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Perlite Canada Inc

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JonnyRBuck12   Friday, 11/30/18 05:15:00 PM
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Perlite Canada Inc
Symbol C : PCI
Shares Issued 10,813,059
Close 2018-11-26 C$ 0.60
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Perlite Canada management to take company private

2018-11-29 16:21 MT - News Release

Mr. Richard Barabe reports


Perlite Canada Inc. has entered into an acquisition agreement pursuant to which Richard Barabe, president and chief executive officer, and Martin Joyal, secretary, will acquire, through a newly formed corporation, all of the issued and outstanding common shares of the corporation, other than shares held directly or indirectly by the principals, at a price of 80 cents in cash per share, and Perlite will be taken private for a total consideration of approximately $6,392,000. The principals directly or indirectly hold approximately 26.11 per cent of the issued and outstanding common shares of the corporation. The transaction values Perlite's equity at approximately $8.65-million.

The 80-cent-per-share cash consideration represents a premium of approximately 33 per cent to the closing price of the common shares of the corporation on the TSX Venture Exchange on Nov. 28, 2018, the last day of trading prior to the date hereof, a premium of approximately 36 per cent to the volume-weighted average trading price of the shares in the last 20 days of trading on the TSX-V and a premium of approximately 31 per cent to the volume-weighted average trading price of the shares in the last 12 months of trading on the TSX-V.

"We are very pleased to be able to allow our shareholders who have supported us for years to monetize their investment and benefit from the substantial growth in value of the corporation during the last years while receiving a significant premium for their shares," Mr. Barabe said.

"We are pleased to present this transaction to the minority shareholders of Perlite, which will provide them with an opportunity to monetize their investment for a significant cash premium and immediate liquidity upon closing," remarked Faycal Salek, chairman of the special committee of the corporation.

The transaction allows for the continued commitment of the principals to the success of Perlite for the long term, and Mr. Barabe will continue as president and CEO and Mr. Joyal will continue as corporate secretary of Perlite.

The transaction is to be structured as an amalgamation of the corporation with the purchaser, under the laws of the Province of Quebec. Upon the completion of the amalgamation, shareholders of Perlite, other than the principals, will receive one redeemable share of the corporation resulting from the amalgamation for each common share of Perlite they hold. Each redeemable share will then be immediately redeemed for 80 cents in cash.

Pursuant to the terms of the acquisition agreement, the holders of options of the corporation who are directors of the corporation shall remit and surrender all of their options for cancellation, as of the effective time of the amalgamation, without any cash or other consideration. The options owned by the other holders shall be terminated and cancelled, as of the effective time of the amalgamation, in exchange for a cash payment by the corporation equal to the difference between 80 cents per vested option and the exercise price of such options (less any applicable withholding) in accordance with the terms of the corporation's stock option plan.

In accordance with applicable securities laws, the board of directors of the corporation established the special committee comprising all of its independent directors in order to, among other things, review and consider the proposed form, structure, terms, conditions and timing of the transaction, as well as any alternative transaction proposed to the corporation, make such recommendations to the board as it considers appropriate or desirable in relation to any such transaction, and provide advice and guidance to the board as to whether one or more transactions is or are in the best interests of the corporation. The members of the special committee, Mr. Salek and Patrick Barriault, retained Norton Rose Fulbright Canada LLP as independent legal adviser, and Richter Advisory Group Inc. was retained to advise the special committee and to prepare a fairness opinion in respect of the transaction, notwithstanding the statutory exemption from the formal valuation requirement set out in Regulation 61-101 respecting protection of minority security holders in special transactions.

Richter has provided the special committee with its opinion that, as of the date hereof, subject to the assumptions, limitations and qualifications contained therein, the consideration to be received by shareholders of Perlite other than the principals pursuant to the transaction is fair, from a financial point of view, to the minority Shareholders.

Based on Richter's conclusions, among other matters considered, and after consultation with its financial and legal advisers, the special committee unanimously determined that the transaction is fair to the minority shareholders and is in the best interests of Perlite. The special committee has unanimously recommended that the board of directors of the corporation approve the transaction and that the corporation enter into the acquisition agreement, and, following this recommendation, the board of directors of the corporation unanimously approved the transaction (with interested directors Mr. Barabe and Mr. Joyal having abstained) and recommends that the minority shareholders vote their common shares of the corporation in favour of the transaction.

Shareholders of the corporation will be asked to approve the transaction at a special meeting which the corporation currently expects will be held in January, 2019. Completion of the transaction is subject to customary closing conditions, including, but not limited to, the approval of at least two-thirds of the shareholders of the corporation voting at the meeting and of a simple majority of the minority shareholders voting at the meeting, and there being no material adverse change with respect to Perlite. The acquisition agreement governing the transaction contains customary representations, warranties and covenants for a transaction of this nature. Assuming the satisfaction of all conditions, the transaction is expected to close in the week following the meeting.

Further details of the transaction, including a copy of the fairness opinion, and the detailed reasons for the favourable recommendation to shareholders of the corporation by the board of directors of the corporation and the special committee, will be contained in the management information circular to be mailed to shareholders of the corporation in December, 2018, in connection with the meeting.

The transaction is not subject to a financing condition, and the principals have confirmed that financing has been arranged to finance the transaction through committed debt facilities. The principals have also confirmed their intent to consummate the transaction to the exclusion of any other alternative transaction.

A copy of the acquisition agreement, the circular (including the fairness opinion) and certain related documents will be filed in due course on SEDAR.

Fasken Martineau DuMoulin LLP is acting as legal adviser to the principals.

Shareholders should consult their own tax and investment advisers with respect to the transaction, details of which will be contained in the circular.

About Perlite Canada Inc.

Perlite specializes in the processing, distribution and sale of perlite and vermiculite. Perlite and vermiculite are used in the construction, industrial and horticultural sectors. The corporation produces expanded perlite and exfoliated vermiculite in its two Canadian plants; one is located in Lachine (Quebec) and the second is located in Saint-Pacome (Quebec).

We seek Safe Harbor.

© 2018 Canjex Publishing Ltd. All rights reserved.

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