MELFORT, SK, Feb. 23, 2015 /CNW/ - Hodgins Auctioneers Inc.
("HAI") (TSXV: HA) wishes to announce that it shall be
proposing to its shareholders a Plan of Arrangement ("Arrangement")
to restructure the HAI by distributing 100 per cent of the common
shares of its wholly owned subsidiary, Majesta Minerals Inc.
("MMI") to the shareholders of HAI and to provide
warrantholders and optionholders with options and warrants in the
spinout entity. Under the Arrangement each shareholder of HAI
will receive one (1) common share of MMI for every three (3) post
Consolidation (defined below) common shares held in HAI in the
aggregate of 3,786,250 common shares at a deemed price of
$0.15 per MMI common share for an
aggregate deemed consideration of $567,937. Under the Arrangement each
warrantholder of HAI will receive one (1) warrant of MMI for every
three (3) post Consolidation warrants held in HAI. Each
optionholder of HAI will receive one (1) option of MMI for every
three (3) post Consolidation options held in HAI. Particulars of
the exercise price and expiry dates of the warrants and options are
set out below.
Plan of Arrangement
The Arrangement is subject to court and regulatory approval. The
Arrangement is subject to a corporate law provision requiring
shareholder approval of at least 66 2/3 percent of the shareholders
and warrantholders, in separate classes, voting in person or by
proxy at the Meeting (as defined below) in favour of the
transaction. The Arrangement is subject to the securities law
provisions of MI 61-101 requiring shareholder approval of at least
50.1% of the shareholders and warrantholders, in separate classes,
voting in person or by proxy in favour of the transaction (in a
vote where the votes of certain non-arm's length
shareholders/warrantholders shall not be included in the
calculation). An Annual General and Special Meeting of the
securitiesholders of HAI has been called for March 13, 2015 (the "Meeting"). If
approved it is expected that the transaction will be completed
shortly after March 13, 2015. The
Arrangement will only be effected if MMI has obtained conditional
approval to list the common shares of MMI on the Canadian
Securities Exchange ("CSE") and satisfied such conditions
prior to the completion of the Arrangement. There is no
assurance that the CSE will grant the conditional
approval. If approved, upon the completion of the
Arrangement two companies will exist, as stand-alone public
entities. MMI will thereby become a reporting issuer in the
Provinces of British Columbia and
Alberta upon completion of the
Arrangement and a reporting issuer in Ontario upon listing on the CSE.
The Arrangement is being proposed to facilitate the separation
of HAI's current business activities into its constituent parts to
reflect the different activities that are intended to be pursued by
HAI (industrial) and MMI (mineral exploration). Because the
two business activities seek to attract different investors with
different risk profiles, it is believed that the ongoing financing
of the mining part of the business will be accomplished if the
mining business is in a separate entity. The Board of Directors has
obtained a fairness opinion from Pin Services Ltd. which fairness
opinion will be included in the Information Circular prepared in
support of the approval of the Arrangement.
The Arrangement will occur by statutory arrangement under the
Alberta Business Corporations Act ("ABCA"). The principle
features of the Arrangement are summarized below, and the following
is qualified in its entirety by reference to the full text of the
Arrangement Agreement and the Plan of Arrangement, which will be
incorporated by reference into an Information Circular. These items
will also be available for review at www.sedar.com under HAI's
profile.
The Arrangement shall become effective under the ABCA upon
filing of all requisite documents with the Registrar of
Corporations for the Province of Alberta. Pursuant to the Arrangement
Agreement, the requisite documents will only be filed upon
satisfaction of various conditions:
(a)
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the Arrangement
Agreement must be approved by the Shareholders and
Warrantholders;
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(b)
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the Arrangement must
be approved by the Court of Queen's Bench of Alberta;
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(c)
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all other consents,
orders, regulations and approvals, including regulatory and
judicial approvals and orders, required, necessary or desirable for
the completion of the Arrangement must have been obtained or
received, each in a form acceptable to HAI and MMI,
including:
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(i)
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TSXV approval of the
Arrangement; and
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(ii)
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conditional listing
approval for MMI on the CSE and the satisfaction of all conditions
necessary to effect the listing other than the timing of the
trading of the shares of MMI.
