TORONTO, June 10, 2014 /CNW/ - Dacha Strategic Metals Inc.
(TSX-V: DSM) ("Dacha") announced today that it has entered into a
letter agreement with Merus Labs International Inc. ("Merus") (TSX:
MSL, NASDAQ: MSLI) pursuant to which Dacha will invest a minimum of
$11 million in Merus in exchange for
common shares of Merus (the "Merus Shares").
Merus is a specialty pharmaceutical company engaged in the
acquisition and licensing of pharmaceutical products. Merus
utilizes its expertise in pharmaceutical markets and its access to
capital to acquire and license niche branded products. Merus
further enhances the sale and distribution of these products by the
introduction of a focused marketing and promotion plan.
Dacha is an investment company whose objective is to enhance
shareholder value over the long term.
Upon completion of this investment, Dacha intends to distribute
the Merus Shares, which would then represent substantially all of
Dacha's assets, to its shareholders with a view to ultimately
winding up its operations. This would involve, among other things,
delisting Dacha's shares from the TSX Venture Exchange and Dacha
ceasing to be a reporting issuer.
Transaction Details
The letter agreement contemplates that Dacha's investment in
Merus will be completed by Merus acquiring from Dacha, in exchange
for Merus Shares, a new subsidiary ("Newco") to be incorporated by
Dacha and to which Dacha will contribute a minimum of $11 million cash by way of equity subscriptions
(the "Newco Acquisition"). Merus has also granted Dacha certain
equity participation rights. The required minimum cash
contribution to Newco will be reduced by the amount of any equity
securities of Merus purchased by Dacha under the equity
participation rights.
The price at which the Merus Shares will be issued to Dacha in
connection with the Newco Acquisition will be $1.70 per share (the "Merus Share Price"),
subject to adjustment in certain circumstances. The number of Merus
Shares to be issued to Dacha pursuant to the Newco Acquisition will
equal Newco's cash at closing divided by the Merus Share
Price.
In connection with the Newco Acquisition, Merus has agreed to
pay Dacha a transaction structuring fee equal to 3.5% of the
aggregate value of the Merus Shares issued in connection with the
Newco Acquisition. Merus will satisfy the structuring fee by
issuing to Dacha an additional number of Merus common shares
determined by dividing the structuring fee by the Merus Share
Price.
The letter agreement has been unanimously approved by the Dacha
board of directors. Completion of the Newco Acquisition will be
conditional upon the conditions to closing set forth in the letter
agreement, which include receipt of all necessary stock exchange
approvals, receipt of Dacha shareholder approval, no material
adverse change with respect to Merus Labs or Dacha and completion
of confirmatory due diligence.
Dacha and Merus are dealing at arm's length to one another in
connection with the Acquisition and no non-arm's length parties of
Dacha have any direct or indirect interest in Merus.
The structure of the Newco Acquisition and additional terms
relating to the transaction are expected to be set out in a
definitive acquisition agreement that Merus and Dacha intend to
enter into prior to June 30,
2014. The parties have agreed to use commercially reasonable
best efforts to complete the Newco Acquisition by August 15, 2014, subject to the satisfaction or
waiver of the closing conditions. If a definitive acquisition
agreement has not been executed by June 30,
2014 or if the Newco Acquisition has not been completed by
August 31, 2014, either party may
terminate today's letter agreement.
Following the execution of the definitive acquisition agreement,
Dacha will be calling a special meeting of its shareholders to seek
approval for the Newco Acquisition and the proposed distribution of
Merus Shares to the Dacha shareholders. Further details regarding
these transactions will be announced in due course and set out in
the management information circular in respect of the meeting.
Forward-Looking Statements
This release contains certain "forward looking statements" and
certain "forward-looking information" as defined under applicable
Canadian securities laws. Forward-looking statements and
information can generally be identified by the use of
forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans"
or similar terminology. Forward-looking statements and information
include, but are not limited to, statements with respect to the
transactions contemplated under the letter agreement, receipt of
the requisite regulatory and shareholder approvals in respect
thereof and Dacha's intention to distribute the Merus Shares to its
shareholders and wind up its operations thereafter. Forward-looking
statements and information are subject to various known and unknown
risks and uncertainties, many of which are beyond the ability of
Dacha to control or predict, that may cause Dacha's actual results,
performance or achievements may be materially different from those
expressed or implied thereby, and are developed based on
assumptions about such risks, uncertainties and other factors set
out here in, including but not limited to: the risk that the
transaction will not be approved by the TSX, the TSXV or Nasdaq or
the Dacha shareholders; risks and uncertainties related to the
transaction not being completed in the event that the other
conditions precedent thereto are not satisfied and other related
risks and uncertainties. Dacha undertakes no obligation to update
forward-looking information except as required by applicable law.
Such forward-looking information represents management's best
judgment based on information currently available. No
forward-looking statement can be guaranteed and actual future
results may vary materially. Accordingly, readers are advised not
to place undue reliance on forward-looking statements or
information.
Completion of the Newco Acquisition is subject to a number of
conditions, including TSXV acceptance and shareholder approval. 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 to be prepared in connection with
the Newco Acquisition, 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 Dacha
should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits
of the proposed transaction and has neither approved nor
disapproved the contents of this press release.
SOURCE Dacha Strategic Metals Inc.