NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF U.S. SECURITIES LAWS.
Himalayan Capital Corp. ("Himalayan" or the "Corporation") (TSX VENTURE:HIM.P)
is pleased to announce that it has entered into a letter of intent dated
November 17, 2010 (the "Letter of Intent") with PyroGenesis Canada Inc.
("PyroGenesis"), a private corporation existing under the laws of Canada, with
respect to a proposed business combination of Himalayan and PyroGenesis (the
"Transaction").
Pursuant to the terms of the Letter of Intent, the principal terms of the
Transaction are as follows:
- Prior to the Transaction, PyroGenesis will complete a brokered private
placement (the "Private Placement") of subscription receipts by no later than
December 17, 2010 for aggregate gross proceeds of up to $5,000,000, but in no
case less than $3,000,000;
- Prior to the closing of the Private Placement, PyroGenesis will complete a
stock split on the basis of approximately 21.0233 common shares of PyroGenesis
for each common share in the capital of PyroGenesis previously issued and
outstanding (the "Stock Split");
- Immediately prior to the Transaction, Himalayan will complete a share
consolidation on the basis of one common share of Himalayan for each two common
shares in the capital of Himalayan previously issued and outstanding (the
"Consolidation") and change its name to "PyroGenesis Canada Inc." or such other
name as may be determined by PyroGenesis (the "Name Change"). The outstanding
options to purchase common shares of Himalayan and common share purchase
warrants of Himalayan shall be adjusted in accordance with their terms to
reflect the Consolidation;
- The Transaction will be structured as an amalgamation (the "Amalgamation")
between PyroGenesis and a wholly-owned subsidiary of Himalayan ("Himalayan
Sub"), whereby the securities of PyroGenesis will be exchanged for
like-securities of Himalayan on a one-for-one post-Consolidation basis and
PyroGenesis and Himalayan Sub will form an amalgamated entity ("Amalco"); and
- The board of directors of the Corporation will be increased to up to 5
directors to be reconstituted all with nominees of PyroGenesis.
The Corporation is a capital pool company and intends for the Transaction to
constitute the "Qualifying Transaction" of the Corporation as such term is
defined in the policies of the TSX Venture Exchange (the "Exchange"). The
Transaction is an arm's length transaction and upon completion thereof, it is
expected that the Corporation will be a Tier 2 Technology/Industrial Issuer.
Amalgamation
PyroGenesis and Himalayan shall enter into a business combination agreement (the
"Business Combination Agreement") whereby such parties shall agree to enter into
a business combination structured in the form of an amalgamation under the laws
of Canada between PyroGenesis and Himalayan Sub, whereby each post-Stock Split
common share of PyroGenesis shall be exchanged for one post-Consolidation common
share of Himalayan.
Upon completion of the Stock-Split and completion of the Private Placement and
concurrent non-brokered private placement as further described below, assuming
the financings are fully subscribed, PyroGenesis shall have approximately
59,687,593 common shares issued and outstanding which shall be exchanged for
59,687,593 post-Consolidation common shares of Himalayan issued at a deemed
price of $0.80 per share. Currently, there are 2,350,000 common shares of
Himalayan issued and outstanding which will be consolidated into 1,175,000
common shares of Himalayan. Upon completion of the Transaction, it is
anticipated that the holders of Pyrogenesis common shares and current holders of
Himalayan common shares will own approximately 98.1% and 1.9%, respectively, of
the issued and outstanding post-Consolidation common shares of the resulting
issuer. The post-Consolidation shares to be issued pursuant to the proposed
Transaction will be subject to the escrow requirements of the Exchange, if
applicable.
As a result of the Transaction, Amalco will become a wholly-owned subsidiary of
the Corporation and Himalayan will carry on the business of PyroGenesis as
currently constituted. The Business Combination Agreement will contain
representations and warranties between the parties that are customary for
transactions of a similar nature.
Description of PyroGenesis
PyroGenesis is a leader in the design, development, manufacture and
commercialization of advanced plasma waste destruction and waste to energy
systems. In addition to development and engineering services, the Company offers
plasma torches, and two distinct systems that use the intense energy of plasma
to rapidly and efficiently gasify and vitrify any type of waste without the need
for pre-sorting. PyroGenesis' plasma systems serve the marine vessel market and
a variety of land-based unit markets, and its end-users include a number of
high-profile customers, including the U.S. Navy and the U.S. Air Force.
