LSC Lithium Corporation (“
LSC” or together with
its subsidiaries, the “
Company”) (TSXV:LSC) is
pleased to announce that it has entered into an arrangement
agreement (the “
Arrangement Agreement”) with
Pluspetrol Resources Corporation B.V.
(“
Pluspetrol”), pursuant to which Pluspetrol will
acquire all of the outstanding common shares of LSC by way of a
plan of arrangement (the “
Arrangement”) under the
Business Corporations Act (British Columbia).
Under the Arrangement, Pluspetrol would acquire
100% of the issued and outstanding common shares of LSC for cash
consideration of C$0.6612 per LSC share (the
“Transaction”). The Transaction was unanimously
approved at the meeting of the LSC Board of Directors and the LSC
Board of Directors recommends that LSC shareholders vote in favour
of the Transaction. The Transaction provides total consideration of
approximately C$111 million.
Transaction Highlights
- The Transaction is the result of the previously announced
strategic review process conducted by BMO Capital Markets as lead
banker and Haitong Securities of Hong Kong, which was focused on
Asia.
- The strategic review process, while in place since August 2017,
was accelerated upon the release of LSC’s updated Resource Estimate
on its Pozuelos Project in November 2018 and its robust Preliminary
Economic Assessment on its Pozuelos-Pastos Grandes Project in
December 2018, and recently Pluspetrol was granted exclusivity and
has completed extensive due diligence.
- The C$0.6612 cash consideration offered for each LSC share
represents a 30% premium to LSC’s 30-day volume-weighted average
share price on the TSX-V for the period ending January 14,
2019.
- The consideration is all cash and is not subject to a financing
condition.
- The consideration secures immediate value for LSC shareholders,
eliminating technical and financing risks involved in advancing
LSC’s development projects.
- Shareholders who collectively own approximately 52% of LSC’s
outstanding shares have entered into support agreements pursuant to
which they have agreed to vote their shares in favour of the
Transaction.
- LSC is entitled to terminate the Arrangement Agreement in order
to enter into a definitive agreement with respect to a superior
proposal, in which case Pluspetrol is entitled to a termination fee
of C$4,486,000.
- Shareholders subject to the support agreements are released
from the support agreements in the event LSC terminates the
Arrangement Agreement to enter into a definitive agreement with
respect to a superior proposal and such superior proposal provides
for consideration of C$0.80 or higher.
- LSC, under the terms of the Arrangement, is not entitled to
solicit third parties or provide access to data under NDA’s or
otherwise.
Stephen Dattels, Chairman of the Board of LSC,
commented, “LSC has been able to produce a large lithium carbonate
resource at its Pozuelos-Pastos Grandes Project as well as a robust
PEA. It also has an extensive portfolio of high quality lithium
exploration assets, most notably at Rio Grande and Salinas Grandes.
However, since February of 2018, capital markets have been
difficult for junior lithium explorers in Argentina and elsewhere,
resulting in a correction in market valuations across the board.
Notwithstanding this market correction, and due to our progress in
advancing our top-tier assets, we have achieved an opportunity for
shareholders to realise a liquidity event at normal market
premiums. LSC’s team of technical and corporate professionals led
by Ian Stalker are deserving of substantial credit for delivering
this result and in recognition thereof, Ian Stalker has been
granted a share award by LSC’s Board of Directors of one million
shares.”
BMO Capital Markets is acting as financial
advisor to LSC. BMO Capital Markets has provided an opinion to
LSC’s Board of Directors that, as of the date of the opinion, and
subject to the assumptions, limitations and qualifications on which
such opinion is based, the consideration to be received by LSC
shareholders is fair, from a financial point of view, to LSC
shareholders.
Transaction Details
The Transaction is subject to approval by LSC
shareholders, court approval and customary closing conditions. Full
details of the Transaction will be set out in LSC’s management
information circular that LSC will prepare in respect of the
meeting of shareholders to approve the Transaction. LSC intends to
mail the management information circular in mid-February 2019. The
Transaction is expected to close by the end of March 2019.
