Berkeley Capital Corp. II ("Berkeley"), a capital pool company listed on the TSX
Venture Exchange Inc. ("TSX Venture Exchange") (TSX VENTURE:BIZ.P), announces
that it entered into a letter agreement on July 18, 2008 with EnWise Holdings
Inc. ("EnWise") for its Qualifying Transaction that is not a Non Arm's Length
Qualifying Transaction in accordance with the policies of the TSX Venture
Exchange. EnWise is a private company based in Toronto, Ontario that, through
its operating subsidiaries, provides homeowners with affordable solutions to
improve the comfort and energy efficiency of their homes so as to save money on
energy bills and reduce their environmental impact. EnWise conducts home energy
assessments, sells and installs a wide range of energy-efficiency products,
offers affordable financing options, and facilitates access to the up to $10,000
currently available in government grants and rebates.
The letter agreement provides for the amalgamation of Berkeley with EnWise. All
of the common shares of Berkeley and EnWise will be cancelled and exchanged for
common shares of the amalgamated company in accordance with exchange ratios
based upon the valuation of EnWise in a private placement to be completed by
EnWise concurrently with the closing of the amalgamation, an agreed upon
valuation of Berkeley and the outstanding common shares of each company. Upon
the closing of the Qualifying Transaction, the name of the amalgamated company
will be EnWise Holdings Inc. ("NewCo"), and the shareholders of EnWise
immediately prior to the amalgamation will collectively exercise control over
NewCo.
Completion of the proposed Qualifying Transaction is subject to, among other
things, regulatory approval, shareholder approval of EnWise and Berkeley, and
the closing of the concurrent offering in the minimum amount of $1 million and
the maximum amount of $10 million, as described below.
In accordance with the terms of the letter agreement, all executive officers,
directors and 5% or greater shareholders of EnWise will enter into support
agreements concurrently with the execution of the amalgamation agreement
pursuant to which they will agree to vote in favour of the Qualifying
Transaction and against all other matters and transactions that could adversely
effect or impede the Qualifying Transaction, and agree not to transfer their
shares prior to the EnWise shareholder meeting to approve the Qualifying
Transaction. Such EnWise shareholders will grant Berkeley an irrevocable proxy
to vote the shares owned by them in accordance with the support agreements.
About EnWise Holdings Inc.
EnWise was founded in 2006 by Peter Hwang, Jay Wilgar, David Carmichael and Roy
Khan with a commitment to building a culture of energy conservation by providing
straightforward ways for homeowners to protect the environment, lower home
energy bills and save money. EnWise currently serves the Greater Toronto Area
and southern Ontario residential housing markets and has plans to support all of
Ontario and other major metropolitan areas of Canada. EnWise operates through
its three wholly-owned subsidiaries - EnWise Power Solutions Inc., EnWise
Capital Corporation and EnWise Building Science Inc.
EnWise services its customers by providing an affordable one-stop-shop for
solutions that improve the comfort and energy efficiency of their home using the
following four step process:
- Evaluation. EnWise Building Science is a licensed service organization for the
Natural Resources Canada ecoENERGY Retrofit -Homes Program and will conduct a
licensed ecoENERGY evaluation and educate the home owner on how to reduce their
energy footprint. Based on the evaluation recommendations, we prepare a
customized ecoENERGY report and recommend the most energy efficient suite of
products and services that make sense for the homeowner.
- Equipment Sale and Installation. EnWise Power Solutions offers licensed and
reliable installations for a suite of recommended energy saving products and
services.
- Financing. EnWise Capital Corporation provides affordable end-to-end equipment
financing to help the homeowner achieve their energy conservation goals sooner.
- Saving Money. EnWise's helps its customers start saving money on their home
energy costs and receive any available government rebates.
EnWise has raised approximately $8 million in private capital since its
formation. As at July 18, 2008, the outstanding securities of EnWise consisted
of (i) 7,803,750 common shares; (ii) 13,240,000 preferred shares; (iii) options
to purchase an aggregate of 2,104,375 common shares; (iv) warrants to purchase
an aggregate of 15,404,600 common shares and 889,600 preferred shares. As at
July 18, 2008, EnWise had a total of 59 registered shareholders and the
directors and officers of EnWise collectively owned 4,560,000 common shares, or
approximately 21.7%, of the outstanding shares of EnWise.
