OTTAWA,
Sept. 24, 2012 /CNW/ - Seprotech
Systems Incorporated (TSX-V: SET; "Seprotech") and WESA Group Inc.
"WESA" today announced that further to the previously announced
non-binding letter of intent, they have entered into a binding
share exchange agreement under which Seprotech will acquire 100% of
privately-held WESA in a reverse takeover (the "Transaction"). Upon
completion of the Transaction, the combined entity (the "Resulting
Issuer") is expected to be a leading provider of earth science and
environmental engineering services, and wastewater and water
treatment systems. The intent is to build an integrated product and
service organization that provides intelligent solutions to complex
environmental problems both in Canada and abroad.
Transaction Summary
The Transaction is an arm's length transaction
and will constitute a reverse-takeover pursuant to the policies of
the TSX Venture Exchange ("TSX.V"). Completion of the Transaction
("Closing") is subject to several conditions, including, but not
limited to the approval of a simple majority of Seprotech
shareholders, the approval of the majority of the minority
Seprotech shareholders, and final approval by the TSX.V. Seprotech
has convened a special meeting of shareholders (the "Meeting") on
October 24, 2012 to seek such
shareholder approval and to approve a change of name from Seprotech
Systems Incorporated to BluMetric Environmental Inc. The other
conditions are summarized below.
Seprotech currently has issued and outstanding
66,446,926 common shares, and 5,330,000 options to purchase
Seprotech common shares, at prices ranging between $0.10 and $0.26 per share.
At the Meeting, Seprotech also intends to seek
the approval of its shareholders to consolidate its common shares
on a 1 for 10 basis (the "Consolidation"). Assuming completion of
the Consolidation, Seprotech would have issued and outstanding
immediately prior to Closing (i) 6,644,692 post-consolidation
Seprotech common shares and (ii) options to purchase 533,000 common
shares, each exercisable at a price of from $1.00 - $2.60 per share.
Shareholders will also be asked to approve a
reduction in the stated capital of Seprotech to a nominal amount,
in order to meet the solvency requirements of the Canada Business
Corporations Act.
The Transaction will be completed by way of a
share exchange agreement pursuant to which Seprotech will acquire
all of the issued and outstanding shares of WESA in consideration
for the issuance to the shareholders of WESA of 14,157,433
post-consolidation common shares of Seprotech, each at a deemed
value of $0.664 per share for
aggregate consideration of $9,400,536. Upon Closing, WESA will become a
wholly-owned subsidiary of Seprotech and WESA shareholders will
control approximately 68.06 % of the common shares of the Resulting
Issuer. Immediately following closing, Seprotech and WESA will be
amalgamated.
Seprotech and WESA have also agreed on the
additional consideration to be paid to WESA shareholders to reflect
the value of inclusion of WESA's real estate assets which were
added to the transaction subsequent to the originally agreed to
valuations. The value of the equity in the real estate has been
agreed at $1,880,000, resulting in
total aggregate consideration of $11,280,536. This additional consideration is to
be settled by the issuance to the WESA shareholders of 2,831,325
special shares of Seprotech (the "Special Shares"). Each Special
Share will be automatically converted into common shares of the
Resulting Issuer on the earlier of (i) completion of a qualified
financing that occurs subsequently to the current transaction for
gross proceeds of not less than $2,000,000, for an issue price of not less than
$0.664 per common share, and (ii)
July 2, 2013. In the case of
conversion upon a qualified financing, the conversion ratio will be
a fraction equal to $0.664 divided by
the issue price. In the case of a conversion in the absence of a
qualified financing, the conversion ratio will be a fraction equal
to $0.664 divided by the volume
weighted average trading price of the common shares on the TSX.V
during the period from June 3, 2013
through June 28, 2013; provided that
the conversion ratio will not be greater than 1:1, and the maximum
number of common shares to be issued after giving effect to the
Share Consolidation will be 2,831,325. Based on the floor
conversion price of $0.664, the WESA
shareholders' ownership of the Resulting Issuer would increase to
71.90 %.
Management and Board of Directors of
Resulting Issuer
Effective upon Closing, the board of directors
of the Resulting Issuer will include five members, consisting of
Jordan B. Grant, former chairman and
a director of Seprotech, William M.