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(d)
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consolidation of the
common shares of HAI on a two (2) old for one (1) new basis
("Consolidation");
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(e)
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closing of a
non-brokered private placement by MMI (minimum $525,000 and maximum
$1,350,000 by the issuance of between 3,500,000 and 9,000,000
units at $0.15 per unit ("MMI Units"). Each unit to
consist of one (1) MMI common share and one half of one (1/2) MMI
common share purchase warrant entitling the holder of a full
warrant to purchase one (1) MMI common share at any time within 1
year of issuance for $0.225 per MMI common share)("MMI Private
Placement") MMI is offering to pay finders a 8% cash fee
plus ten (10) common shares for every one hundred (100) MMI Units
sold to subscriber introduced by finder at a deemed price of $0.15
per share. Insiders are not intending on participating in the
MMI Private Placement;
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(f)
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the number of
dissenting shareholders of HAI shall not exceed five (5) percent of
the issued and outstanding shares of the HAI; and
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(g)
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the Arrangement
Agreement must not have been terminated.
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If any condition set out in the Arrangement Agreement is not
fulfilled or performed, the Arrangement Agreement may be
terminated, or, in certain cases, one or more of the parties
thereto, as the case may be, may waive the condition in whole or in
part. Management of HAI believes that all material consents,
orders, regulations, approvals or assurances required for the
completion of the Arrangement will be obtained in the ordinary
course upon application thereof.
History of Majesta Minerals Inc. and Transactions Related to
the Arrangement
MMI was incorporated on August 6,
2014, to acquire a 25% interest in 9 uranium prospective
mineral claims ("Majesta Mineral Claims") which cover covers 39,125
hectares, 230 km north-north-west of La
Ronge, Saskatchewan on parts of NTS 74G-01, 74B-16 and
74H-04, and 24 km southwest of the active Key Lake
mill. Pursuant to the terms of the Purchase/Option
Agreement ("Purchase/Option Agreement") dated August 7, 2014 (as amended) between MMI and MRI
Holdings Ltd. ("MRI") (formerly Majesta Resources Inc.) the
following consideration was paid by MMI to MRI to acquire 25%
interest on August 8, 2014:
Nature of
Transaction
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Interest In Majesta
Mineral Claims
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Assumption
of Debt to
Durama
Enterprises
Limited
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Cash
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Common
Shares Of
Hodgins Auctioneers
Inc
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Exploration Work
Commitments
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Total Consideration
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Purchase
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25%
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$100,000
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nil
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2,000,000 ($100,000)
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$300,000
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$500,000
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HAI raised $365,000 by
non-brokered private placement on August
8, 2014. MMI borrowed $365,000 from the HAI in order to pay for: (a)
the exploration work commitment; and (b) $65,000 in soft costs associated with the Plan of
Arrangement. Pursuant to the Arrangement, MMI will issue 3,786,250
common shares at a deemed price of $0.15 per share to HAI in exchange for the debt
owing by MMI to HAI, being $567,937
consisting of: (a) $365,000; (b)
$100,000 in shares issued by HAI to
MRI Holdings Ltd. ("MRI") on August
8, 2014; and (c) $102,937 in
debts paid by HAI to complete the Arrangement. Following completion
of this issuance, HAI shall distribute the 3,786,250 common shares
of MMI to the shareholders of HAI on a pro rata basis pursuant to
the Arrangement. Each shareholder will retain its existing
common share in HAI. In addition, there will be 686,083 MMI
warrants issued by MMI with an exercise price of $0.45 per MMI common share expiring August 8, 2015. There will also be 66,667 MMI
options issued by MMI with an exercise price of $1.08 per MMI common share expiring August 24, 2017 and 61,500 MMI options issued by
MMI with an exercise price of $0.60
per MMI common share expiring March 6,
2015.