The only shareholders of PyroGenesis who each hold a controlling interest in
PyroGenesis are Photis Peter Pascali of Montreal, Quebec, who is a principal of
PyroGenesis and is currently a director and the President and Chief Executive
Officer of PyroGenesis and Peter P. Pascali of Cyprus.
Summary of Financial Information
Financial statements, as required by the Exchange, were not available at the
time of this press release. The financial statements and summary financial
information will be disclosed at a later date in accordance with the policies of
the Exchange.
Private Placement
In connection with the Transaction, PyroGenesis has engaged Cormark Securities
Inc. and Versant Partners Inc. (the "Agents"), to act as co-lead agents in a
syndicate for purposes of an offering, by way of the Private Placement, of
subscription receipts for aggregate gross proceeds of up to $5,000,000, but in
no case less than $3,000,000, at a price of $0.80 (the "Issue Price") per
subscription receipt. Each such subscription receipt will entitle the holder to
acquire one common share in the capital of PyroGenesis upon satisfaction of the
Release Conditions (as defined below). The Private Placement will be completed
on a best efforts basis. The Agents shall receive a cash commission equal to
7.0% of the gross proceeds (the "Agency Fee") and shall receive that number of
broker warrants (the "Broker Warrants") that is equal to 7.0% of the number of
subscription receipts issued pursuant to the Private Placement. Each Broker
Warrant shall entitle the holder to purchase one common share in the capital of
PyroGenesis for a period of 12 months from the date of issuance at the Issue
Price. PyroGenesis will reimburse the Agents for reasonable fees and
disbursements of the Agents' legal counsel and reasonable "out-of-pocket"
expenses of the Agents.
The gross proceeds raised in the Private Placement will be deposited into escrow
with an escrow agent. Upon receipt of the conditional approval of the
Transaction by the Exchange and confirmation from Himalayan and PyroGenesis that
all conditions under the Business Combination Agreement have been satisfied or
waived (the "Release Conditions"), the Agency Fee and the Agents' expenses shall
be paid to the Agents and the remainder of the gross proceeds and any interest
payable thereon shall be released to PyroGenesis. In the event that the Release
Conditions are not satisfied within 90 days of the closing of the Private
Placement, the gross proceeds shall be returned to the subscribers to the
Private Placement. If the Private Placement is not completed because PyroGenesis
enters into an alternative transaction which prevents the completion of the
Transaction, then PyroGenesis shall be required to pay the Agents a fee of
$300,000, as well as the reasonable expenses of the Agents incurred to that
time.
Concurrent to the brokered Private Placement, PyroGenesis shall undertake a
non-brokered private placement of up to $2.75 million in common shares of
PyroGenesis at a price of $0.80 per share. The gross proceeds raised from the
non-brokered private placement will be immediately available to PyroGenesis upon
closing of such offering.
Management and Board of Directors
Subject to and following the completion of the Transaction and all necessary
approvals, the following individuals are expected to be the directors and
officers of the Corporation:
Photis Peter Pascali (proposed President, Chief Executive Officer and director)
Mr. Pascali is the original founder of PyroGenesis and is the President and
Chief Executive Officer and a director of PyroGenesis. In this capacity, he is
responsible for the overall vision of PyroGenesis as well as the day-to-day
development and execution of its business strategy. Prior to his involvement
with PyroGenesis, Mr. Pascali spent 12 years in the investment banking business.
Mr. Pascali holds a Bachelor of Science and an MBA from McGill University.
Gillian Holcroft (proposed Chief Operating Officer and director)
Ms. Holcroft joined PyroGenesis in 2003 and currently serves as the Chief
Operating Officer and a director of PyroGenesis. Ms. Holcroft oversees
Pyrogenesis' team of engineers and technicians in the execution of its various
contracts. Ms. Holcroft is also responsible for furthering strategic growth,
partnerships and new business opportunities at PyroGenesis. Prior to joining
PyroGenesis, Ms. Holcroft worked for over 12 years at Noranda Inc. (now
Xstrata), in which she was involved in many aspects of the company's operations,
including the start up of a $750 million production facility. Ms. Holcroft holds
Bachelor's and Master's degrees in Chemical Engineering from McGill University.
Pierre Carabin (proposed Chief Engineer)
Mr. Carabin joined PyroGenesis in 1998 as an R&D Engineer and was instrumental
in the original development, design and engineering of the company's waste to
energy systems. Presently serving as Chief Engineer of PyroGenesis, Mr. Carabin
is responsible for building and motivating the company's engineering team, as
well as overseeing the process engineering product design at PyroGenesis. Mr.
