Walmer Capital Corp.
TSX VENTURE : WAL.P

May 08, 2014 16:14 ET

Walmer Capital Corp. to Enter Into Business Acquisition-Proposed Qualifying Transaction to Include an Equity Financing of Up to CDN$ 4.0 Million (The "Financing")

CALGARY, ALBERTA--(Marketwired - May 8, 2014) -

NOT FOR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW

Jay Richardson, Chief Executive Officer and Chief Financial Officer of Walmer Capital Corp. (TSX VENTURE:WAL.P) (the "Company" or "Walmer"), a capital pool company, is pleased to announce it has entered into a letter of intent dated April 1, 2014 (the "LOI") with RedBox Inc. ("RedBox") and Trout Lake Corporation ("Trout Lake") to complete an arm's length business combination transaction whereby Walmer will acquire the assets of Redbox and Trout Lake, which includes all of the issued and outstanding shares of Beresford Box Company Inc. ("BBC") and the active business of RedBox.

Walmer intends for the Proposed Transaction (as defined below) to constitute its Qualifying Transaction, as such term is defined in the policies of the TSX Venture Exchange (the "Exchange").

RedBox, based in Toronto, Ontario, is a diversified industrial company that specializes in the acquisition and operation of small and medium sized distressed and under-valued businesses. RedBox, together with Trout Lake, an Ontario holding company, owns BBC, an Ontario company amalgamated in 2005, which is based in Waterloo, Ontario, and is a specialty producer of quality folding and formed cartons that has more than 100 employees and yearly revenues in excess of $20 million. BBC's primary business focus is providing packaging solutions that differentiate consumer products in the retail environment. BBC has a particular strength in the food and drug industries. RedBox is wholly owned and controlled by Range Bancorp S.A., a Swiss company which is itself controlled by Roland Raths. Trout Lake is wholly owned and controlled by David Del Bocco, who is an intended officer of the Resulting Issuer.

Summary of the Qualifying Transaction

The LOI contemplates Walmer and RedBox and Trout Lake entering into an arm's length business combination transaction (the "Proposed Transaction"). It is currently contemplated that the Proposed Transaction will include an acquisition of all or substantially all of the assets of RedBox and all of the securities of BBC which are held by Trout Lake and RedBox, for which RedBox and Trout Lake will receive an aggregate of approximately 22.9 million Walmer common shares as consideration at a deemed price of $0.20 for total deemed consideration of $4.58 million. As a result of the Proposed Transaction, prior to the equity financing, RedBox will own approximately forty four percent (44%) of the issued and outstanding shares of the resulting publicly traded issuer (the "Resulting Issuer"), Trout Lake will own approximately thirty seven (37%) of the issued and outstanding shares of the Resulting Issuer and the existing shareholders of Walmer will hold approximately nineteen percent (19%) of the issued and outstanding shares of the Resulting Issuer. The subscribers of the Financing, assuming the full $4.0 million of financing at a price equal to that of the Proposed Transaction, being $0.20, will hold approximately forty one percent (41%) of the issued and outstanding shares of the Resulting Issuer, the issuance of such shares to dilute all other shareholders accordingly, including the existing shareholders of Walmer, Redbox and Trout Lake. It is expected that the Financing will be brokered. Details concerning the Financing, including the minimum amount to be raised thereunder, the identity of the broker and the expected commissions to be payable in connection therewith, will be disclosed in a future news release.

Approval of the Proposed Transaction by the shareholders of Walmer is not expected to be required by the Exchange since the Proposed Transaction is not a "non-arm's length transaction" pursuant to the policies of the Exchange.

At the Company's request, trading in the common shares of Walmer has been halted by the Exchange. Moreover, pursuant to the policies of the Exchange, trading is also expected to be suspended in view of the passing of the second anniversary of Walmer's initial public offering. Trading is expected to be suspended until the earlier of either completion or termination of the Proposed Transaction. As long as the Proposed Transaction is completed within 90 days of the second anniversary, it is anticipated that Walmer will be able to avoid having its shares moved to the NEX Board of the Exchange.

Each of Walmer and RedBox shall bear their own costs in respect of the Proposed Transaction, except that all expenses will be borne by Walmer assuming the consummation of the Proposed Transaction.

The LOI is subject to Walmer, Trout Lake and RedBox executing the Definitive Agreement in regard to the Proposed Transaction, as required, and the parties satisfying various other conditions including regulatory and secured lender approvals and a financing acceptable to Redbox and Trout Lake in such amount as to satisfy the valuation and sponsorship requirements of the Exchange. There can be no assurance that the Proposed Transaction will be completed on the terms proposed above or at all.

