Water Capital Inc.

March 12, 2008 15:13 ET

Water Capital Inc. Announces Proposed Qualifying Transaction With Schneider Power Inc.

TORONTO, ONTARIO--(Marketwire - March 12, 2008) -


WATER CAPITAL INC. (TSX VENTURE:WCP.P) (the "Corporation"), a Capital Pool Company, announced today that it has entered into a term sheet that serves as an agreement in principle concerning a proposed transaction (the "Transaction") between the Corporation and Schneider Power Inc. ("Schneider") which, if completed, will be the Corporation's qualifying transaction pursuant to the policies of the TSX Venture Exchange Inc. (the "Exchange").

Schneider Power Inc.

Schneider Power Inc. is a Canadian-based independent renewable energy company with a strong focus on the exploitation of renewable resources and related services both in Canada and internationally. The company is in the business of developing, building, owning and servicing renewable power projects in a profitable and socially responsible manner. With an experienced management team, in-house development capabilities and access to equipment manufacturers, the company has been able to successfully take advantage of the significant increase in government calls for renewable electricity generation. The company has 30MW of contracted projects under the Ontario Standard Offer with applications for another 40MW pending. Its current portfolio consists of one wholly owned and operational wind farm in Ontario, as well as a minority interest in a second operational wind farm in Germany. The company has a portfolio of renewable power projects totalling approximately 1,437MW. Schneider is a licensed electricity generator and wholesaler of electricity in Ontario and also supplies EcologoM certified green electricity to Ontario electricity retailer Bullfrog Power Inc. from its Providence Bay Wind Farm on Manitoulin Island. More information can be seen on Schneider's website: www.schneiderpower.com.

Transaction Summary

The Transaction will be by way of an amalgamation or a share purchase under which the Corporation will acquire all of the outstanding shares (the "Purchased Shares") of Schneider. The Corporation will satisfy the acquisition price for the Purchased Shares by the issuance of shares in the capital of the Corporation at a price of $0.40 per share, on a post-consolidation basis.

The Transaction will be subject to a formal amalgamation or share exchange agreement, in normal commercial form for parties acting at arm's length, which will contain representations and warranties concerning the Corporation, Schneider, its business and the Purchased Shares. The following matters will also occur as part of the Transaction:

(a) The Corporation will, on or subsequent to closing of the Transaction, and subject to shareholder approval, consolidate its shares on the basis of two existing shares for one new share, change its name and change its auditors.

(b) Schneider will complete a financing of up to $10,000,000 (the "Financing").

The Transaction is an arm's length transaction. No related party of the Corporation has any interest in Schneider. Accordingly, the Transaction will not, as currently contemplated, be subject to approval by the shareholders of the Corporation.

Share Capital

The common shares in the capital of the Corporation for the purposes of the Transaction have been valued at $0.40 per share after consolidation on a two for one basis.


Completion of the Transaction is subject to a number of conditions, including but not limited to, due diligence, board approval by both companies, completion of the Financing, satisfactory management contracts for key personnel, securing directors' and officers' insurance, negotiation and signing of a definitive agreement and Exchange acceptance. The Transaction cannot close until all the conditions are satisfied. There can be no assurance that the Transaction will be completed as proposed or at all.

A comprehensive press release with further particulars of the Transaction will follow in accordance with the policies of the Exchange. Trading in the common shares of the Corporation will remain halted pending the release of more fulsome disclosure regarding the Transaction and the satisfaction of the filing requirements of the Exchange.

Completion of the transaction 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 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.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Corporation assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Corporation. Additional information identifying risks and uncertainties is contained in the Corporation's filings with the Canadian securities regulators, hich filings are available at www.sedar.com.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this press release.

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