On the basis of unaudited consolidated financial statements for the year ended
December 31, 2007, as at December 31, 2007, EnWise and its subsidiaries had
total assets of $3,104,384, liabilities of $1,514,067, accumulated losses of
$5,549,659, shareholders' equity of $7,142,976 and available working capital of
$1,880,571. For the fiscal year ended December 31, 2007, EnWise and its
subsidiaries recorded revenue of $1,231,272 and a net loss of $5,373,184. On the
basis of unaudited consolidated financial statements prepared by management for
internal use, EnWise and its subsidiaries recorded revenue of approximately
$3,744,011 and a net loss of approximately $2,183,111 for the six months ended
June 30, 2008.
EnWise currently has 90 employees and consultants and is headquartered in
Toronto, Ontario.
EnWise was incorporated pursuant to Ontario law on October 19, 2007. EnWise
currently has three wholly-owned subsidiaries: (i) EnWise Power Solutions Inc.,
which was incorporated as Greensmart Energy Corporation in Ontario on September
20, 2006; (ii) EnWise Capital Corporation, which was incorporated as Greensmart
Capital Corporation in Ontario on September 20, 2006; and (iii) EnWise Building
Science Inc., which was incorporated in Ontario on March 15, 2007.
Terms of the Proposed Qualifying Transaction
The letter agreement provides that upon Berkeley's amalgamation with EnWise, all
of the common shares of Berkeley and EnWise will be cancelled and exchanged for
common shares of NewCo. The EnWise common shares will be exchanged for NewCo
common shares on a one-for-one basis. The Berkeley common shares will be
exchanged in accordance with an exchange ratio based upon the valuation of
EnWise following the concurrent offering described below (up to a maximum of $15
million), a fixed valuation of $1.65 million agreed to by the parties for
Berkeley and the aggregate number of common shares of EnWise and Berkeley
outstanding. Holders of options to purchase Berkeley common shares will receive
from NewCo an option to purchase an adjusted number of common shares of NewCo
based on the exchange ratio at a correspondingly adjusted exercise price.
Subject to applicable regulatory approval, holders of options and warrants to
purchase common shares of EnWise will receive from NewCo an option or warrant,
as applicable, to purchase the same number of common shares of NewCo on the same
terms for each option and warrant held by them, subject to adjustment for the
conversion of EnWise preferred shares into EnWise common shares on a one-for-two
basis upon the closing the amalgamation in accordance with the provisions of
EnWise's articles of incorporation. Preliminary indications from prospective
agents for the concurrent offering, assuming completion of the bridge financing
as described below raising an aggregate amount of $3 million in gross proceeds,
are that the pre-money valuation of EnWise in the concurrent offering will be
approximately $8.25 million, or $0.25 per EnWise common share, and the parties
have agreed that the Qualifying Transaction will be conditional on the
completion of the concurrent offering on mutually satisfactory terms. Assuming
an offering price of $0.25 per EnWise common share in the concurrent offering,
the Berkeley exchange ratio would be 0.60. According to such exchange ratio and
assuming completion of the EnWise bridge financing on such terms and the
concurrent offering raising an aggregate of $6 million in gross proceeds, an
aggregate of 82,283,750 NewCo common shares would be issued to the holders of
EnWise common shares and an aggregate of 6,600,000 NewCo common shares would be
issued to the holders of Berkeley common shares.
Between now and the amalgamation, holders of EnWise options and warrants may
exercise such securities, resulting in the issuance of additional EnWise common
shares, with the result that the number of common shares of NewCo to be issued
to holders of common shares of EnWise will increase, while the number of common
shares reserved of NewCo for issuance to holders of EnWise options and EnWise
warrants will correspondingly decrease. For greater clarity, the consideration
to be issued to the holders of common shares EnWise and Berkeley will not be
increased to take into account, or otherwise give effect to, the exercise price
associated with outstanding options and warrants.
