Huakan Announces Going Private Transaction With Its Principal
Shareholders
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Mar 17, 2014) -
Huakan International Mining Inc. (the "Company") (TSX-VENTURE:HK)
announces that it has entered into an Amalgamation Agreement (the
"Agreement") with 0996059 B.C. Ltd. ("Newco"), pursuant to which
the Company will be taken private by way of an amalgamation (the
"Amalgamation") between Newco and the Company.
Newco is a corporation owned by Hong Kong Huakan Investment Co.,
Limited ("Hong Kong Huakan"), Sun Luck Asia Investment Limited
("Sun Luck") and Power Best Resources Inc. ("Power Best" and
together with Hong Kong Huakan and Sun Luck, the "Acquirors").
Certain wholly-owned subsidiaries of Hong Kong Huakan (being Huakan
Resources Inc., Hua Kan International Mining Co., Ltd., Shanchuan
Mining Limited and Dashan Mining Limited (collectively, the "Huakan
Subsidiaries")), together with Sun Luck and Power Best,
collectively own approximately 91.8% of the issued and outstanding
common shares (the "Shares") in the capital of the Company. The
Acquirors are unrelated, but are acting in concert in the
Amalgamation.
More specifically, Hong Kong Huakan, through the Huakan
Subsidiaries, collectively owns 31,955,223 Shares (representing
approximately 75.27% of the Shares). Sun Luck and Power Best own
3,942,852 Shares (representing approximately 9.29% of the Shares)
and 3,074,285 Shares (representing approximately 7.24% of the
Shares), respectively. In addition, there is a shareholder holding
214,286 (representing 0.5% of the Shares) who, pursuant to the
Amalgamation Agreement will remain a shareholder of the amalgamated
company together with Sun Luck, Power Best and the Huakan
Subsidiaries (such shareholder together with Sun Luck, Power Best
and Huakan Subsidiaries be referred to as the "Amalco
Shareholders").
As at March 14, 2014, the Company had outstanding 42,451,939
Shares.
The Acquirors have entered into lock-up agreements with holders
of Shares who represent 1,806,752 of all the issued and outstanding
Shares (or approximately 4.3% of all the issued and outstanding
Shares) pursuant to which such shareholders have agreed to vote all
of their Shares in favour of the Amalgamation.
Pursuant to the Agreement, the Acquirors will, directly or
indirectly, through the Amalgamation, pay $0.50 per Share in cash
(the "Offer Price") to holders of all of the issued and outstanding
Shares that are not directly or indirectly, owned by the Amalco
Shareholders. Each shareholder of the Company, other than the
Amalco Shareholders, will receive one redeemable preferred share of
the amalgamated company for each Share held immediately prior to
the Amalgamation. Each redeemable preferred share will then be
redeemed for the Offer Price. The total cash consideration for the
aggregate Offer Price will be $1,632,646.50. The Amalgamation, if
consummated, will result in the Company being taken private and
delisted from the TSX Venture Exchange.
The Offer Price represents a 294% premium to the volume weighted
average price of the Shares over the previous 20 trading days on
the TSX Venture Exchange.
The Amalgamation, if consummated, will constitute a "business
combination" for the purposes of Multilateral Instrument 61-101 -
Protection of Minority Security Holders in Special
Transactions ("MI 61-101").
The board of directors of the Company (the "Board") formed a
special committee (the "Special Committee") comprised of
independent directors David Bo (the Chair) and Garnet Dawson to
evaluate the Amalgamation and make recommendations to the Board.
The Special Committee has engaged McCarthy Tétrault LLP as its
legal advisors.
Because the Acquirors directly or indirectly beneficially own,
in aggregate, over 90% of the issued and outstanding Shares, the
Amalgamation will, pursuant to Section 4.6(1)(a) of MI 61-101, be
exempt from the minority shareholder approval requirements of MI
61-101.
Further, because the Company is listed on the TSX Venture
Exchange, the Amalgamation will, pursuant to Section 4.4(1)(a) of
MI 61-101, be exempt from the formal valuation requirements of MI
61-101.
The Special Committee has, however, retained Mr. Stephen W.
Semeniuk as an independent financial advisor to prepare a fairness
opinion (the "Fairness Opinion") with respect to the proposed
Amalgamation. Having given due consideration to a number of factors
including the Fairness Opinion, which concludes that the Offer
Price is fair, from a financial point of view, to the minority
shareholders of the Company, the Special Committee, as advised by
its legal advisors, recommended the Amalgamation positively to the
Board, which in turn approved and executed the Agreement for and on
behalf of the Company.
The Company has convened a special meeting of shareholders (the
"Meeting") which will take place on April 17, 2014 for shareholders
to consider and, if thought appropriate, to approve the
Amalgamation. Notice of the Meeting has been duly issued and
filed.
The completion of the Amalgamation is subject to a number of
conditions precedent that are customary to this type of
transaction, including, but not limited to, there being no material
adverse change with respect to the Company, the approval of at
least two-thirds of the votes cast by holders of Shares at the
Meeting and the acceptance of the Amalgamation by the TSX Venture
Exchange.
Assuming the satisfaction of all conditions, the proposed
transaction is expected to close as soon as practicable following
the Meeting. However, there can be no assurances that the
Amalgamation, or any other transaction with the Acquirors, will be
completed.
Details of the terms and conditions of the Amalgamation,
together with a summary of the Fairness Opinion, will be included
in a management information circular, which will be mailed to the
shareholders as soon as practicable and will also be available for
download at www.sedar.com.
No actions are required to be taken by shareholders at this
stage. The Company will communicate with shareholders in due course
with respect to the Amalgamation.
Neither the TSX Venture Exchange nor its Regulations
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Forward-looking statements or information are subject to a
variety of risks and uncertainties which could cause actual events
or results to differ from those reflected in the forward-looking
statements or information, including, without limitation, risks and
uncertainties relating to the negotiation and consummation of the
definitive agreements with respect to the Amalgamation, the
completion of the Amalgamation or related transactions, receipt of
requisite legal and financial opinions with respect to the
Amalgamation and applicable regulatory approvals required with
respect to the Amalgamation. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in forward-looking statements or information. Accordingly, readers
are advised not to place undue reliance on forward-looking
statements or information. The Company disclaims any intent or
obligation to update forward-looking statements or information
except as required by law, and the reader is referred to the full
discussion of the Company's business contained in the Company's
reports filed with the securities regulatory authorities in Canada
at www.sedar.com.
Huakan International Mining Inc.Fiona LeungChief Financial
Officer(604) 694-2344
Huakan International Mining Inc. (TSXV:HK)
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Huakan International Mining Inc. (TSXV:HK)
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