Rick Rule to
Join Sprott Investment Team and be Nominated to Board of
Directors
TORONTO, Jan. 24 /PRNewswire-FirstCall/ - Sprott Inc.
(TSX:SII) ("Sprott") today announced the signing of a
definitive share exchange agreement (the "Agreement") with
Arthur Richards Rule IV and the Rule
Family Trust U/A/D 12/17/98 (the
"Seller") for the acquisition (the "Transaction") of
all of the outstanding stock of Rule Investments, Inc. (the owner
of Global Resource Investments, Ltd.), Terra Resource Investment
Management, Inc. and Resource Capital Investment Corporation
(collectively, the "Global Companies"), as first
announced by the Company on September 22,
2010. Closing is expected to occur in early February 2011, subject to the timing of necessary
regulatory approvals.
"We are pleased to have the well respected team
of investment professionals Rick has built join our organization,
and look forward to working with them to continue to deliver
superior investment performance to our clients and shareholders,"
commented Eric Sprott, Chairman of
Sprott.
"With our due diligence activities complete, and
integration planning underway, our combined team will be moving
quickly to offer compelling new investment opportunities to
Canadian investors, while continuing to grow our client base both
in the United States and
globally," said Peter Grosskopf, CEO
of Sprott. "We remain convinced that our objectives of expanding
our investment management capabilities, increasing our US
distribution capabilities, and diversifying our asset and earnings
profile will be well served by having the Global Companies join the
Sprott organization. Combined, the companies' Assets Under
Management would have been approximately $9.0 billion as of December 31, 2010."
"Much like the mutual funds and hedge funds
managed by Sprott Asset Management, the Global Companies' pooled
investment vehicles have performed exceptionally well in 2010,
highlighting the degree of investment expertise that the Global
Companies bring to the combined organization," added Mr.
Grosskopf.
"The entire team at the Global Companies is
delighted to be joining Sprott Inc. We expect that our clients will
benefit from the help of the Sprott team, and that this will be a
true win-win for all stakeholders; clients, employees, and
shareholders of both organizations," commented Rick Rule, founder of the Global Companies.
Transaction Terms
Sprott will issue 20 million common shares in
the capital of Sprott ("Sprott Shares") in consideration for
the acquisition of the Global Companies. Approximately 500,000 of
the Sprott Shares will be received by employees of the Global
Companies after closing. The Seller has agreed to forego any
general quarterly or special dividends, if any, associated with
Sprott's 2010 financial performance. In addition, the Seller and
certain current and future employees of the Global Companies will
further be entitled to receive, on the date that is five years
following the closing of the Transaction, additional shares (the
"Earn-out Shares") based on the aggregate EBITDA of the
Global Companies during such five year period, and the performance
of the Global Companies relative to the balance of Sprott. For
every dollar that the aggregate EBITDA exceeds US$40 million, the Seller and certain current and
future employees shall receive 0.145455 Earn-out Shares, up to a
maximum of eight million Earn-out Shares in aggregate.
Subject to certain conditions, including minimum AUM thresholds at
the Global Companies, if aggregate EBITDA of US$95 million is reached prior to the end of such
five-year period, the Seller and certain employees as noted above
shall receive all the Earn-out Shares at such time; provided that
the Seller and these specific employees shall not receive such
shares prior to three years after the closing of the
Transaction. Each of the Seller and the employees of the
Global Companies receiving Sprott Shares or Earn-out Shares will
enter into lock-up agreements with Sprott whereby they will agree
not to directly or indirectly sell their shares without Sprott's
consent, subject to certain conditions, with one-third of such
shares being released from lock up every year for three years from
the date of issuance.
Upon closing of the Transaction, Mr. Rule will
join the investment and management team at Sprott for a minimum
three year term and will be included on management's slate of
nominees for the election of directors at Sprott's next annual
meeting of shareholders. The Transaction is an arm's length
transaction and is subject to the approval of all applicable
regulatory authorities, including the Toronto Stock Exchange, as
well as other third parties, as necessary.
Forward-Looking Statements
This release contains "forward-looking
statements" which reflect the current expectations of Sprott Inc.
These statements reflect management's current beliefs with respect
to future events and are based on information currently available
to management. Forward-looking statements in this press release
include, but are not limited to, the closing of the Transaction and
the anticipated benefits from the Transaction.
Forward-looking statements involve significant known and unknown
risks, uncertainties and assumptions, including with respect to the
closing of the Transaction, the timing and receipt of all
applicable regulatory approvals and third party consents, the
anticipated benefits from the Transaction and the satisfaction of
other conditions to the completion of the Transaction. Many
factors could cause actual results, performance or achievements to
be materially different from any future results, performance or
achievements that may be expressed or implied by such
forward-looking statements including, without limitation, those
listed under the heading "Risk Factors" in Sprott's annual
information form dated March 30, 2010
as well as that the closing of the Transaction could be delayed if
the necessary regulatory approvals and third party consents are not
obtained within the timelines planned or the Transaction may not be
completed at all if these approvals are not obtained or any other
conditions to closing are not satisfied. Should one or more of
these risks or uncertainties materialize, or should assumptions
underlying the forward-looking statements prove incorrect, actual
results, performance or achievements could vary materially from
those expressed or implied by the forward-looking statements
contained in this release. Although the forward-looking statements
contained in this release are based upon what Sprott believes to be
reasonable assumptions, management cannot assure investors that
actual results, performance or achievements will be consistent with
these forward-looking statements. These forward-looking statements
are made as of the date of this release and Sprott does not assume
any obligation to update or revise them to reflect new events or
circumstances, except as required by law.
About the Global Companies
The Global Companies are leading experts in the
natural resource investing sector providing both investment
management and specialized broker services. The Global Companies
are led by Rick Rule, a highly
respected natural resources investor with over 35 years of
experience in the investment industry, and have developed a highly
specialized team of resource investing experts, including
geologists and mining engineers. They offer their expertise through
pooled investment vehicles, managed accounts and brokerage accounts
and have delivered strong investment performance to their clients.
The Global Companies currently administer or manage more than
US$1.8 billion in assets.
About Sprott Inc.
Sprott Inc. is a leading independent asset
manager dedicated to achieving superior returns for its clients
over the long term. The company currently operates through
three distinct business units: Sprott Asset Management LP,
Sprott Private Wealth LP and Sprott Consulting LP. Sprott
Asset Management is the investment manager of the Sprott family of
mutual funds and hedge funds and discretionary managed accounts;
Sprott Private Wealth provides wealth management services to high
net worth individuals; and Sprott Consulting provides management,
administrative and consulting services to other companies,
including Sprott Resource Corp. (TSX: SCP) and Sprott
Resource Lending Corp. (TSX: SIL; NYSE Amex: SILU). Sprott
Inc. is headquartered in Toronto,
Canada, and is listed on the Toronto Stock Exchange under
the symbol "SII". For more information on Sprott Inc., please
visit www.sprottinc.com.
SOURCE Sprott Inc.
Copyright . 24 PR Newswire