Touzel, Mark Stirling and
Denis Douville, directors of
Seprotech, and Roger M. Woeller, who
will be appointed chief development officer of the Resulting
Issuer.
The chief executive officer of the Resulting
Issuer will be William M. Touzel,
who is presently president of WESA; the chief financial officer
will be Ian W. Malone, presently
chief financial officer of Seprotech. The other members of the
senior management team of the Resulting Issuer will be Roger M. Woeller, Harry
J. Marshall, president of the water and wastewater division
and Nell van Walsum, president of
the professional services division.
Conditions to the Transaction
The proposed Transaction is subject to a number
of terms and conditions including the final approval of the TSX.V
and other relevant regulatory authorities, and various other
customary conditions that must be satisfied prior to closing, which
is expected to take place no later than December 31, 2012. The Resulting Issuer will also
be required to complete a concurrent brokered private placement of
common shares for aggregate gross proceeds of not less than
$1 million, or more than $2 million, at a price per share to be
negotiated.
Other Information
Trading in Seprotech common shares will remain
halted pending the satisfaction of all applicable requirements of
the TSX.V. There can be no assurance that trading in Seprotech
common shares will resume prior to the completion of the
Transaction. Further details concerning the Transaction, WESA
(including additional financial information) and other matters will
be included in the management proxy circular being distributed to
shareholders of Seprotech in advance of the special meeting of
shareholders.
About WESA
WESA was founded in 1978 under the laws of
Ontario. WESA is a professional
services company focussed on environmental earth sciences, water
resources, waste management, occupational health, safety and
hygiene and renewable energy needs of industry and all levels of
government. WESAtech, a wholly-owned subsidiary, supplies turn-key
water treatment systems to industry. More information can be
obtained at www.wesa.ca .
About Seprotech:
Seprotech is a provider of engineered water and
wastewater treatment solutions to the municipal/land development,
resource sector and military market place, including Reverse
Osmosis water purification systems, ROTORDISK® biological sewage
treatment package plants and CrystalBlue™ membrane-based water
recycling systems. More information can be obtained at
www.seprotech.com .
Forward-looking Statements
This news release contains certain "forward looking statements"
within the meaning of applicable securities laws. Seprotech has
made numerous assumptions regarding, among other things, the
ability of Seprotech and WESA to satisfy all the closing conditions
to complete the Transaction. Readers are cautioned that the plans,
intentions or expectations disclosed in any forward-looking
statements and underlying assumptions may not be achieved and that
readers should not place undue reliance on any forward-looking
statement, each of which is expressly qualified in its entirety by
this cautionary statement. Although Seprotech believes that the
expectations conveyed by the forward-looking information are
reasonable based on information currently available to it, these
statements are not guarantees and involve a number of risks,
uncertainties and assumptions, both known and unknown. The results
or events depicted in these forward-looking statements may differ
materially from actual results or events. Many factors could cause
results to differ materially from those stated including, but not
limited to: the Transaction may not be completed upon the terms
contemplated herein, or at all; the possibility of not satisfying
all of the closing conditions to complete the Transaction; the
possibility that Seprotech's shareholders do not approve the
Transaction at the special meeting of shareholders; difficulties or
delays in obtaining regulatory approvals; the ability of WESA or
Seprotech to retain existing customer contracts; risks related to
integration upon the completion of the Transaction; and the ability
to retain and obtain qualified staff as well as various other
factors which are discussed in Seprotech's filings with applicable
securities regulatory authorities at www.sedar.com. Any
forward-looking statement speaks only as of the date of this news
release and, except as may be required by applicable securities
laws, Seprotech disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information,
future events or results or otherwise.
Completion of the Transaction is subject to a
number of conditions, including, but not limited to, acceptance by
the TSX.V. 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.
Investors are cautioned that, except as
disclosed in the management proxy circular of Seprotech 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 Seprotech should be considered to be highly
speculative.
The TSX.V has in no way passed upon the
merits of the proposed Transaction, and neither TSX.V nor
its Regulation Services Provider (as that term is defined in the
policies of the TSX.V) accepts responsibility for the adequacy or
accuracy of this release. The TSX.V has neither approved nor
disapproved of the information contained herein.
SOURCE Seprotech Systems Incorporated