/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES./
VANCOUVER, BC, Aug. 20, 2021 /CNW/ - Kootenay Silver Inc.
("Kootenay" or the "Company") (TSXV: KTN), is pleased
to announce that its board of directors has unanimously approved a
spin-out of 80% of the Company's Canadian exploration assets (the
"Canadian Assets"), to its shareholders by way of a share
capital reorganization effected through a statutory plan of
arrangement (the "Arrangement"). The Canadian Assets are
held through Kootenay's wholly-owned subsidiary, Kootenay Resources
Inc. ("Spinco"). Under the Arrangement, Kootenay will
distribute 80% of the common shares (each, a "Spinco Share")
of Spinco to Kootenay's shareholders. Once the Arrangement becomes
effective, which will be triggered by the board of Kootenay,
Kootenay shareholders will ultimately own shares in two public
companies: Spinco, which will focus on the development of the
Canadian Assets, and Kootenay, which will continue with the
exploration and development of its Mexican assets.
James McDonald, Kootenay's
President and CEO stated, "We believe the spin-out of the
Canadian Assets will be very beneficial to shareholders. Among
other benefits, it will unlock the value of the Canadian Assets by
allowing it to be developed separately, by a skilled and
experienced management team, and it will allow our shareholders to
own shares in two companies."
Under the Arrangement, Kootenay's current shareholders will
receive Spinco Shares by way of a share exchange, pursuant to which
each existing common share of Kootenay will be exchanged for one
new common share of Kootenay (each, a "New Kootenay Share")
and 0.04 of a Spinco Share. Under the Plan of Arrangement,
outstanding options and warrants to purchase common shares of the
Company will be adjusted or replaced so that upon exercise, holders
will receive one New Kootenay Share and 0.04 Spinco Shares for each
option or warrant exercised.
The reorganization will be effected pursuant to the arrangement
provisions of the Business Corporations Act (British Columbia), and must be approved by the
Supreme Court of British Columbia
and by the affirmative vote of 66 2/3% of Kootenay's shareholders
at a shareholders' meeting to be held on September 15, 2021
(the "Meeting"). Upon receipt of approval from the
shareholders of Kootenay and Supreme Court approval of the
spin-out, Kootenay's board will determine a trigger date for Spinco
to complete a financing by way of private placement, rights
offering or other means, and apply for a listing on the TSX Venture
Exchange (the "TSXV") or other Canadian stock
exchange. The trigger date is anticipated before the end of
2021.
Kootenay expects that the Arrangement will increase shareholder
value by allowing capital markets to ascribe value to the Canadian
Assets independently of the other properties held by Kootenay. The
spin-out will provide new and existing shareholders more
flexibility as to their specific investment strategy and risk
profile. Kootenay also believes that having a separately funded
early-exploration business will accelerate development of the
Canadian Assets.
Completion of the Arrangement is subject to a number of
conditions, including the following:
- Kootenay shareholder approval at the Meeting;
- the approval of the Supreme Court of British Columbia; and
- TSXV approval for the Arrangement by Kootenay and the
substitutional listing of the New Kootenay Shares in place of the
existing Company common shares.
On August 10, the TSXV
conditionally accepted the terms of the Arrangement, subject to
standard conditions including court and shareholder approval.
Upon completion of the Arrangement, it is intended that Spinco
will be managed by James McDonald,
as the President and Chief Executive Officer and Rajwant Kang, as the Chief Financial Officer.
Spinco's board of directors will consist of James McDonald, Rajwant
Kang and Kenneth Berry.
Changes and additions to the management team and board will be made
as needed as the Canadian Assets progress.
Additional details of the spin-out transaction will be included
in an information circular to be mailed to shareholders of Kootenay
in August, 2021 in connection with the Meeting. The Arrangement is
expected to close on or about September 30, 2021.
About Kootenay Silver Inc.
Kootenay Silver Inc. is an exploration company actively engaged
in the discovery and development of mineral projects in the Sierra
Madre Region of Mexico and in
British Columbia, Canada.
Supported by one of the largest junior portfolios of silver assets
in Mexico, Kootenay continues to
provide its shareholders with significant leverage to silver
prices. The Company remains focused on the expansion of its current
silver resources, new discoveries and the near-term economic
development of its priority silver projects located in prolific
mining districts in Sonora, State
and Chihuahua, State, Mexico,
respectively.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Certain statements in this press release may be considered
forward-looking information. These statements can be identified by
the use of forward-looking terminology (e.g., "expect","
estimates", "intends", "anticipates", "believes", "plans" or
variations of such words and phrases or statements that certain
actions, events or results "will" occur). Forward-looking
statements in this press release include, but are not limited to,
statements regarding the completion of the Arrangement; the
completion of the conditions of the Arrangement; the listing of
Spinco on the TSXV; the proposed board of directors and management
team of Spinco; and the effects of the Arrangement on Kootenay and
Spinco.
Such forward-looking information involves known and unknown
risks -- including the conditions of the Arrangement not being met;
the Arrangement not being completed; the availability of funds; the
results of financing and exploration activities; unanticipated
costs, expenses, or liabilities associates with the Arrangement;
the interpretation of exploration results and other geological
data; or unanticipated costs and expenses and other risks
identified by Kootenay in its public securities filings that may
cause actual events to differ materially from current expectations.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. Kootenay does not undertake to update any
forward-looking statements, except as may be required by applicable
securities laws.
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 Kootenay Silver Inc.