Vida Ventures Ltd.

January 18, 2012 15:11 ET

Vida Ventures Ltd. Announces Proposed Qualifying Transaction With Tonec Advanced Materials (BVI) Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 18, 2012) -


Vida Ventures Ltd. (TSX VENTURE:VDA.P) (the "Company"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), today announced that it has entered into a letter of intent on January 16, 2012 relating to the acquisition of 100% of the equity interest of Jinan Tonec Energy-Saving Co., Ltd. ("Tonec"), by acquiring Tonec Advanced Materials (BVI) Ltd., which controls the business of Tonec (the "Acquisition"). This transaction is intended to constitute the Company's Qualifying Transaction (the "Transaction") and is not a Non-Arm's Length Qualifying Transaction (as defined by the Exchange policies). It is expected that upon completion of the Transaction, the resulting issuer will be renamed Tonec Advanced Materials Corp.

Overview of Tonec

Tonec is a developer and producer of technologically advanced building materials. Tonec's principal products are laminated polymer panels ("Laminated Polymer Panels"), which are made primarily from a proprietary structurally-reinforced thermosetting compound (the "SRT Compound") that has been developed by Tonec. Due to properties unique to the SRT Compound, Tonec's Laminated Polymer Panels have superior performance characteristics that overcome many of the traditional shortcomings of traditional building materials (e.g., steel, metal, wood, concrete and conventional plastic panels). The Laminated Polymer Panels are strong, energy efficient, work well in highly corrosive and extreme temperature environments, have superior resistance to fire, sound, electro magnetic waves, weather, and thermal contraction/expansion, and have a life span of 15 to 20 years.

Tonec's SRT Compound is made by combining a proprietary highly-advanced thermosetting plastic resin, a proprietary composite chemical additive and a reinforcement material such as fiberglass or jute. The SRT Compound is the result of over 20 years of research and development ("R&D") work and field-testing product trials. Using the SRT Compound, Tonec has developed two types of Laminated Polymer Panels: corrugated panels; and flat panels. Corrugated panels are used primarily for the exterior skinning of industrial facilities such as metal refineries, processing plants, and warehouses, while flat panels have a more diverse set of applications including building interiors (such as walls and flooring), furniture, transportation, machinery, and other miscellaneous applications where any of the benefits of superior insulation, durability, life span, sound absorption, or heat transference render the flat panel a superior alternative to traditional materials.

Laminated Polymer Panels can be applied to a number of global multi-billion dollar end markets including industrial building materials, residential/consumer products, transportation and manufacturing. Tonec's corrugated Laminated Polymer Panels are marketed as an exterior finishing material for industrial buildings and facilities. Tonec believes that their corrugated Laminated Polymer Panels have a global opportunity in harsh and highly corrosive environments that currently use steel panels for exterior finishing such as metal smelting, chemical production plants, power plants, and even food processing plants. In emerging markets such as China, the corrugated Laminated Polymer Panels can be used as a replacement for steel panels in general industrial facilities such as manufacturing buildings distribution centers, and warehouses. While being priced competitively with steel panels, Tonec's Laminated Polymer Panels have a useful life of 15 to 20 years, as compared to steel panels which typically have a useful life of less than five years in corrosive environments.

The global market for steel panels was approximately 75.5 million tonnes in 2010, equating to approximately 17 billion square feet. China is the single largest producer of steel panels globally with a market share of approximately 38% in 2010. While Tonec has traditionally targeted steel replacement in existing facilities, the market for new building product is large and growing - in 2009, there was over 63 billion square feet of floor space under construction in China, and the construction industry has been growing at a compound annual growth rate of approximately 21.5% since 2004. Tonec's flat panels potentially have a more diverse set of applications than do its corrugated panels, including building interiors (such as walls and flooring), furniture, transportation, machinery, and other miscellaneous applications. The global construction industry produced US$7.3 trillion in output in 2010, and is expected to grow by 65% to US$12 trillion in 2020.

Tonec's intellectual property is protected by patents, trade secrets, know-how, confidential designs and methodologies, formulae, production techniques and trade-marks. Tonec, including its predecessor company, has spent over C$5 million on R&D to date and has created significant competitive advantages through the accumulation of know-how and trade secrets. Tonec's Laminated Polymer Panels are protected by 12 international patents in the United States, China, Malaysia, Russia, Taiwan, and Thailand.