The Resulting Issuer

It is estimated that there will be approximately 48.4 million common shares of the Resulting Issuer issued and outstanding immediately following closing of the Proposed Transaction consisting of: (i) the 5.5 million shares of Walmer currently issued and outstanding and assuming the exercise of all outstanding options to acquire shares of Walmer; (ii) approximately 12.45 million shares issued to RedBox, as part of the Proposed Transaction, at a deemed price per share of $0.20 for total deemed consideration of $2.49 million; (iii) approximately 10.45 million shares issued to Trout Lake, as part of the Proposed Transaction, at a deemed price of $0.20 for total deemed consideration of $2.09 million; and (iv) approximately 20.0 million common shares of the Resulting Issuer as a result of completion of the Financing assuming the full $4.0 million of financing at a price of $0.20. The deemed transaction size is therefore approximately $4.58 million, before giving effect to the Financing.

In addition to the foregoing, additional shares of the Resulting Issuer will be issuable pursuant to the exercise of incentive stock options to be granted to incoming directors and officers, as set out below.

Insiders and Board of Directors of the Resulting Issuer

Upon completion of the Proposed Transaction, management and the board of directors of Walmer will remain and will be augmented by the addition of Redbox's management: Raffi Azadian who will become President of Walmer, and up to four Directors nominated by Redbox and Trout Lake.

Each of Trout Lake and RedBox is expected to own more than 10% of the shares of the Resulting Issuer after giving effect to the Proposed Transaction, subject to the number of securities which may be issued and sold as part of the Financing. In addition, the directors and officers of Walmer outlined in this Press Release will become insiders of the Resulting Issuer.

All of the current shareholders of RedBox and Trout Lake act at arm's length to Walmer and all of the current shareholders of Walmer act at arm's length to RedBox and Trout Lake.

Grant of Additional Stock Options

As part of the Proposed Transaction or shortly thereafter, it is anticipated that the Resulting Issuer will issue additional incentive stock options (the "Additional Stock Options") to the incoming directors and officers, at an exercise price equal to the price of the securities issued under the Financing or otherwise priced in accordance with the policies of the Exchange. The terms and conditions of the Additional Stock Options will be determined by the Board of Directors of the Resulting Issuer in accordance with the Resulting Issuer's stock option plan, but, together with the 500,000 options presently outstanding to Walmer Directors, will not exceed 10% of the issued and outstanding shares of the Resulting Issuer, post-completion of the Proposed Transaction.

Sponsorship of the Qualifying Transaction

Sponsorship of a "Qualifying Transaction" of a CPC is required by the Exchange unless exempt therefrom in accordance with the Exchange's policies. Given the size and nature of the Proposed Transaction, including the amount of the Financing, Walmer intends to apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange. There is no assurance that such an exemption will be granted.

Walmer will prepare and disseminate a subsequent Press Release of information regarding summary financial information on BBC and RedBox, the specifics and mechanics of the Financing (including the minimum amount that must be raised pursuant to the Financing) and background information on proposed directors and officers of the Resulting Issuer.

About Walmer Capital Corp.: Walmer is a CPC that completed its initial public offering and obtained a listing on the Exchange in May, 2012 (Trading Symbol: "WAL.P"). Prior to entering into the LOI, Walmer did not carry on any active business activity other than reviewing potential transactions that would qualify as Walmer's Qualifying Transaction.

Cautionary Note

As noted above, completion of the Proposed Transaction is subject to a number of conditions including, without limitation, approval of the Exchange, approval of the shareholders of RedBox and Trout Lake and completion of the Financing. Where applicable, the Proposed Transaction cannot close until the required approvals have been obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the continuous disclosure document containing full, true and plain disclosure regarding the Proposed Transaction, required to be filed with the securities regulatory authorities having jurisdiction over the affairs of the Company, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of Walmer on the Exchange should be considered highly speculative.

ON BEHALF OF THE BOARD OF DIRECTORS:

Jay Richardson, Chief Executive Officer and Chief Financial Officer and Director

This press release contains forward-looking information. More particularly, this press release contains statements concerning the prospective Qualifying Transaction of the Company. The information about the Redbox, Trout Lake and BBC contained in the press release has not been independently verified by the Company. Although the Company believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. Forward-looking information involves known and unknown risks, uncertainties, assumptions (including, but not limited to, assumptions on the performance and financial results of the Redbox, Trout Lake and BBC) and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The terms and conditions of the prospective Qualifying Transaction may change based on the Company's due diligence on the respective companies and properties of Redbox, Trout Lake and BBC the entering into a binding agreement for the Qualifying Transaction and the Proposed Transaction, the success of the Financing, regulatory and third party comments, consents and approvals and the ability to meet the conditions of the Qualifying Transaction in the required timeframes. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. 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 state in which such offer, solicitation or sale would be unlawful.

Investors are cautioned that, except as disclosed in the management information circular, filing statement or other continuous disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed 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.

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 this press release.

Contact Information

  • Walmer Capital Corp.
    Jay Richardson
    Chief Executive Officer and Chief Financial Officer
    and Director
    Toronto Office: 416-410-JAYR (5297)
    jay.richardson@sympatico.ca