If the Minimum MMI Private Placement is raised ($525,000), pursuant to the Purchase/Option
Agreement, MMI will exercise an option ("Majesta Option #1")
to acquire an undivided 35% interest in the Majesta Mineral Claims
from MRI for the following consideration:
Nature of
Transaction
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Interest In Majesta
Mineral Claims
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Cash
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Common
Shares Of
MMI $0.15 per
share
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Exploration Work
Commitments
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Total Consideration
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Majesta
Option #1
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35%
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Nil
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1,333,333 ($200,000)
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$400,000
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$600,000
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If the Maximum MMI Private Placement is raised ($1,350,000), pursuant to the Purchase/Option
Agreement, MMI will exercise the Majesta Option #1 and a second
option ("Majesta Option #2") to acquire an undivided 40%
interest in the Majesta Mineral Claims from for the following
consideration:
Nature of
Transaction
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Interest In Majesta
Mineral Claims
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Cash
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Common
Shares Of
MMI $0.15 per
share
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Exploration Work
Commitments
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Total Consideration
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Majesta
Option #2
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40%
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$300,000
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666,666
($100,000)
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Nil
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$400,000
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If the maximum MMI Private Placement is raised, in addition to
the shares, warrants and options issued to HAI , the following
payments or share issuances will be made: (a) $400,000 will be segregated into an exploration
account to conduct the Phase 1 work program recommended by Mr.
Andrew J. Gracie in the November 27, 2014 MI 43-101 Report (which will be
attached to the Information Circular); (b) 1,333,333 common shares
of MMI will be issued to MRI at a deemed price of $0.15 per MMI share; (c) $300,000 cash will be paid to MRI; (d) 666,666
common shares of MMI will be issued to MRI at a deemed price of
$0.15 per MMI share; and (e)
$100,000 cash will be paid to Durama
Enterprises Limited ("DEL")(assumed as part of the 25%
acquisition of the Majesta Mineral Claims on August 8, 2014. If the maximum finders shares
were payable on all subscriptions this would result in an addition
900,000 MMI shares being issued.
Information on MRI Holdings Ltd.
MRI is owned by Randy Studer and
related parties (64.7%); Grant
Hodgins 27.5%; Barrie Jung
(5%) and 3 others 2.8%. Grant
Hodgins and Barrie Jung are
directors of HAI. Grant Hodgins is
the CEO of HAI. Randy Studer
is a director and controlling shareholder of DEL and an officer and
director of MMI. If the maximum MMI Private Placement is
raised, there will be 14,786,249 MMI shares issued and outstanding
consisting of: (a) 3,786,250 issued HAI (to be distributed to the
shareholders of HAI); (b) 9,000,000 shares to be issued pursuant to
the MMI Private Placement; and (c) 2,000,000 MMI shares issued to
MRI upon exercise of the Majesta Option #1 and Majesta Option
#2.
Share Consolidation to Be Effected by the HAI Concurrently
with the Plan of Arrangement
On January 12, 2015 the HAI
announced its intention to: (a) carry out the Consolidation; and
(b) seek to close a non-brokered private placement to raise
$550,000 by the sale of 11,000,000
units at $0.05 per unit ("HAI
Unit")(post Consolidation). Each unit shall consist of
one (1) post Consolidation common share and one half of one (1/2)
post Consolidation common share. Each full warrant would entitle
the holder to purchase a post Consolidation common share for
$0.075 any time with 1 year of
issuance of the warrant)("HAI Private Placement"). In
connection with this private placement, HAI will pay cash finder's
fees equal to 8% of the funds raised to eligible finders who
introduce subscribers to the private placement and issue one (1)
post Consolidation common share and one (1) post Consolidation
finder's fee warrant for every 10 HAI Units issued to eligible
subscribers. Each post Consolidation finder's fee warrant
will be issued to finders on the same terms as the warrants
comprising the HAI Units. Insiders are not intending on
participating in the HAI Private Placement.