The Arrangement Agreement includes customary
provisions, including non-solicitation of alternative transactions,
a right to match superior proposals in favour of Pluspetrol and
fiduciary-out provisions. LSC has agreed to pay a termination fee
of approximately C$4,486,000 million to Pluspetrol upon the
occurrence of certain termination events.
Directors and officers of LSC, along with
certain other shareholders of LSC, have entered into support
agreements with Pluspetrol pursuant to which they have agreed,
among other things, to support the Transaction and vote their LSC
securities in favour of the Transaction. In total, shareholders
owning approximately 52% of the outstanding shares of LSC have
entered into such support agreements.
Pursuant to the Transaction, the Board of
Directors of LSC has approved the issuance of 1 million bonus
shares to Ian Stalker, President & CEO issued at a deemed value
of C$0.6612 per share.
LSC and Rincon Ltd. (formerly Enirgi Group
Corporation), have entered into a termination agreement dated
January 14, 2019, terminating the following agreements between the
parties: (i) relationship agreement dated December 22, 2016, as
amended February 14, 2017; (ii) head office management support
agreement dated December 22, 2016, as amended February 14, 2017;
(iii) mining management support agreement dated December 22, 2016,
as amended February 14, 2017; and (iv) memorandum of understanding
dated December 22, 2016.
ABOUT LSC LITHIUM
CORPORATION
LSC Lithium has amassed a large portfolio of
prospective lithium rich salars and is focused on developing its
material projects: Pozuelos and Pastos Grandes Project, Rio Grande
Project and Salinas Grandes Project. All LSC tenements are located
in the “Lithium Triangle,” an area at the intersection of
Argentina, Bolivia, and Chile where the world’s most abundant
lithium brine deposits are found. LSC Lithium has a land package
portfolio totaling approximately 300,000 hectares, which represents
extensive lithium prospective salar holdings in Argentina.
ABOUT PLUSPETROL
Pluspetrol is the leading oil and gas private
company in Latin America, with presence in 3 continents and
operations in 5 countries: Argentina, Angola, Bolivia, Colombia and
Perú. Pluspetrol is also positioned as an important protagonist in
unconventional reservoirs in Argentina, which makes it a key global
player in this strategic resource.
For further information please
contact: LSC Lithium Corporation Ian StalkerPresident
& Chief Executive Officer40 University Avenue, Suite 605,
TorontoON Canada M5J 1T1+416 306 8380Email:
info@lsclithium.comWeb: lsclithium.com
Forward-Looking Statements
Certain statements contained in this news
release constitute forward-looking information. These statements
relate to future events or future performance, including statements
as to the likelihood and timing of completing the Arrangement and
the Transaction, likelihood of receiving shareholder approval for
the Transaction, ability to receive regulatory, court and other
required approvals of the Transaction, and timing for mailing of
the circular and meeting date. The use of any of the words “could”,
“anticipate”, “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 LSC's current belief
or assumptions as to the outcome and timing of such future events.
Whether actual results and developments will conform with LSC's
expectations is subject to a number of risks and uncertainties
including factors underlying management's assumptions, such as
risks related to: title, permitting and regulatory risks;
exploration and the establishment of any resources or reserves on
the LSC properties; volatility in lithium prices and the market for
lithium; exchange rate fluctuations; volatility in LSC’s share
price; the requirement for significant additional funds for
development that may not be available; changes in national and
local government legislation, including permitting and licensing
regimes and taxation policies and the enforcement thereof;
regulatory, political or economic developments in Argentina or
elsewhere; litigation; title, permit or license disputes related to
interests on any of the properties in which the Company holds an
interest; excessive cost escalation as well as development,
permitting, infrastructure, operating or technical difficulties on
any of the Company's properties; risks and hazards associated with
the business of development and mining on any of the Company's
properties. Actual future results may differ materially. The
forward-looking information contained in this release is made as of
the date hereof and LSC 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.
For more information, see the Company's filing statement on SEDAR
at www.sedar.com.
Neither the TSX Venture Exchange Inc. 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.
The TSX Venture Exchange Inc. has neither
approved nor disapproved the contents of this press
release.
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