Vesta Capital Corp. ("Vesta") (TSX VENTURE: VES.P) is pleased to
announce that on October 30, 2008, it entered into a letter of
intent ("LOI") with 3GSolar, Ltd. ("3G"). The LOI provides that
Vesta will enter into a share exchange transaction with each of
3G's shareholders, which will result in 3G becoming a wholly-owned
subsidiary of Vesta (the "Transaction"). The Transaction is
intended to constitute Vesta's "qualifying transaction" under TSX
Venture Exchange ("TSXV") policies. If the Transaction it
successfully completed, it is believed that 3G would be the first
Israel-based business listed on a Canadian stock exchange.
About 3G
3G (formerly, Orionsolar Photovoltaics Ltd.) is a developer of
dye solar cell ("DSC") photovoltaic modules. DSC technology is a
cost-effective alternative to silicon and thin film-based systems,
providing a low-cost solar energy solution that produces
electricity efficiently even in low light conditions. 3G focuses
its efforts to develop DSC modules to serve off-grid markets,
mainly in developing countries where in excess of two billion
people live without electricity.
3G was incorporated June 24, 2004 under the laws of the State of
Israel. Its business operations are conducted through its facility
in Jerusalem, Israel. Upon completion of the Transaction, it is
anticipated that the resulting issuer will be classified as a
research and development issuer by the TSXV.
The issued shares of 3G are owned by thirty-four (34)
shareholders. Dr. Jonathan Goldstein (of Jerusalem, Israel), 3G's
founder, its president and a director, owns approximately 11% of
3G's shares (fully diluted). Seventeen (17) shareholders (including
three 3G employees who own less that 3% of 3G's shares, fully
diluted) are individual Israel residents or Israel corporations
controlled by Israel residents, who collectively own approximately
22% of 3G's shares (fully diluted). The remaining sixteen (16)
shareholders own approximately 66% of 3G's shares (fully diluted).
Fifteen (15) of these remaining shareholders are limited liability
companies formed under the laws of Delaware (U.S.A.) and controlled
by U.S. residents, and one (1) shareholder is an Ontario
corporation controlled by a resident of Ontario. Other than Dr.
Goldstein, the only shareholder who holds in excess of 10% of 3G's
shares is DG-OSP, LLC, a Delaware (U.S.A.) limited liability
company, controlled by The Quercus Trust (Newport Beach,
California) which owns approximately 17% of 3G's shares (fully
diluted).
To date 3G has engaged in the research and development of DSC
photovoltaic technology. 3G employs seventeen (17) professionals at
its facility.
3G has provided Vesta with audited financial statements
(prepared in accordance with Israel auditing standards) for the
years ended December 31, 2007 and 2006, which financial statements
have been reconciled to Canadian GAAP (both presented in United
States dollars). 3G has also provided unaudited financial
statements for the 6 month period ended June 30, 2008, which
financial statements are also being reconciled to Canadian
standards. As at December 31 2007, 3G had total assets of
USD$1,514,175 and total liabilities of USD$202,330. For the year
ended December 31, 2007, 3G had a net loss of USD$967,255 of which
USD$741,079 represented R&D expenditures incurred during the
period. As at June 30, 2008, 3G had total assets of USD$1,293,891
and total liabilities of USD$262,390. For the 6 month period ended
June 30, 2008, 3G had a net loss of USD$655,726 of which
USD$289,435 represented R&D expenditures incurred during the
period.
Terms of the Transaction
Vesta is proposing to issue 25,000,00 common shares to holders
of 3G shares pro rata (based on the number of 3G shares held) at a
deemed price of $0.40 per share, in exchange for 100% of the issued
shares of 3G. Upon completion of the Transaction, Vesta will own
100% of 3G. 3G's current business (as heretofore described) will
become the business of the resulting issuer.
The Transaction is subject to a number of conditions including
but not limited to: (i) both 3G and Vesta completing their mutual
due diligence of one another, which due diligence is to be
completed within 30 days of the date of the LOI, (ii) negotiation
of acceptable definitive share exchange agreement(s) (or other
suitable arrangements) between Vesta and each holder of 3G shares,
(iii) receipt of all required regulatory approvals (including TSXV
approval as noted below), and (iv) Vesta raising sufficient
additional funds which, which combined with Vesta's existing funds,
will allow it to meet the TSXV's minimum listing requirements upon
completion of the Transaction.