Currently Skyberry Holdings Ltd., a company existing under the laws of the
Bahamas ("Skyberry"), either directly or indirectly, owns 10% or more of the
outstanding shares of EnWise. As of the date of this release, Skyberry owns,
either directly or indirectly, approximately 47.5% of the outstanding shares of
EnWise. Anthony Lacavera, an officer and director of Berkeley, purchased $66,667
of convertible debentures in the Enwise bridge financing. Bay Bridge Partners,
LLC, a California limited liability company in which Kevin Rooney, a director of
Berkeley, is a managing member and holds 33.33% beneficial interest, $75,000 of
convertible debentures in the Enwise bridge financing. Each of Anthony Lacavera,
Mike Drake and Kevin Rooney, being all of the directors and officers of
Berkeley, hold approximately 12.1% of the outstanding common shares of Berkeley.
Following the completion of the Qualifying Transaction, the EnWise bridge
financing and the concurrent offering on the above terms, the principal
shareholder of NewCo, either directly or indirectly, will be Skyberry.
Following the completion of the Qualifying Transaction, the EnWise bridge
financing (not including the Skyberry Option (defined below)) and the concurrent
offering on the above terms assuming $6 million in gross proceeds is raised,
Skyberry will own or control, either directly or indirectly, 22.5% of the
outstanding common shares of NewCo.
Upon completion of the Qualifying Transaction, it is expected that NewCo will be
a Tier 1 issuer pursuant to the policies of the TSX Venture Exchange. Assuming
the completion of the Qualifying Transaction, and assuming $3 million in gross
proceeds is raised in the EnWise bridge financing and $6 million in gross
proceeds is raised in the concurrent offering at a price of $0.25 per EnWise
common share, there would be 109,131,924 NewCo common shares outstanding or
issuable upon exercise of outstanding options and warrants. Of these, the
current shareholders and other security holders of EnWise, including the
investors in the bridge financing, would hold an aggregate of 77,571,925 shares,
or approximately 71.1%, the current shareholders of Berkeley would hold an
aggregate of 7,559,999 shares, or approximately 6.9%, and investors in the
concurrent offering would hold an aggregate of 24,000,000 shares, or
approximately 22.0%.
EnWise Bridge Financing
The letter agreement signed by the parties contemplated the completion of a
bridge financing by Enwise pursuant to which Enwise would issue convertible
debentures in amount of not less than $1 million and not more than $4.5 million
to existing shareholders of EnWise and certain other investors in a private
placement, including an option to purchase $1.5 million of convertible
debentures granted to Skyberry, which option expires six (6) months from the
date of the initial closing of the bridge financing (the "Skyberry Option").
Pursuant to the terms of the bridge financing, all such convertible debentures
are to be automatically converted into EnWise preferred shares, which will be
converted into EnWise common shares upon closing of the amalgamation in
accordance with EnWise's articles of incorporation. On July 21, 2008, Enwise
completed the initial closing of the bridge financing by issuing convertible
debentures in an aggregate amount equal to $2.7 million, leaving $300,000 of
convertible debentures which may be issued in subsequent closings in accordance
with the terms of the bridge financing.
Concurrent Offering
The Qualifying Transaction will be conditional upon the completion of an EnWise
concurrent private placement of common shares raising not less than $1 million
and not more than $10 million. Preliminary indications from prospective agents
are that the valuation of EnWise for the concurrent offering will be
approximately $0.25 per common share, or pre-money valuation of EnWise of
approximately $8.25 million assuming completion of the bridge financing raising
an aggregate amount of $3 million in gross proceeds. The actual per share
offering price will be determined in the marketing of the offering. EnWise will
select the agent to EnWise in respect of the offering, subject to the reasonable
acceptance of Berkeley.
The proceeds from the concurrent offering, together with the combined working
capital of EnWise and Berkeley following the completion of the proposed
Qualifying Transaction, will be used for expansion of infrastructure, sales and
marketing initiatives and for working capital. Upon completion of the proposed
Qualifying Transaction, the EnWise bridge financing and the concurrent offering,
EnWise anticipates having sufficient financial resources to carry on its
business plan for a period of at least 18 months.
Berkeley intends to apply to the TSX Venture Exchange for a waiver of the
sponsorship requirements for the Qualifying Transaction based upon the brokered
concurrent offering.
Proposed Directors and Management Team
At the closing of the Qualifying Transaction, Peter Hwang, Paul Massara, Jay
Wilgar and Brett Whalen will be the nominees of EnWise to be elected to the
Board of Directors of NewCo. Brice Scheschuk will be the nominee director of
Berkeley to be elected to the Board of Directors of NewCo. Upon completion of
the Qualifying Transaction, the new senior management team of NewCo will consist
of Peter Hwang, Chief Executive Officer, Colin Reynolds, Director of Finance,
Paul Hebelka, Vice President of Operations, Thane Sinclair, Vice President and
Jay Wilgar, Secretary.
