MONTREAL, March 20, 2014 /CNW Telbec/ - Sofame Technologies
Inc. (TSXV: SDW) (OTC: SFMGF) has reached a non-binding agreement
(LOI) to complete the arm's-length acquisition of 100 per cent of
the common shares of a group of New England-based power engineering
and services firms (the "Group") for a maximum of $5 million. The Group to be acquired
specializes in steam generation at industrial and institutional
boiler plants, utility power generating stations, cogeneration
facilities, hydroelectric power generation, pulp & paper, and
water or waste water treatment plants generating roughly, in the
aggregate, $7 million of sustainable
revenues and mainly having intangible assets. Through
the proposed transaction Sofame would effectively acquire expertise
in process controls, boilers, boiler room auxiliary equipment,
steam and condensate distribution, combustion controls, burner
management, emissions monitoring, waste heat recovery and field
servicing and start-up of systems throughout North America.
The acquisition would enable Sofame to provide comprehensive
customer support in areas of engineering, systems integration,
field service, mechanical fabrication, and equipment supply for
boiler room applications.
The proposed merger would deliver all the outstanding equity
interests of the Group to be acquired through a wholly owned
subsidiary of Sofame Technologies Inc. to be incorporated in the
United States. As part of the proposed transaction, the
shareholders of the Group to be acquired would receive a
compensation composed of 1) the issuance of shares of Sofame
having a value, at closing using a discounted market price
prevailing at time of closing, corresponding to $850,000; ii) payment in cash
of $ 2.65 million U.S. Dollars at
closing; and iii) an earn-out over three years based on the
agreed-upon expected financial performance of the acquired company
before interest and financial expenses. All key management of
the firm would remain in their current roles, and enter into
long-term employment agreements with Sofame Technologies
Inc.. The acquisition is an arm's-length transaction and
therefore is not a related party transaction pursuant to
Multilateral Instrument 61-101. As a result, no meeting of
Sofame shareholders is expected to be required as a condition to
completion of the acquisition. No insiders would be created as a
result of the transaction.
As at the date hereof, Sofame has received sufficient financing
commitments from various lenders to complete the proposed
transaction. These consist of a term sheet for a $ 2 million royalty loan, and $ 1.5 million in pledges for an unsecured
convertible debenture for a two year term, bearing an interest rate
of 10% per annum, convertible at $ 0.05
cents, and including, for each $
2,500 tranche of debenture, 12,500 warrants to purchases
Sofame shares at $0.05 for the first
12 months and $ 0.10 cents
thereafter. Sofame has made an application to the TSX Venture
Exchange for conditional approval of the unsecured convertible
debenture financing. Sofame's secured short-term lender, TCA
Global Fund headquartered in Aventura,
Florida, is aware of the proposed transaction, and a formal
request for TCA's consent is required under the credit agreement
signed in September 2013. More details of the proposed
transaction, and the financial position of company to be acquired,
will be announced as the transaction moves through the formal
approvals process.
According to Robert Presser,
Sofame's Board Chairman, "This opportunity to join forces with a US
Company in the same industry as Sofame, and with the same
entrepreneurial culture, has been over two years in the
making. Both companies expect to become stronger, and achieve
solid revenue growth in North
America, as a result the combination of expertise, personnel
and complementary capabilities."
Neither TSX Venture Exchange nor its Regulation 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.
SOURCE Sofame Technologies Inc.