There are no persons who are Control Persons (as defined in TSXV
policies) in both Vesta and 3G and no director, officer or insider
of Vesta owns any shares of 3G and no director, officer or insider
of 3G owns any shares of Vesta. As such, the proposed Transaction
does not constitute a "Non-Arms Length Qualifying Transaction" (as
defined in TSXV policies). Therefore, subject to TSXV confirmation,
the Transaction will not require the approval of Vesta's
shareholders.
Agency, Fiscal Advisory and Sponsorship Arrangements
To satisfy the condition set out in (iv) above, concurrent with
the closing of the Transaction, Vesta will conduct a public
offering of common shares by way of prospectus in Canada and in
other jurisdictions pursuant to available exemptions, seeking to
raise between $4,000,000 and $6,000,000 of funds (the "Offering").
Subscribers to the Offering will receive common shares of Vesta at
a price of $0.40 per share.
Vesta has engaged Canaccord Capital Corporation ("Canaccord") to
act as lead agent in connection with the Offering. Canaccord has
agreed to lead a syndicate of agents (collectively, the "Agents"),
including Sandfire Securities Inc. ("Sandfire").
In connection therewith, the Agents will be paid a cash
commission of 8% of the funds raised and will receive that number
of brokers warrants which is equal to 10% of the number of common
shares sold. Each brokers warrant will entitle the holder to
purchase one common share of Vesta at a price of $0.40 per share,
for a period of 24 months from the closing of the Offering.
Canaccord has agreed to act as sponsor in connection with the
Transaction, however Vesta expects that it will be exempt from the
TSXV formal sponsorship requirements provided a portion of the
Offering is completed by way of prospectus signed by a duly
qualified agent (such as Canaccord). An agreement to sponsor should
not be construed as any assurance with respect to the merits of the
Transaction or the likelihood of completion. The financing and the
sponsorship are subject to the completion of satisfactory due
diligence by Canaccord.
Vesta has also engaged Canaccord to provide fiscal advisory
services in connection with the Transaction. In connection
therewith, Vesta has agreed to pay Canaccord a monthly work fee of
$25,000 plus G.S.T. for up to four months.
In addition to the above, upon completion of the Offering, Vesta
has agreed to issue as a success fee, 1,350,000 common shares
(assuming the minimum Offering is sold) up to a maximum of
1,575,000 common shares (assuming the maximum Offering is sold) to
Canaccord (which amounts will be reduced by up to 250,000 shares in
lieu of any sponsorship fees and any monthly work fees paid to
Canaccord, to a maximum of $100,000 at a price of $0.40 per share)
and 150,000 common shares (assuming the minimum Offering is sold)
up to a maximum of 175,000 common shares (assuming the maximum
Offering is sold) to Sandfire.
About the Resulting Issuer
Following completion of the Transaction the resulting issuer
will continue 3G's business. Upon completion of the Transaction and
the anticipated minimum offering described above, 3G's shareholders
would own approximately 60% of the issued shares of the resulting
issuer. It is not anticipated that any single shareholder of 3G
will own in excess of 10% of the shares of the resulting
issuer.
It is anticipated that the directors and officers of the
resulting issuer will be as follows:
Barry N. Breen is currently the Chief Executive Officer and a
director of 3G. Upon completion of the Transaction, Mr. Breen will
be added as a director and named Chief Executive Officer and
President of Vesta. Mr. Breen served 16 years in senior positions
at AVX Corporation (listed on NYSE). Prior to AVX, Barry was an
engineer at General Electric (listed on NYSE). Mr. Breen holds a
B.Sc. in Nuclear Engineering from the Massachusetts Institute of
Technology. Mr. Breen was awarded the Kaplan Prize in 1994 for
excellence in industrial development. In 1998, he was awarded the
Kyocera Corporation President Award for outstanding achievement in
product & business development.