The following are brief resumes of the currently proposed directors and senior
officers of NewCo following the Qualifying Transaction:
Peter Hwang, Chief Executive Officer and Director, EnWise Holdings Inc. - Mr.
Hwang is the founder of EnWise and has served as its Chairman and Chief
Executive Officer since its formation. Mr. Hwang has extensive experience
building multiple start-up companies from inception to sustainability. Prior to
EnWise, he co-founded Easylease Corp., a successful asset-based financing and
syndication company. He has over 12 years experience in the asset-based
financing market. Easylease Corp. celebrated its 10th year in business in 2006
and is a member of the Canadian Finance and Leasing Association and Finance and
Leasing Professionals of Canada. As Vice President of Sales, he was key in
building the company and leading the sales and marketing initiatives while
assisting in the development and overall growth of Easylease Corp. into one of
the largest leasing brokers in Canada. Mr. Hwang holds a Bachelor of Arts degree
from Wilfrid Laurier University.
Colin Reynolds, Director of Finance, EnWise Holdings Inc. - Mr. Reynolds joined
EnWise in December 2007 as its Director of Finance, and is responsible for all
Financial Operations, IT and Human Resources. Mr. Reynolds has been responsible
for developing all levels of financial controls and metrics within the EnWise
Holdings Inc. group of companies. Prior to that, Mr. Reynolds has held a number
of senior management positions with large multi-national companies including
nine years in the H/VAC industry with Union Energy. Mr. Reynolds received his
CMA designation in 1986, and holds a Bachelor of Arts degree from Wilfrid
Laurier University.
Paul Hebelka, Vice President of Operations, EnWise Holdings Inc. - Mr. Hebelka
joined EnWise in December 2006 in the capacity of Director of Operations of
EnWise Power Solutions. Mr. Hebelka has been instrumental in executing the
deliverables model set forth for the growth of the company and he continues to
focus on company and product line expansion. Mr. Hebelka has extensive
experience in directing operations and sales. Prior to joining EnWise, Mr.
Hebelka held various senior positions at Union Energy/Reliance Home Comfort.
Following an extremely successful seven year period in the consumer finance
business at Wells Fargo (earning numerous awards for achievements in sales
growth and profit), Mr. Hebelka joined Clow Darling Ltd, a large commercial
contractor and later became a partner with the company, directing sales and
service. Mr. Hebelka graduated from Acadia University with a Bachelor of Arts
degree.
Thane Sinclair, Vice President, EnWise Holdings Inc. - Mr. Sinclair joined
EnWise in January 2007 as the Vice President of Enwise Capital Corporation. Mr.
Sinclair is responsible for developing and implementing the financing model in
support of EnWise Power Solution's product offerings to the consumer
marketplace. Mr. Sinclair is also responsible for developing and executing the
expansion model for ECC to extend its services to third party companies
throughout Canada and the United States. He brings with him over 20 years of
experience in the equipment financing industry and has held many senior
management positions at various large private and public sector companies such
as CIT Financial Ltd., Easylease Corp and XFD (Xerox Finance Division). Mr.
Sinclair earned both his Honours BSC and his MBA degrees from Dalhousie
University in 1985.
Jay Wilgar, Secretary and Director, EnWise Holdings Inc. - Mr. Wilgar, together
with Peter Hwang, founded EnWise in September 2006 and he's been a Director and
its Secretary since formation. Mr. Wilgar's career has spanned several
entrepreneurial ventures. In 2002, he founded AIM PowerGen, Canada's leading
wind power development company, and is currently Vice-President and Director.
Since its inception, AIM has built and financed over 140 MW's (megawatts) of
wind generation projects valued at more than $300 million and has another 30
projects at various stages of development. In 2006, AIM PowerGen was sold to a
major UK based energy firm for $29.1 million. Mr. Wilgar holds a Bachelor of
Commerce degree from Wilfrid Laurier University.
