TORONTO, July 18, 2014 /CNW/ - Dacha Strategic Metals Inc.
(TSX-V: DSM) ("Dacha") announced today that it has mailed a
management information circular (the "Circular") to
shareholders in connection with the annual and special meeting of
shareholders to be held August 11,
2014 (the "Meeting"). A copy of the Circular is also
available on SEDAR at www.sedar.com.
At the Meeting, shareholders will be asked to consider, among
other things, resolutions relating to:
- the previously announced transaction pursuant to which Merus
Labs International Inc. ("Merus") (TSX: MSL, NASDAQ: MSLI)
will acquire from Dacha, in exchange for common shares of Merus
("Merus Shares") priced at $1.70 per share, a new subsidiary to be
incorporated by Dacha ("Newco") and to which Dacha will
contribute a minimum of $6 million
cash by way of equity subscriptions (the "Newco Sale");
and
- if the Newco Sale is approved, a proposed share capital
reorganization to be implemented immediately following the Newco
Sale (the "Share Capital Reorganization") that would result
in all of Dacha's outstanding common shares being redeemed in
exchange for Merus Shares.
If the Newco Sale and the Share Capital Reorganization receive
the requisite shareholder and stock exchange approvals, and all
other conditions to completion of the Newco Sale are satisfied or
waived, Dacha expects that the Newco Sale and the Share Capital
Reorganization will be completed on or about August 13, 2014. Following completion of these
transactions, Dacha will apply to be delisted from the TSX Venture
Exchange and to cease to be a reporting issuer for Canadian
securities law purposes.
Dacha currently owns 2,940,000 Merus Shares, which it acquired
by participating in Merus' bought deal offering of Merus Shares
that closed on June 19, 2014.
Assuming Dacha contributes $6.5 million in cash to Newco immediately
prior to completion of the Newco Sale, Dacha will receive an
additional 3,823,529 Merus Shares in satisfaction of the Purchase
Price plus 133,824 Merus Shares in satisfaction of the structuring
fee payable to Dacha in connection with the New Sale.
Pursuant to the Share Capital Reorganization, provided it is
duly approved at the Meeting, Dacha will redeem all of its
outstanding common shares in exchange for all of the Merus Shares
that it owns following completion of the Newco Sale, other than
those required to be held back to satisfy: (a) Dacha's operating
expenses up to completion of the Newco Sale and Share Capital
Reorganization; (b) all fees and expenses that have been incurred
and will be incurred in connection with the Newco Sale, the Share
Capital Reorganization and related matters, including advisory
fees; (c) compensation to certain consultants of Dacha for their
contributions to Dacha including in full and complete satisfaction
of any and all notice and/or bonus entitlements of such
consultants; and (d) the estimated net costs and expenses relating
to Dacha's delisting, Dacha ceasing to be a reporting issuer, the
cessation of all business activities by Dacha and its subsidiaries,
the filing of final tax returns by Dacha and its subsidiaries and
ultimately any winding up of Dacha and each of its subsidiaries
(collectively, the "Holdback Liabilities"). As set forth in
the Circular, after factoring in Dacha's estimate of the Holdback
Liabilities and assuming the Merus Shares at the time of the
completion of the Share Capital Reorganization are trading at the
same level as the Merus Shares closed on July 10, 2014 (being the
last trading day prior to the Circular being finalized, when the
Merus Shares closed at $2.31 per share), Dacha expects that
pursuant to the Share Capital Reorganization its shareholders will
receive, in exchange for each Dacha common share redeemed,
approximately 0.0838 of a Merus Share (or one Merus Share for
approximately every 12 Dacha common shares redeemed). Based on this
exchange ratio and a price of $2.31 per Merus Share, the implied
redemption price for the Dacha common shares as of the date of the
Circular was approximately $0.19 per share. The closing price
of the Merus Shares on July 17, 2014 was
$2.15.
Merus Shares will not be issued to registered Dacha shareholders
who are or appear to be, or Dacha has reason to believe are a U.S.
Person (as defined in Regulation S issued under the United States
Securities Act of 1933 (the "U.S. Securities Act")) or
resident in the United States of
America, its territories or possessions ("Non-Qualified
Shareholders") except, in Dacha's sole discretion, pursuant to
an available exemption from the registration requirements of the
U.S. Securities Act and any applicable state securities laws and
such Dacha shareholder has satisfied Dacha that the issuance of the
Merus Shares to it is in compliance with available exemptions from
the registration requirements. Non-Qualified Shareholders will
receive cash in lieu of Merus Shares unless Dacha determines they
are entitled to receive Merus Shares in accordance with the
foregoing. Instructions as to the sale, transfer or exercise
of the Merus Shares that would otherwise be delivered to
Non-Qualified Shareholders will not be accepted from such
shareholders. Dacha will use its commercially reasonable
efforts to sell such Merus Shares over the facilities of the
Toronto Stock Exchange on, or as promptly as reasonably possible
after, the redemption date under the Share Capital Reorganization.
The net proceeds of such sale, less any applicable brokerage
commissions, other expenses and withholding taxes (the "Sale
Proceeds"), will be paid to the Non-Qualified Shareholders, on
a pro rata basis, in full satisfaction of the redemption price.
Dacha's ability to sell the Merus Shares of Non-Qualified
Shareholders, and the price obtained therefor, will be dependent on
market conditions. Dacha will not be responsible, or subject to any
liability, for any failure to sell any Merus Shares of
Non-Qualified Shareholders at any particular time, for any
particular price or at all.
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
Newco Sale and the Share Capital Reorganization, receipt of the
requisite regulatory and shareholder approvals in respect thereof,
Dacha's intention to distribute the Merus Shares to its
shareholders and wind up its operations thereafter and the number
of Merus Shares that will be available for distribution.
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 to be materially
different from those expressed or implied thereby, and are
developed based on assumptions about such risks, uncertainties and
other factors set out herein, including but not limited to: the
risk that the transaction will not be approved by the Toronto Stock
Exchange, the TSX Venture Exchange or Nasdaq or the Dacha
shareholders; risks and uncertainties related to the transactions
not being completed in the event that the other conditions
precedent thereto are not satisfied; uncertainties regarding the
number and value of Merus Shares that will be owned by Dacha upon
completion of the Newco Sale and the amount of the Holdback
Liabilities 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 sale of Newco to Merus Labs is subject to a
number of conditions, including TSX Venture Exchange 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
Circular, 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.