Tonec has sold Laminated Polymer Panels to customers in China, Taiwan, the Philippines, Thailand, Malaysia and South Africa. Given the location of the manufacturing facility in Jinan, China, the majority of Tonec's sales are to large companies located in China. While Tonec expects to continue targeting customers that own and operate heavy industrial facilities in China, Tonec also intends to broaden its geographic reach by targeting new customers in international markets. Tonec's management believes that Russia, Europe, India and North America are potential markets for its products.

Tonec began producing Laminated Polymer Panels at its production facility in 2006 and has consistently increased sales each year. The effective capacity of the current production facility is approximately 6.5 million square feet per year, assuming normalized production levels of 15 hours per day, 350 days per year. The plant can be run above effective capacity (up to design capacity of 10.8 million square feet per year) to accommodate excess demand or fluctuations in order volumes by reducing downtime or adding shifts. Tonec is currently running at close to 100% of design capacity and has accumulated an order backlog well in excess of its current production capacity. Furthermore, Tonec has visibility on a long term sales pipeline of potential orders that is well in excess of its current maximum production capacity. Given the demand for the Laminated Polymer Panels, Tonec is constructing a new production facility adjacent to its existing production facility in Jinan, China which will increase its annual effective capacity by approximately 32.3 million square feet (which assumes the production facilities are operating at normal production rates for 15 hours per day for 350 days per year). This expansion will increase total effective annual capacity to approximately 39 million square feet. Tonec has started construction on the new production plant and has paid deposits on the automated production line. Tonec expects to complete construction and have the production line delivered by June 2012.

Going forward, Tonec intends to apply its expertise in plastics and chemicals to expand its product offering into new products, such as flat panels. Tonec has developed a flat panel product and has produced samples at a prototype scale which are currently being tested by several potential customers.

Tonec also plans to strengthen its existing partnerships with research institutions, universities, and colleges in developing future generations of its products. Tonec is currently working with Shandong Construction University to develop a third generation composite material that would have broader market applications including use in furniture, highway sound insulation, billboards, and buses, amongst others. Tonec expects to have this third generation product to the market by 2013.

Tonec is well established, and has a strong track record of profitability and growth. Tonec has grown rapidly since establishing its production facility in Jinan in 2006, having grown revenues from C$3.0 million in 2008 to C$11.7 million in 2010, representing a compound annual growth rate of 96%. In the 2008, 2009, and 2010 fiscal years, Tonec achieved EBITDA of C$0.5 million, C$2.1 million, and C$5.2 million, respectively. Net income has also grown during the same period, from a net loss of C$0.3 million in 2008, net income of C$1.2 million in 2009 and C$3.9 million in 2010. These figures have been selected from unaudited financial statements prepared and provided by Tonec's management. The new production line will allow Tonec to meet the demand for its Laminated Polymer Panels and support the Company's growth for the foreseeable future.

The Transaction

It is anticipated that the Company will enter into a share exchange agreement (the "Share Exchange Agreement") in connection with the acquisition of all issued and outstanding shares of Tonec's offshore holding company, Tonec Advanced Materials (BVI) Limited ("TAML") to effect the combination of the business and assets of Tonec with those of the Company. Vida expects to issue, subject to Exchange approval, approximately 201,600,000 of its common shares (representing approximately 81.2% of the issued and outstanding common shares of the Company upon completion of the Acquisition, including the shares issued under the Private Placement as defined below) in exchange for 100% of the TAML shares currently issued and outstanding. Thereafter, and on issuance by the Exchange of the final bulletin, the Company will become the resulting issuer, TAML will be a wholly-owned subsidiary of the resulting issuer, and the business of Tonec will become the business of the resulting issuer.

