member of the Audit Committee and Director of Macatawa Bank Corporation since October 2010.

Mr. Herr graduated from Western Michigan University in 1967 with a Bachelor of Science (Accounting Major).

Robert Metcalfe, Age 73, Director

Mr. Metcalfe has been counsel at Metcalfe, Blainey & Burns LLP since 2001, and prior to that he was a senior partner with the law firm Lang Michener LLP for 20 years. He is the former President and Chief Executive Officer of Armadale Properties and counsel to all of the Armadale Group of Companies, with significant holdings across numerous industries including finance, construction of office buildings, airport ownership and management, land development, automotive dealerships as well as newspaper publishing and radio and television stations. Mr. Metcalfe was a director of Canada Lands Company Limited, one of the largest real estate corporations in Canada, and was a director and Chairman of the Board of CN Tower Limited, the tallest communications structure in the world. He has served as a director of numerous public and private corporations and currently serves as a director of the following publicly listed companies: Gran Colombia Gold Corp. (Director and Chairman of the Corporate Governance and Nominating Committee); Xinergy Corp. (Lead Director and Chairman of the Audit Committee); and Alberta Oil Sands (Director and Chairman of the Board). He is a member of the Institute of Corporate Directors and a member in good standing of the Law Society of Upper Canada.

Pierre Labbé, Age 47, Director

Mr. Labbé has been the Vice-President, Chief Financial Officer and Secretary of Medicago Inc. since May 2008 and acting Chief Financial Officer of Plexmar Resources Inc. from May 2007 to November 2012. He was Vice-President, Chief Financial Officer and Secretary of Medicago Inc. from July 2004 to May 2007. Before joining Medicago in 2004, he was Vice-President and Chief Financial Officer and Secretary of Sequoia Minerals Inc. from December 2003 to June 2004, and of Mazarin Inc. from March 2000 to December 2003, while both companies were listed on the Toronto Stock Exchange. Prior to March 2000, he held management positions in accounting and finance, notably with PricewaterhouseCoopers LLP (formerly Coopers & Lybrand) where he was involved in many acquisitions and public financing projects. Mr. Labbé holds a Bachelor's Degree in Business Administration and a Chartered Accountants Degree from Laval University, Quebec City. He is a member of the Order of Chartered Accountants of Quebec and of the Canadian Institute of Chartered Accountants and the association of Certified Corporate Directors. He is also Director and Chairman of the Audit Committee of Virginia Mines Inc., a mining exploration company.

Michael Valdes, Age 48, Chief Financial Officer and Corporate Secretary

Mr. Valdes was named Agility's Chief Financial Officer in 2010. In this capacity, Mr. Valdes has responsibility for Agility's accounting, financial services, tax, and treasury management functions. He also provides executive leadership for all merger, acquisition and external development activities. As a member of Agility's senior management committee, Mr. Valdes plays an integral role in shaping overall corporate strategy.

Prior to joining Agility, Mr. Valdes held a series of positions at University of Michigan Health System, where he served most recently as Chief Administrative Officer for the system's flagship University Hospital, and as Associate Hospital Director for Operations and Ancillary Services. Mr. Valdes joined the Health System in 2001, serving as Director of Finance and Business Operations for Patient Care Services. Earlier in his career, Mr. Valdes held leadership roles in finance and operations with a number of public and private healthcare and related firms, with an emphasis on mergers and acquisitions, corporate finance and operational improvement.

Mr. Valdes holds a Masters of Business Administration from the University of Michigan's Ross School of Business and a bachelor's degree in business administration from the University of Toledo.

Sponsorship

Byron Capital Markets Ltd. has acted as sponsor to the Resulting Issuer in connection with the Qualifying Transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Qualifying Transaction or the likelihood of completion.

Arm's Length Transaction

The Qualifying Transaction will be carried out by parties dealing at non-arm's length to one another and therefore will be considered to be a "Non-Arm's Length Qualifying Transaction" as such term is defined under the policies of the Exchange. The Qualifying Transaction will be considered to be a Non-Arm's Length Qualifying Transaction because Steven Davidson and Kenneth Scholten, each a director, officer and principal shareholder of Thornapple, are also each a director, officer and principal shareholder of Agility Health. Each of Steven Davidson and Kenneth Scholten currently beneficially own 2,077,500 Voting Common Shares, representing approximately 20.64%, respectively, of the issued and outstanding Voting Common Shares and each own 100,000 Agility Shares, representing 50% of the outstanding Agility Shares, respectively. The Qualifying Transaction will also be subject to "majority of the minority" shareholder approval pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. Thornapple formed a special committee comprised of its independent directors to evaluate the terms of the Qualifying Transaction.

Further information concerning Agility Health, the Corporation and the Qualifying Transaction is contained in the information circular prepared in connection with the Meeting and filed on the Corporation's SEDAR profile at www.sedar.com.

Cautionary Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this press release contains forward-looking information relating to the intention of the parties to, among other things, enter into and complete the Qualifying Transaction. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Corporation. The material factors and assumptions include the parties to the agreements underlying the Qualifying Transaction being able to obtain the necessary director, shareholder and regulatory approvals; completion of the Private Placement; Exchange policies not changing; and completion of satisfactory due diligence. Risk factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: conditions imposed by the Exchange, the failure to obtain the required directors' and shareholders' approvals in respect of the Qualifying Transaction and related matters; changes in tax laws, general economic and business conditions; and changes in the regulatory environment. The Corporation cautions the reader that the above list of risk factors is not exhaustive. The forward-looking information contained in this press release is made as of the date hereof and the Corporation is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

Completion of the Qualifying 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 Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

The Agility Shares have not been and will not be registered under the United States Securities Act of 1933 and accordingly will not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to applicable exemptions from the registration requirements.

Investors are cautioned that, except as disclosed in the information circular prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying 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 Exchange has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Thornapple Capital, Inc.
    Robert Herr
    Director
    (416) 361-1790

    Agility Health Holdings, Inc.
    Steven N. Davidson
    Chief Executive Officer
    (616) 356-5000