Triwood Capital Corp.
NEX BOARD : TRD.H

February 11, 2011 11:52 ET

Triwood Capital Corp. Announces Merger Agreement and Financing

CALGARY, ALBERTA--(Marketwire - Feb. 10, 2011) -

NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Triwood Capital Corp. (the "Corporation") (NEX BOARD:TRD.H) is pleased to announce that further to the Corporation's press release dated August 4, 2010, the Corporation has entered into a merger agreement with Algae Biosciences Corp. ("ABC") and Triwood Capital Corp., a Delaware corporation ("TCC"), a wholly-owned subsidiary of the Corporation, effective January 28, 2011 (the "Merger Agreement"), with respect to the Corporation's acquisition (the "Acquisition") of all of the issued and outstanding common stock of ABC, which is intended to constitute the Corporation's Qualifying Transaction, as such term is defined in the policies (the "TSXV Policies") of the TSX Venture Exchange (the "Exchange"). Further information relating to the Acquisition is available in the Corporation's press release dated August 4, 2010, which is posted under the Corporation's SEDAR profile at www.sedar.com.

The Corporation is also pleased to announce that the Corporation has entered into an engagement agreement with Macquarie Private Wealth Inc. (the "Agent") contemplating the engagement of the Agent to act as agent on a "commercially reasonable agency efforts" basis, subject to completion of satisfactory due diligence, for a brokered financing (the "Brokered Financing") of common shares of the Corporation ("Common Shares").

The Corporation is a Capital Pool Company, as defined by the TSXV Policies, that completed its initial public offering on August 26, 2008, pursuant to which it issued 1,500,000 common shares of the Corporation at a per-share price of $0.20, for aggregate gross proceeds of $300,000. The common shares of the Corporation originally traded on the Exchange and were halted from trading as required by the Exchange on March 18, 2010 in connection with a proposed Qualifying Transaction. On December 22, 2010, the Corporation announced its transfer to the NEX board of the Exchange (the "NEX"). In accordance with the TSXV Policies, the Corporation was given 24 months to complete a Qualifying Transaction. The Corporation made progress towards completing a Qualifying Transaction but was unable to complete a Qualifying Transaction within the allotted 24 month period. As such, the Corporation obtained shareholder approval, exclusive of the votes of non-arm's length parties to the Corporation, to transfer its listing to the NEX at a special meeting of shareholders held on December 13, 2010. In connection with the transfer to NEX, a total of 600,000 common shares of the Corporation ("Common Shares"), which constitute "seed shares" under the TSXV Policies, were cancelled. As a result of the cancellation of 600,000 Common Shares, there are currently 2,400,000 Common Shares issued and outstanding. Further information relating to the Corporation's transfer to the NEX is available in the Corporation's press release dated December 22, 2010, which is posted under the Corporation's SEDAR profile at www.sedar.com.

Summary Information Relating to ABC

The following information relating to ABC has been provided to the Corporation by ABC.

As previously publicly announced, ABC is a private corporation incorporated under the laws of the State of Nevada with its head office in Clay Springs, Arizona. ABC is engaged in the growth and production of microalgae and macroalgae for the nutraceutical, pharmaceutical and biofuel markets. ABC is not a reporting issuer in any jurisdiction in Canada or the equivalent in the United States.

ABC has developed an "Algae Production Platform" that allows the production of various products. These products are used as nutraceuticals, nutritional supplements, therapeutic proteins, as dyes in diagnostic tests and biotechnology, for aquaculture and animal consumption, food additives and functional foods, in personal care and cosmetics, as biofuels, and a host of other potential product applications. ABC will initially produce products primarily destined for use as nutraceuticals and food additives. ABC owns property and production facilities located near Holbrook, Arizona. ABC is intending to complete full-scale production facilities within the next 12 months. The first stage of these facilities has produced microalgae in test batches since October 2006.

Concurrent with the research and development of bioreactor and other production system designs, the founders have refined an array of specific algae strains and related media formulations and specialty bioreactor designs used to advance the efficacy of such algae strains (collectively, the "Licensed Intellectual Property"). The Licensed Intellectual Property is owned by International IP Holdings, LLC, a Nevada limited liability company ("International IP") that is owned directly or beneficially by Andrew D. Ayers, Robert Thompson, Keith Guelpa, Mark Edwards, Rakesh Amin, Glen Galster, and Laurence Luke. The Licensed Intellectual Property was licensed to ABC, on a world-wide, exclusive basis, under the terms and conditions of a license agreement (the "License Agreement"). The algae strains contained within the Licensed Intellectual Property have been used to grow sample Omega-3 fatty acid products in ABC's facilities and the resultant products have been tested by independent laboratories. All algae strains developed by International IP for ABC are subject to the License Agreement, and such algae strains that show breakthrough strengths, as nutritional or pharmaceutical input products, will warrant pursuit of patent protection. ABC will pay a sliding scale royalty based on gross margin performance. ABC is also granted an exclusive option to purchase International IP or all of its assets under the License Agreement. The term of the License Agreement is five years, renewable at the option of International IP, for successive five year terms. The current term of the License Agreement is scheduled to expire on November 29, 2015.

The following table summarizes selected audited financial information for ABC for the year ended December 31, 2009 and the selected unaudited financial information for ABC for the years ended December 31, 2007, 2008, and for the nine month period ended September 30, 2010.