PoinTop Holdings Inc. (owned by Po-Chin (Alex) Chang, the proposed President & Chief Executive Officer of the resulting issuer, and five individuals related to him and who are all Taiwanese citizens), OmniGreen Holdings Inc. (owned by Yu-Chin Ni and eight individuals related to him and who are all Taiwanese citizens), and two investors being Vive Enterprises Limited (owned by a Taiwanese citizen) and Ocean Harvest Investment Inc. (owned by a Canadian citizen), together currently own all of the outstanding shares of TAML. Yin-Mei (Ingrid) Chang, who is expected to be a member of the resulting issuer's board, is Alex Chang's sister and Yu-Chin Ni's wife. PoinTop Holdings Inc. and OmniGreen Holdings Inc. will control the resulting issuer upon completion of the Acquisition.

The Transaction remains subject to Exchange review and approval. The following is a summary of the principal elements of the Transaction.

Concurrently with the Acquisition and prior to the completion of the Transaction, it is intended that the Company will complete a non-brokered private placement (the "Private Placement") of its common shares ("Vida Shares") for gross aggregate proceeds of approximately C$4,000,000. Under the Private Placement, the Company proposes to sell approximately 32,000,000 Vida Shares at C$0.125 per share. Proceeds will be used to fund production capacity expansion, payment of equipment purchases, and for working capital and general corporate purposes.

There is no assurance of the amount of proceeds that the Company will raise under the Private Placement. Subject to Exchange approval, finders' fees may be paid in connection with the Private Placement.

Upon completion of the Transaction, it is expected that the resulting issuer will meet the public distribution requirements of an Exchange Tier 2 issuer. Shareholders of the Company and the resulting issuer will be subject to all applicable Exchange escrow policies.

The completion of the Transaction will be subject to, among others, the following mutual conditions precedent:

  1. the execution of the Share Exchange Agreement;
  2. the receipt of all necessary regulatory, corporate and third party approvals, including the approval of the Exchange, and compliance with all applicable regulatory requirements and conditions in connection with the Transaction;
  3. the maintenance of the Company's listing on the Exchange;
  4. the confirmation of the representations and warranties of each party to the Share Exchange Agreement as set out in such agreement;
  5. the absence of any material adverse effect on the financial and operational condition or the assets of each of the parties to the Share Exchange Agreement;
  6. the delivery of standard completion documentation including, but not limited to, legal opinions from Canadian and PRC legal counsels, officers' certificates and certificates of good standing or compliance; and
  7. other conditions precedent customary for a transaction such as the Transaction.

The completion of the Transaction is also subject to the following conditions precedent in favour of Tonec and its affiliates:

  1. prior to the execution of the Share Exchange Agreement, the principal shareholders of Tonec confirming, to their own satisfaction, acting reasonably, that they will not be subject to any significant adverse tax consequences as a result of the Transaction or otherwise;
  2. at closing of the Transaction, except for any obligations to a sponsor appointed by the Company in connection with this Transaction, and except for liabilities and obligations relating to the certain budgeted costs of the Company for purposes of the Transaction, the Company will have no liabilities or obligations (contingent or otherwise) in excess of C$5,000, inclusive of liabilities relating to the fees and disbursements of its counsel appointed in connection with the Transaction, as evidenced by an officer's certificate of the Company to be tendered at closing of the Transaction;
  3. the completion of the Private Placement;
  4. at closing, the Company will have cash of not less than C$850,000 (not including the net proceeds of the Private Placement); and
  5. the termination of all agreements involving the Company and relating to any administrative services or leases without any further liability to the Company or the resulting issuer.

The conditions precedent in favour of the Company may be waived in whole or in part by the Company, and the conditions precedent in favour of Tonec may be waived in whole or in part by Tonec and its affiliates.

The completion of the Transaction is expected to occur on the day that is the tenth business day following the satisfaction or waiver of the conditions precedent or such other date as mutually agreed to by the Company and Tonec, but in any event no later than June 30, 2012. If the Transaction is not consummated on or before June 30, 2012, or such other date as agreed to by the Company and Tonec, the terms of the Transaction will be terminated and be of no further force or effect. Each of the Company and Tonec will be bear their own respective costs and expenses associated with the Transaction. The Company will pay, as a non-refundable deposit, C$25,000 to Tonec (or its nominee) in order to further the Transaction.

The Company expects that Canaccord Genuity Corp. will act, subject to completion of satisfactory due diligence, 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.