David Anthony is currently a director of 3G. Upon completion of
the Transaction, Mr. Anthony will be added as a director and named
Chief Financial Officer and Secretary of Vesta. Mr. Anthony, is
Managing Partner of New York venture capital firm, 21Ventures, LLC.
Mr. Anthony currently serves as a director on the boards of public
companies Worldwater & Solar Technologies Corp. (listed on
OTCBB) and Open Energy Corporation (listed on OTCBB), and private
companies Agent Video Intelligence Ltd, BioPetroClean Ltd., Juice
Wireless, Inc. and VoIP Logic, LLC. Mr. Anthony teaches business
management at the New York Academy of Sciences where he is an
Adjunct Professor. Mr. Anthony received an MBA from The Tuck School
of Business at Dartmouth College in 1989 and a BA in economics from
George Washington University in 1982. He is an entrepreneurship
mentor at the Land Center for Entrepreneurship at Columbia
University Graduate School of Business. In 2002, Mr. Anthony was
awarded the Distinguished Mentor of the Year Award from Columbia
University.
Harold Wolkin is currently the President, Chief Financial
Officer, Secretary and a director of Vesta. Upon completion of the
Transaction, Mr. Wolkin will resign from all offices held by him
and remain as an independent director of Vesta. Mr. Wolkin is a
designated chartered financial analyst and Vice Chairman, Sandfire
Securities Inc. (subject to regulatory approval), a full service,
boutique investment bank. From August 1983 until his retirement in
January 2008, Mr. Wolkin was employed with BMO Capital Markets,
serving as the Managing Director, Diversified Industries,
Investment and Corporate Banking. Mr. Wolkin received his B.A. from
York University in 1975, his M.A. from the University of Toronto in
1976 and became a member of the Chartered Financial Analyst
Institute in 1980. Since April 2008, Mr. Wolkin has served as a
director of Grandview Gold Inc., a Toronto Stock Exchange and
Over-The-Counter Bulletin Board listed company. Since November
2005, Mr. Wolkin has also served as a director of Brighter Minds
Media Inc. (formerly Road Runner Capital Corporation), a TSX
Venture Exchange listed company.
Frank Bellotti, is a current director of Vesta. Upon completion
of the Transaction, Mr. Bellotti will remain as an independent
director of Vesta. Mr. Bellotti served as is the Vice President and
Director of Prime City One Capital Corp., a TSX Venture Exchange
listed company. Mr. Bellotti is also the President of Kingside
Mortgage Corporation, a position he has held since January 1989.
Mr. Bellotti served as a director of BDE Equities from June 2006 to
March 2008 and served as a director of Kingsdale Capital from June
2001 to June 2006.
Dr. Jonathan Goldstein, is the President and a director of 3G.
It is anticipated that Dr. Goldstein will be appointed to the Vesta
board some time following completion of the Transaction. Dr.
Goldstein has been President and Chief Scientist of 3G since its
founding. He served as a senior scientist at LUZ Industries, a
pioneering company in the solar energy industry. From 1977 to 1989,
Dr. Goldstein served as the senior battery scientist at Tadiran
Ltd., Israel's flagship electronics company. Dr. Goldstein received
his Ph.D in Chemistry from City University, London, UK. He holds 38
granted US patents, and has published/delivered more than 30
scientific papers.
TSXV Approval
Completion of the transaction is subject to a number of
conditions, including but not limited to, TSXV acceptance and if
applicable pursuant to TSXV requirements, majority of the minority
shareholder 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.
Investors are cautioned that, except as disclosed in the
management information circular or filing statement or prospectus
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.
For Investors
This press release may include statements about expected future
events and/or financial results that are forward-looking in nature
and subject to risks and uncertainties. Vesta cautions that actual
performance will be affected by a number of factors, many of which
are beyond its control. Future events and results may vary
substantially from what Vesta currently foresees. Discussion of the
various factors that may affect future results is contained in
Vesta's recent filings, available on SEDAR.
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.
Contacts: Vesta Capital Corp. Harold Wolkin President, Chief
Financial Officer and Corporate Secretary (416) 485-0980 Email:
harold.wolkin@sympatico.ca
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