Nine months Year ended Year ended Year ended
ended December December December
September 30, 31, 2009 31, 2008 31, 2007
2010 (US$) (US$) (US$)
(US$)

-----------------------------------------------------------
Revenue $ - $ - $ - $ -
Loss from (144,870) (214,170) (1,190,395) (175,392)
Operations
Net Loss (335,401) (274,551) (1,254,959) (176,326)
Total Assets 730,336 812,073 919,938 1,494,264
Total Long-Term 368,213 385,477 346,448 141,929
Financial
Liabilities
Research and - - 828,193 -
Development
Expenditures


The Merger Agreement

Pursuant to the Merger Agreement, which was negotiated at arm's length, the Corporation will acquire ABC in a reverse take-over transaction which will be effected by way of a merger under the corporation law of the State of Delaware, in a transaction sometimes referred to as a "forward triangular merger".

Pursuant to the terms of the Merger Agreement, TCC, a wholly-owned subsidiary of the Corporation that was incorporated under the laws of the State of Delaware, and ABC, will amalgamate and continue as one corporation. The holders of common shares of ABC ("ABC Shares") will transfer their ABC Shares to TCC and receive one (1) Common Share for each ABC Share previously held. In connection with the foregoing, any outstanding options and similar rights to acquire ABC Shares will be exchanged for analogous options and similar rights to acquire Common Shares.

Any ABC Shares held by a holder who has demanded and perfected appraisal rights for such shares in accordance with Nevada law and who, as of the date that is 30 days after the date on which the shareholders of ABC received notice of their right to demand payment, has not effectively withdrawn or lost such appraisal rights, will not be converted into or represent the right to receive Common Shares in the Acquisition, but the holder thereof will be entitled to demand and receive, in lieu of the Common Shares offered in the Acquisition, the fair value of such shares of ABC Shares as determined in accordance with Nevada law.

The Acquisition will result in the issuance of 34,048,250 Common Shares and 1,336,579 warrants to acquire Common Shares, to the shareholders of ABC. The 34,048,250 Common Shares will be issued to shareholders of ABC at a deemed price of $0.20 for aggregate deemed consideration of $6,809,650. Assuming completion of the Acquisition, but before issuance of Common Shares in connection with the Brokered Financing, there will be an aggregate of 36,448,250 Common Shares issued on a non-diluted basis, of which former shareholders of ABC and shareholders of the Corporation will own approximately 93.42% and 6.58%, respectively. Accordingly, the Acquisition will constitute a reverse take-over of the Corporation.

Assuming completion of the Acquisition and completion of the Brokered Financing, there will be an aggregate of 61,448,250 Common Shares issued on a non-diluted basis, of which former shareholders of ABC and shareholders of the Corporation will own approximately 55.41% and 3.91%, respectively, assuming none of the current shareholders subscribe for Common Shares under the Brokered Financing.

Upon completion of the Acquisition, the Corporation will continue to carry out the business of ABC as currently constituted.

Directors and Officers of Resulting Issuer

In connection with the completion of the Acquisition, Lawrence Luke will be appointed as Secretary of the Corporation and Robert Thompson will remain the Chief Financial Officer. Further information relating to the proposed directors and officers of the Corporation following the Acquisition is available in the Corporation's press release dated August 4, 2010, which is posted under the Corporation's SEDAR profile at www.sedar.com.

Brokered Financing

Prior to or concurrent with the closing of the Acquisition, the Corporation expects to complete the Brokered Financing. Additional terms of the Brokered Financing, including the Agent's remuneration, the price per share and number of shares to be issued, will be announced in a subsequent news release. The net proceeds will be used by the combined entity (the "Resulting Issuer") to pay costs associated with the Brokered Financing and the Acquisition to finance and increase the production capacity of the Resulting Issuer, and for working capital and other corporate purposes.

Loan

On July 29, 2010, the Corporation entered into a loan agreement with ABC, whereby the Corporation loaned ABC $25,000 in Canadian Funds (the "Loan Agreement"). Pursuant to the terms of the Loan Agreement, the $25,000 loan bears interest at a rate of 8% per annum, is secured by all assets of ABC, and is due on demand with no set terms of repayment.

Controlling Interest

Andrew Ayers of Clay Springs, Arizona maintains a controlling interest in ABC, as he currently owns 9,686,173 ABC Shares or 28.45% of ABC. Following the Acquisition and Brokered Financing, Andrew Ayers will own 9,686,173 Common Shares or 15.76% of the Corporation.

Interest of Corporation's Directors

Mr. Robert Thompson is a director of both the Corporation and ABC, and beneficially owns 1,200,644 ABC Shares (3.53% of ABC) and will own 1,388,144 Common Shares following completion of the Acquisition and the Brokered Financing (2.26% of Resulting Issuer) . As such, the Acquisition will not constitute a Non-Arm's Length Qualifying Transaction, as such term is defined under the TSXV Policies.

Sponsorship

In relation to the Acquisition, the Corporation applied for an exemption from the Exchange with respect to the Exchange's sponsorship requirement pursuant to Section 3.4 of Policy 2.2 "Sponsorship and Sponsorship Requirements" of the Exchange's Corporate Finance Manual.

Trading Halt

The trading of Common Shares is expected to remain halted pending completion of the Corporation's Qualifying Transaction.

Cautionary Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the proposal to complete the Acquisition and associated transactions, including statements regarding the terms and conditions of the Acquisition, the Brokered Financing and the use of proceeds of the Brokered Financing. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Acquisition, the Brokered Financing and associated transactions, that the ultimate terms of the Acquisition, the Brokered Financing and associated transactions will differ from those that currently are contemplated, and that the Acquisition, the Brokered Financing and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, ABC or their respective financial or operating results or (as applicable), their securities.

Completion of the Acquisition 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 prospectus to be 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 TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this press release.

The Common Shares 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 absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the content of this release.

Contact Information

  • Triwood Capital Corp.
    Kevin Blanchette
    President, Chief Executive Officer, and Secretary
    (403) 241-8477