Overview of Management and the Board of Directors


It is expected that the management of the resulting issuer will consist of Alex Chang as President and Chief Executive Officer and Zijian Pan as Chief Financial Officer. Certain other officers will be appointed in due course.

Alex Chang is the current President and Chief Executive Officer of Tonec and is responsible for the general strategy and direction of the Company. Mr. Chang is a former General Manager of Guang Ching Chen Enterprise Co., Ltd. Mr. Chang is one of the founders of Tonec and its predecessor Lilun, having worked with Lilun in its R&D facility in Taiwan and was instrumental in developing its specialty resin formula. In 2005, Mr. Chang moved to Jinan to focus on establishing Tonec's operations in mainland China. Mr. Chang graduated from Soochow University, Taiwan in 1992.

Zijian Pan was appointed Chief Financial Officer of Tonec in December 2011. Mr. Pan has 20 years of experience in accounting, financial planning and merger and acquisitions in different business sectors and has worked with a number of publicly listed companies in Hong Kong, Singapore and Toronto. From 2006 to 2009, Mr. Pan was a Senior Vice President for Asia Biochem; 2003-2004 as Chief Financial Officer for Asia Aluminum Holdings Ltd.; 2000-2003 as Assistant Vice President of Finance for PCCW Ltd.; 1997-2000 Manager of Revenue Management for SmarTone Telecommunications Holdings Ltd.; 1992-1997 as Finance and Accounting Manager for The Sincere Co. Ltd. Mr. Pan worked with Deloitte Touche Tohmatsu and is a graduate of the Hong Kong Polytechnic University, a fellow member of the Association of Chartered Certified Accountants, and a non-practicing member of the Hong Kong Institute of Certified Public Accountants.

Board of Directors

It is the intention of the Company and Tonec to establish and maintain a board of directors with a combination of appropriate skill sets that is compliant with all regulatory and corporate governance requirements, including any applicable independence requirements. The board of directors of the Company currently consists of four members. Upon completion of the Transaction, the board of directors of the resulting issuer is expected to be reconstituted to comprise five members being Alex Chang, Frank Dottori (independent), Randall Smallbone (independent), Jun Zhao (independent) and Ingrid Chang.

1. Alex Chang

Information on Alex Chang (who is also expected to be the President and Chief Executive Officer of the resulting issuer) is set out above.

2. Frank Dottori

Mr. Frank Dottori was a founder of Tembec Inc. and President and Chief Executive Officer from 1979 until his retirement in January 2006. Since May of 2006, he has been the President of FADCO Consulting Inc. He also served as Managing Director of Greenfield Ethanol's Advanced Capital Biofuels Division until September 2011. Mr. Dottori is currently a Director of Saputo Inc. and Capital BLF. He also serves as Chairman of AVCell Inc. and AV Nackawic Inc. (Canadian Subsidiaries of Adityabirla, India); Chairman of Center for Research and Innovation in the Bio Economy Ontario (CRIBE); and Director of Bio Auto Council of Ontario. In the past, he has served as Governor of the Montreal Stock Exchange; Director of the Laurentian Bank of Canada; Director of Telebec and Bell Nordiq Income Fund. He has also served as Chair of the Canadian Pulp and Paper Association Pulp and Paper Research Institute of Canada; Forest Engineering Institute of Canada; Free Trade Lumber Council; Co-Chair for Forest Sector Advisor Committee Government of Canada. Mr. Dottori has received numerous awards and recognitions such as four honorary Doctorates and the Order of Canada in 1989.

3. Randall Smallbone

Mr. Randall Smallbone is the Chief Financial Officer of Migao Corporation. Mr. Smallbone was previously Executive Vice-President of Finance and Chief Financial Officer of KIK Custom Products and prior to that, he was Executive Vice President, Finance and Chief Financial Officer of Decoma International Inc., a Magna International company. He is a financial executive with more than 30 years of operational experience in diverse, global industries including consumer goods, contract manufacturing, automotive and aerospace parts. He is a director and Chair of the Audit Committee of Hanwei Energy Services Corp., a director and Chair of the Audit and Finance Committee of Joseph Brant Hospital Foundation and prior trustee and Chair of the Audit committee of Norcast Income Fund. Mr. Smallbone brings significant experience in financial management, capital markets, acquisitions and investor relations. Mr. Smallbone holds a Certified General Accountant designation.

