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H2O Innovation announces execution of definitive agreement and

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Al_Capwn   Tuesday, 01/14/14 10:16:28 PM
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H2O Innovation announces execution of definitive agreement and completion of the acquisition of Piedmont Pacific Corporation and closing of concurrent bought deal and private placement for aggregate gross proceeds of approximately $8 million
Alternext: MNEMO: ALHEO

All amounts in Canadian dollars unless otherwise stated.

QUEBEC CITY, Dec. 5, 2013 /CNW Telbec/ - (TSXV: HEO) - H2O Innovation Inc. ("H2O Innovation" or the "Company") announces the execution of a definitive stock purchase agreement (the "Definitive Agreement") and the completion of the previously announced acquisition of all of the issued and outstanding shares of Common Stock of Piedmont Pacific Corporation, a company located in Oakland, CA and one of the leading manufacturers in the world of flexible pipe couplings and other pipe fittings for highly corrosive environments, for a total consideration of approximately $4.0 million (US$ 3.8 million) (the "Acquisition").

Concurrent Private Placement Financings

The Company also announces that it has closed the previously announced bought deal private placement (the "Bought Deal") and concurrent additional non-brokered private placement (the "Additional Placement" and together with the Bought Deal, the "Offerings") of common shares of the Company (the "Common Shares") at a price of $0.23 per Common Share for total gross proceeds of approximately $8 million. The Bought Deal was conducted by GMP Securities L.P. Since the execution of the Definitive Agreement and completion of the Acquisition occurred concurrently with the closing of the Bought Deal, the Company has delivered Common Shares instead of subscription receipts to investors in the Bought Deal.

Certain insiders of the Company, being Caisse de dépôt et placement du Québec, holder of more than 10% of the Common Shares, Richard A. Hoel, director and holder of more than 10% of the Common Shares, Philippe Gervais, director of the Company, Pierre Côté, director of the Company, Élaine Phénix, director of the Company, Marc Blanchet, Vice President Corporate & Legal Affairs of the Company, Josée Riverin, Vice President Finance of the Company, Guillaume Clairet, Executive Vice President of the Company, and Frédéric Dugré, director and President and Chief Executive Officer of the Company, participated in the Offerings and subscribed for an aggregate of 3,941,737 Common Shares representing an aggregate amount of approximately $906,600. Participation of insiders of the Company in the Offerings constitutes a "related party transaction" as defined under Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions ("Regulation 61-101"). The Offerings are exempt from the formal valuation and minority shareholder approval requirements of Regulation 61-101 as neither the fair market value of securities being issued to insiders nor the consideration being paid by insiders will exceed 25% of the Company's market capitalization. The Company did not file a material change report 21 days prior to the closing of the Offerings as the details of the participation of insiders of the Company had not been confirmed at that time.

Investissement Québec ("IQ") has participated in the Bought Deal and subscribed for 19,130,435 Common Shares representing 18.28% of the issued and outstanding Common Shares. In connection with IQ's subscription, the Company has entered into an agreement with IQ granting the right to IQ to appoint a representative of IQ on the Board of Directors of the Company.

The Company used a portion of the net proceeds of the Offerings to finance the Acquisition. The remaining portion of the net proceeds of the Offerings will be used for working capital purposes, as necessary to support the up-coming growth in the Company's systems sales backlog.

The Common Shares issued as part of the Offerings are subject to a statutory resale restriction until April 6, 2014.

H2O Innovation had received an advance income tax ruling from the Ministère du Revenu du Québec confirming that H2O Innovation meets the criteria of a "qualified issuing corporation" in accordance with the Québec Stock Savings Plan II. The Common Shares to be issued under the Offerings, if subscribed by a qualified mutual fund, are "qualifying shares" as per such plan.

The Common Shares have not and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the act. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Prospective disclosures
Certain statements set forth in this press release regarding the operations and the activities of H2O Innovation as well as other communications by the Company to the public that describe more generally management objectives, projections, estimates, expectations or forecasts may constitute forward-looking statements within the meaning of securities legislation. Forward-looking statements concern analysis and other information based on forecast future results, performance and achievements and the estimate of amounts that cannot yet be determined. Forward-looking statements include the use of words such as "anticipate", "if", "believe", "continue", "could", "estimate", "expect", "intend", "may", "plan", "potential", "predict", "project", "should" or "will", and other similar expressions, as well as those usually used in the future and the conditional, notably regarding certain assumptions as to the success of a venture. Those forward-looking statements, based on the current expectations of management, involve a number of risks and uncertainties, known and unknown, which may result in actual and future results, performance and achievements of the Company to be materially different than those indicated. Information about the risk factors to which the Company is exposed is provided in the Annual Information Form dated September 24, 2013 available on SEDAR (www.sedar.com). Unless required to do so pursuant to applicable securities legislation, H2O Innovation assumes no obligation to update or revise forward-looking statements contained in this press release or in other communications as a result of new information, future events and other changes.

About H2O Innovation
H2O Innovation designs and provides state-of-the-art, custom-built, and integrated water treatment solutions based on membrane filtration technology to municipal, energy & natural resources end-users. H2O Innovation also provides a complete line of specialty chemicals and consumables for membrane filtration and reverse osmosis systems. For more, visit www.h2oinnovation.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor the Alternext Exchange accepts responsibility for the adequacy or accuracy of this release.

SOURCE H2O Innovation Inc.


Marc Blanchet
+1 418-688-0170

Copyright CNW Group 2013

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