Carabin has 20 years of experience in the chemical process and process
development. He has authored nearly 40 technical papers and presentations. Mr.
Carabin holds a Bachelor's and Master's degree in chemical engineering from
McGill University.
Aida Kaldas (proposed Technology Development Manager)
Ms. Kaldas joined PyroGenesis in 2001 and is the Technology Development Manager
at PyroGenesis. In this capacity, Ms. Kaldas leads the technology development
activities for both marine and land-based plasma gasification systems. Her
responsibilities include assessing new ideas for process improvement, managing
all of the contract research activities and providing recommendations to the
engineering team for improvement to PyroGenesis' commercial installations. Ms.
Kaldas has over 20 years of technology development experience and is the author
of numerous technical publications. Prior to joining PyroGenesis, Ms. Kaldas
spent many years managing development programs for Orica (formerly ICI
Explosives) where she led a team of engineers, scientists and technicians in the
research, development and implementation of technologies. Ms. Kaldas holds a
Bachelor's degree in chemical engineering from Cairo University and a Master's
degree in engineering science from the University of Western Ontario.
Alan Curleigh (proposed director)
Mr. Curleigh has managed the responsibilities of the Chair of the Board of the
Canadian Commercial Corporation for seven years until November, 2009. During
this term, he, together with ten board colleagues, oversaw the affairs of this
federal Crown Corporation. Mr. Curleigh is currently the Chair of the Audit
Committee for the Department of Veterans Affairs Canada. Mr. Curleigh also sits
on the board of Northstar Trade Finance Inc., a Canadian financial institution
engaged in the financing of Canadian export transactions. Mr. Curleigh has spent
many years as a senior executive and board member of a major Canadian
engineering contracting firm and has participated in representing Canadian
exporter interests in Canada's evolving international trade agenda which led to
his engagement as a board member and then chair of one of Canada's leading
manufacturing and international trade advocacy groups. Mr. Curleigh has also sat
on the steering committee of the Public Enterprise Governance Centre in Ottawa
and has been a member of the Advisory Board of the Business Faculty of the
University of New Brunswick, his alma mater, and is a visiting faculty member at
the Directors College, a corporate governance institution established through
the collaboration of the Conference Board of Canada and McMaster University.
John Kubricky (proposed director)
Mr. Kubricky presently serves as a member of the scientific advisory board of
NanoInk, Inc., an emerging growth technology company specializing in
nanometer-scale manufacturing and applications development for the life
sciences, engineering, pharmaceutical, and education industries. Mr. Kubricky is
the former U.S. Deputy Under Secretary of Defense (Advanced Systems and
Concepts), a position he held from 2006 to 2009. During his tenure, Mr. Kubricky
was responsible for the U.S. Department of Defense (DoD) applied technology
programs that demonstrated urgently needed defense capabilities, comparative
tests of domestic and foreign defense systems, technology transition and
acceleration programs, and defense manufacturing research and development.
Previously, he served as the U.S. Department of Homeland Security's Director of
Systems Engineering and Development within the Science & Technology Directorate.
In this position, he was responsible for integrating technologies into systems
for demonstration, operational test and evaluation, and pre-production
prototypes. He also served as the Director of the U.S. Homeland Security
Advanced Research Projects Agency, which manages more than 100 advanced
technology programs under contracts with the private sector.
Sponsorship of Qualifying Transaction
The Corporation anticipates that the Transaction will be exempt from the
Exchange's sponsorship requirement pursuant to Section 3.4 of Policy 2.2 -
Sponsorship and Sponsorship Requirements of the Exchange's Corporate Finance
Manual.
Non-solicitation
During the term of the Letter of Intent, neither PyroGenesis nor Himalayan
shall, directly or indirectly, solicit, discuss, encourage or accept any offer
for their purchase or the purchase of their business or assets.
Conditions to closing
The execution and delivery of the Business Combination Agreement and the
completion of the Transaction shall be subject to the satisfaction of a number
of conditions, including, but not limited to: i) completion of satisfactory due
diligence investigations; ii) delivery of legal opinions, officer's certificates
and other standard closing documentation; iii) conditional approval of the
Transaction by the Exchange; iv) the approval of the Stock Split and
Amalgamation by a special majority of the shareholders of PyroGenesis and the
approval of the Consolidation, Name Change and Continuance by a special majority
of shareholders of Himalayan; v) receipt of all required regulatory and third
party approvals, consents, waivers and compliance with all other applicable
regulatory requirements and conditions; vi) Himalayan having maintained its
current listing on the Exchange; vii) the completion of the Private Placement;
and viii) the absence of any material adverse effect on the financial and
operational conditions or the assets of PyroGenesis or Himalayan.