The Arrangement would be closed after the consolidation but
before the closing of the HAI Private Placement. The
subscribers of the HAI Private Placement would not participate in
the distribution of the MMI securities. HAI has 22,717,500
common shares issued and outstanding. There would be
11,358,750 common shares post Consolidation which would be entitled
to participate in the distribution of MMI shares. There will
be 384,500 outstanding post Consolidation options which would be
entitled to distribution of MMI options and 2,058,250 outstanding
post Consolidation warrants entitled to distribution of MMI
warrants as part of the Arrangement. The warrants will have an
exercise price of $0.15 per post
Consolidation common share expiring August
8, 2015. There will be 200,000 options with an exercise
price of $0.36 per post Consolidation
common share expiring August 24,
2017. There will be 184,500 options with an exercise price of
$0.20 per post Consolidation common
share expiring March 6, 2015.
If the maximum HAI Private Placement is raised, there will be
22,358,750 common shares issued and outstanding consisting of: (a)
11,358,750 existing common shares post Consolidation; and (b)
11,000,000 shares to be issued pursuant to the HAI Private
Placement. If the maximum finders shares were payable on all
subscriptions this would result in an addition 1,100,000 post
Consolidation common shares being issued.
HAI expects that following the completion of the Arrangement and
if the MMI Private Placement is fully funded, MMI will own 100% of
the Majesta Mineral Claims and MMI will continue to focus on
pursuing the development of the Majesta Mineral Claims at Key Lake,
Saskatchewan. The Majesta Mineral Claims have no indicated
resources or reserves. The corporate headquarters of
MMI is 203, 221 – 10th Avenue SE, Calgary, Alberta, T2G 0V9.
Presented below is the anticipated corporate structure of HAI
before and after completion of the Arrangement.
Corporate Structure Prior to the Plan of Arrangement:
http://files.newswire.ca/1387/HA_Corp_Structure.pdf
Corporate structure after: (a) Consolidation; (b) Plan of
Arrangement; (c) Maximum MMI Private Placement; (d) Maximum HAI
Private Placement; and (e) Exercise of Majesta Option #1 and
Majesta Option #2 by MMI to acquire a 75% interest in the Majesta
Mineral Claims:
http://files.newswire.ca/1387/HA_Corporate_after.pdf
Non Approval of the Arrangement
If the Arrangement is not approved then MMI will remain a wholly
owned subsidiary of HAI. MMI will not be able to finance the
monies needed to exercise Majesta Option #1 or Majesta Option #2
within HAI without the approval of the TSX Venture Exchange
("TSXV") because HAI will be deemed to be carrying on a
"Change of Business" as defined under TSXV Policy 5.2. This
will require TSXV approval and a new Information Circular and
another shareholder meeting will need to be held. There is no
assurance that the TSXV will accept such "Change of
Business".
Trading Halt
The common shares of the HAI will remain halted until the
Arrangement is completed or terminated or pending receipt by the
TSXV of applicable documentation.
About Hodgins Auctioneers Inc.
Hodgins Auctioneers is an auction company conducting business in
Western Canada. For further information, please contact
Grant Hodgins, CEO, 306.752.2075 or
visit www.hodginsauctioneers.com
Reader Advisory
Except for statements of historical fact, this news release
contains certain "forward-looking information" within the meaning
of applicable securities law. Forward-looking information is
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. In particular, forward-looking
information in this press release includes, but is not limited to,
statements with respect to the timing and completion of the
proposed private placement and related information. Although we
believe that the expectations reflected in the forward-looking
information are reasonable, there can be no assurance that such
expectations will prove to be correct. We cannot guarantee future
results, performance or achievements. Consequently, there is no
representation that the actual results achieved will be the same,
in whole or in part, as those set out in the forward-looking
information.
The forward-looking information contained in this news
release is expressly qualified by this cautionary statement. We
undertake no duty to update any of the forward-looking information
to conform such information to actual results or to changes in our
expectations except as otherwise required by applicable securities
legislation.
"Completion of the transaction is subject to a number of
conditions, including Exchange acceptance and disinterested
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 transaction, any information released or received with
respect to the Arrangement may not be accurate or complete and
should not be relied upon. Trading in the securities of Hodgins
Auctioneers Inc. 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.";
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release)
SOURCE Hodgins Auctioneers Inc.