Brett Whalen, Director, EnWise Holdings Inc. - Mr. Whalen joined the Board of
Directors of Enwise in January 2007. Mr. Whalen has been an investment banker at
Jacob & Company Securities Inc. and Dundee Securities Corporation since 2000. He
has been actively involved in a wide range of public & private financings and
merger & acquisition assignments in the mining, consumer products and renewable
power sectors. Prior to Dundee Securities, he worked at CIBC World Markets for
two years as a research associate in both the mining and consumer products
sectors. Mr. Whalen holds a BA in Economics from Wilfrid Laurier University and
holds a CFA designation.
Paul Massara, Director, EnWise Holdings Inc. - Mr. Massara joined the Board of
Directors of Enwise in July 2008. Mr. Massara has extensive commercial
experience having held senior executive roles for Centrica Plc for the last ten
years. His last role with the company was as President of Canadian Operations
for Direct Energy where he was responsible for the strategy and profit and loss
for a business with a turnover in excess of $2.7 billion, growing it from $1.0
billion just three years earlier. He was also responsible for home services,
sales and customer experience on a North American basis. He has extensive
experience in deregulation, corporate finance, marketing, sales, customer
experience, risk management and trading as it relates to the energy and service
sectors both in Europe and North America. He has a Masters in Corporate Finance
from London Business School and was voted one of the Top 40 Under 40 Canadian
leaders in 2005. Mr. Massara is a Board member of the Toronto Board of Trade and
also several charitable organizations.
Brice Scheschuk, Chief Financial Officer, Globalive Communications Corp. - Mr.
Scheschuk is the Chief Financial Officer of Globalive Communications Corp., a
provider of telecommunications solutions globally, and has been with Globalive
since September 2003. He is also the Co-President and Secretary of Brave
Consulting Corporation, a private investment company, and has held those
positions since May 2000. He is the Chairman of the Board of iLOOKABOUT Corp.
and a director of Hy-Drive Technologies Inc., both TSX-Venture listed companies,
as well as a director of numerous private companies. Mr. Scheschuk has 13 years
of financial experience in the telecommunications, technology, media and
financial industries. From April 2001 to September 2003, Mr. Scheschuk was the
Corporate Controller of Leitch Technology Corporation, a manufacturer of
hardware and software for the professional video market listed on the Toronto
Stock Exchange. From March 1999 to March 2001, he was Vice President of Finance
and Secretary of Level Jump Financial Group, Inc. (and predecessor companies),
an investor relations company listed on the U.S. OTC Bulletin Board and a NASD
registered broker-dealer. Mr. Scheschuk received a B.Comm. (Honours) Finance
degree from Dalhousie University in April 1994 and earned his Canadian Chartered
Accountant designation while working for Coopers & Lybrand (now
PricewaterhouseCoopers) from May 1994 through September 1998.
Conditions to Completion of Qualifying Transaction
Completion of the Qualifying Transaction is subject to a number of conditions,
including, but not limited to, the closing of the concurrent offering,
acceptance by the TSX Venture Exchange, NewCo's satisfaction of the minimum
listing requirements of the TSX Venture Exchange for a Tier 2 issuer, other
regulatory approvals and third party consents, shareholder approval of EnWise
and Berkeley, completion of satisfactory legal, accounting and financial due
diligence by both Berkeley and EnWise, and completion of formal agreements,
including an amalgamation agreement among Berkeley and EnWise and certain of
EnWise's security holders. There can be no assurance that the Qualifying
Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information
circular to be prepared in connection with the Qualifying Transaction and any
offering document prepared in respect of the concurrent offering, 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.
Cautionary Note Regarding Forward-looking Statements
This news release contains forward-looking statements (including, without
limitation, information regarding the proposed Qualifying Transaction and the
business opportunities and plans of EnWise and NewCo) that involve risks and
uncertainties that could cause the results of Berkeley to differ materially from
management's current expectations. Actual results may differ materially due to a
number of factors including, among others: the Qualifying Transaction may not
close; market acceptance of EnWise's products and services; the impact of
competitive products and services; and costs of product and service development.
The matters discussed in this news release also involve risks and uncertainties
described in Berkeley's documents filed from time to time with the Canadian
securities regulatory authorities. Berkeley assumes no obligation to update the
forward-looking information contained in this new release.
EnWise is a trademark of EnWise Power Solutions Inc. Other names mentioned
herein are the property of their respective owners.
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