4. Jun Zhao

Mr. Jun Zhao is currently the Vice Chairman of Beijing New Building Material (Group) Co., Ltd. In 2010, Mr. Zhao completed a post doctoral degree from China Building Material Academy with a focus on researching the function of wall materials and polymer reinforced cement. Mr. Zhao was previously the general manager for Mongolia Sengong Group; and Technical Director of Mongolia Woods Products Quality Surveillance Tester Center.

5. Ingrid Chang

Ms. Chang is a director of Compos International Co. and has been involved with Tonec since 2006. Ms. Chang is responsible for advising on matters relating to international business and review of Tonec's operating and financial performance. Ms. Chang graduated from Gonzaga University, Spokane Washington, in 1986 and is fluent in English and Mandarin.

About Vida Ventures Ltd.

Vida Ventures Ltd. is a capital pool company within the meaning of the policies of the Exchange, was incorporated in British Columbia on January 25, 2011 and was listed on the Exchange on August 18, 2011. The Company does not have any operations and has no assets other than cash. The Company's business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction under the policies of the Exchange.

Trading in the common shares of the Company was halted on January 16, 2012 by the Exchange and is expected to remain halted until after the Exchange accepts and confirms the completion of the Transaction.

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 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.

The selected financial results for Tonec presented herein have been provided by Tonec's management and have been selected from financial statements that have not been audited, and are subject to audit.

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.


This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company's current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release includes information relating to the Acquisition (including the structure of the Acquisition), the Transaction (including terms such as the name change, and the completion or termination), the Private Placement (including its completion and the use of proceeds from the Private Placement), the principal owner, directors and management of the resulting issuer upon completion of the Transaction and Tonec's business plan. Such statements and information reflect the current view of the Company with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: risks associated with the completion of the Transaction and matters relating thereto; and the delisting of the Company from the Exchange due to its failure to complete a Qualifying Transaction within the time period set in the policies of the Exchange; and risks associated with the marketing and sale of securities, the need for additional financing, reliance on key personnel, the potential for conflicts of interest among certain officers or directors with certain other projects, and the volatility of the Company's common share price and volume. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.

There are a number of important factors that could cause the Company's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: risks related to Tonec's business such as failure of the business strategy, stable prices for key raw materials, demand and market prices for its products, and government regulations; risks related to Tonec's operations, such as additional financing requirements and access to capital, reliance on key and qualified personnel, insurance, competition, intellectual property and reliable supply chains; risks related to Tonec and its business generally such as potential exposure to tax under PRC income tax regulations, Chinese regulations relating to offshore special purpose companies, recent Chinese regulations relating to cross-border mergers and acquisitions, environmental protection, currency exchange rates and conflicts of interest; and risks related to doing business in China such as changes to income tax regulations, repatriation of profit and currency conversion, acquisition and appropriation of land use rights, foreign investment, permits and business licenses, employment contracts, government intervention, shareholders' rights and enforcement of judgments and a developing legal system.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. While the Company may elect to, it does not undertake to update this information at any particular time.

The Company has also included in this press release selected financial results based on EBITDA, which is a non-GAAP measure. Readers are cautioned that such measures do not have any standardized meaning prescribed by Canadian GAAP and therefore the Company's method of calculating these measures may differ from the method used by other issuers and accordingly the Company's measure may not be comparable to the measures used by other issuers.



This press release includes market and industry data and forecasts that have been obtained from Tonec, third-party sources and publicly available information, as well as industry data prepared by Tonec's management on the basis of its knowledge or and experience in the industry in which Tonec operates. The knowledge of the industry has been developed through Tonec management's experience and participation in the industry. The Company believes that the industry data presented is accurate and that its estimates and assumptions are reasonable, but there can be no assurance as to the accuracy or completeness of this data. Third-party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. Although the Company believes it to be reliable, the Company has not independently verified any of the data from Tonec or third-party sources referred to in this press release or analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying economic assumptions relied upon by such sources.

The TSX Venture Exchange has in no way passed on the merits of the proposed transaction and has neither approved or disapproved the contents of this press release. Neither 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 this release.

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