Termination Provisions
The Letter of Intent shall terminate with the parties having no obligations to
each other, other than in respect of certain provisions pertaining to expenses
and confidentiality, on the date as follows: i) automatically if the
Amalgamation Agreement is not executed on or before 5:00 pm (Vancouver time) on
December 17, 2010 or such later date as the parties may agree upon in writing;
ii) automatically if all required regulatory approvals are not received on or
before 5:00 pm (Vancouver time) on January 31, 2011, or such later date as the
parties may agree upon in writing; iii) automatically if the Transaction is not
closed on or before 5:00 pm (Vancouver time) on February 15, 2011, or such later
date as the parties may agree upon in writing; iv) by the Corporation, upon
providing written notice to PyroGenesis by no later than 11:59 pm (Vancouver
time) on December 17, 2010 or such later date as the parties may agree upon in
writing, that acting reasonably and in good faith, it has determined that as a
result of its due diligence review it is not prepared to complete the
Transaction; and v) by PyroGenesis, upon providing written notice to the
Corporation by no later than 11:59 pm (Vancouver time) on December 17, 2010 or
such later date as the parties may agree upon in writing, that acting reasonably
and in good faith, it has determined that as a result of its due diligence
review it is not prepared to complete the Transaction.
Other Information and Updates
The Corporation's shares are currently listed for trading on the Exchange. In
accordance with Exchange policy, however, the Corporation's shares are currently
halted from trading and will remain halted until such time as determined by the
Exchange, which, depending on the policies of the Exchange, may or may not occur
until the completion of the Transaction.
The Corporation will provide further details in respect of the Transaction, in
due course by way of press release. However, the Corporation will in due course
make available to the Exchange all financial information as required by the
Exchange, and will disclose at a later date summary financial information
derived from such statements, in accordance with the policies of the Exchange.
Cautionary Statements
Certain statements contained in this press release constitute forward-looking
information. These statements relate to future events or future performance. The
use of any of the words "could", "intend", "expect", "believe", "will",
"projected", "estimated" and similar expressions and statements relating to
matters that are not historical facts are intended to identify forward-looking
information and are based on the Corporation's current belief or assumptions as
to the outcome and timing of such future events. Actual future results may
differ materially. In particular, this release contains forward-looking
information relating to the intention of the parties to enter into the Business
Combination Agreement, the completion of the Stock Split, Private Placement and
the Amalgamation and the completion of the Consolidation and Name Change.
Various assumptions or factors are typically applied in drawing conclusions or
making the forecasts or projections set out in forward-looking information.
Those assumptions and factors are based on information currently available to
the Corporation. The material factors and assumptions include the parties to the
Business Combination Agreement being able to obtain the necessary director,
shareholder and regulatory approvals; Exchange policies not changing; and
completion of satisfactory due diligence. Risk Factors that could cause actual
results or outcomes to differ materially from the results expressed or implied
by forward-looking information include, among other things: conditions imposed
by the Exchange, the failure to obtain the required directors' and shareholders'
approval to the Amalgamation; changes in tax laws, general economic and business
conditions; and changes in the regulatory regulation. The Corporation cautions
the reader that the above list of risk factors is not exhaustive. The
forward-looking information contained in this release is made as of the date
hereof and the Corporation is not obligated to update or revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as required by applicable securities laws. Because
of the risks, uncertainties and assumptions contained herein, investors should
not place undue reliance on forward-looking information. The foregoing
statements expressly qualify any forward-looking information contained herein.
This press release does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities in the United States. The securities have not
been and will not be registered under the United States Securities Act of 1933,
as amended (the "U.S. Securities Act") or any state securities laws and may not
be offered or sold within the United States or to U.S. Persons unless registered
under the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.
Completion of the Transaction is subject to a number of conditions, including
but not limited to, Exchange acceptance and if applicable pursuant to Exchange
Requirements, majority of the minority shareholder approval. Where applicable,
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 or filing statement to be prepared in connection with the Transaction,
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
a capital pool company should be considered highly speculative.
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