O2 Capital Corp. of Calgary, AB (TSX VENTURE:OCA.P) ("O2" or the "Corporation")
is pleased to announce that it has entered into a letter of intent dated
November 20, 2009 (the "LOI") pursuant to which it intends to acquire all of the
issued and outstanding shares of Xianburg Data Systems (Canada) Inc. ("XID"), a
company incorporated under the Canada Business Corporations Act, which has
entered into a series of agreements with Xianburg International Data Co. Ltd.
("XID-China"), the result of which XID-China is expected to be deemed a Variable
Interest Entity under the Accounting Guideline 15 "Consolidation of variable
interest entities." XID-China is a Xi'an, China based corporation that provides
proprietary data processing and storage technology to the Chinese and
international markets. O2 will acquire all issued and outstanding shares of XID
in exchange for the issuance of common shares ("Common Shares") in the capital
of the Corporation (the "XID Acquisition"). It is expected that the XID
Acquisition will constitute a "Qualifying Transaction" for the Corporation as
such term is defined in the policies of the TSX Venture Exchange Inc. (the
"Exchange").
The principal shareholders of XID (and their approximate percentage ownership)
of the Resulting Issuer (based on completion of the Concurrent Financing) are
Jingping Dong of Xian, Peoples Republic of China (16.0%), Yiping Zhu of Xian,
Peoples Republic of China (18.7%), and Yan Zhang of Peoples Republic of China
(14.7%).
It is intended that O2 will, in conjunction with the completion of the XID
Acquisition, complete a private placement of 3,333,333 common shares or units
with gross proceeds of approximately C$1,000,000, at a price of C$0.30 per share
(the "Concurrent Financing"). In addition, it is expected that the Corporation
will change its name to "Xianburg Data Systems Canada Corporation", or such
other name as acceptable to regulatory authorities, and approved by the board of
directors and O2's shareholders.
A special meeting of the shareholders of O2 (the "Meeting") will be held to
consider and approve certain aspects of the Qualifying Transaction in accordance
with the policies of the Exchange and the Business Corporations Act (Alberta),
including the appointment of the new board of the Resulting Issuer (as defined
in Exchange Policy 2.4), and the change of name. Management of O2 will prepare
an information circular to be mailed to shareholders of O2 in conjunction with
its annual meeting.
All information contained in this news release with respect to XID and XID-China
was supplied by XID, and with respect to such information, O2 and its board of
directors and officers have relied on XID.
Highlights of the Transaction
The Parties
The Corporation was incorporated on February 7, 2008, under the provisions of
the Business Corporations Act (Alberta), has a head office located at 205 - 1075
Marine Drive, N. Vancouver, V7P 1S6 and its registered office at 3rd Floor,
14505 Bannister Road S.E., Calgary, Alberta, T2X 3J3.
O2 is a CPC, as defined in Exchange Policy 2.4 and is governed by the policies
of the Exchange. O2 common shares trade on the Exchange under the symbol OCA.P.
O2's only business is the identification and evaluation of assets or businesses
with a view to completing a Qualifying Transaction, as defined in Exchange
Policy 2.4.
XID is a company incorporated under the Canada Business Corporations Act, which
has entered into a series of agreements with XID-China, the result of which
XID-China is expected to be deemed a Variable Interest Entity under the
Accounting Guideline 15 "Consolidation of variable interest entities."
XID-China is an IT products and services firm with offices in Beijing and Xi'an,
China, which is a Chinese leader in the mass data processing and storage
industry. XID-China serves the Chinese and international markets with
proprietary and protected technology solutions for data processing and offline
and near-line data storage.
Through its proprietary technology, XID-China strives to provide the most
leading edge mass data processing and storage solutions for the Chinese market,
as well as the highest value offering for international customers. XID-China's
customer base includes hundreds of companies and is growing rapidly. A recent
strategic partnership agreement with WISDATA Corporation, a leader in on line
data storage, enables XID-China with a full suite of data processing and mass
storage solutions as well as access to the over 1000+ customer list of WISDATA.
The following is a summary of XID-China's financial information for the year end
2007 and 2008 and the six months of 2009. The 2007 and 2008 have been audited by
XID's auditor, Lo Porter Hetu, of Calgary, Alberta. The six months of 2009 were
prepared by management of XID.
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In Canadian Dollars 6 months Ended Year End Year End
June 30, 2009 December 31, 2008 December 31, 2007
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Revenues $1,037,919 $1,116,681 $972,450
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EBITDA $351,009 $86,270 $355,192
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The total assets and total liabilities of XID-China as at June 30, 2009 was
$9,705,857 and $1,717,727, respectively.
Upon completion of the XID-Acquisition, XID will be wholly owned by the
Corporation, and XID-China is expected to be deemed a Variable Interest Entity
of the Corporation under the Accounting Guideline 15 "Consolidation of variable
interest entities." It is anticipated that O2 will be a Tier 1 Industrial Issuer
under the polices of the Exchange.
The XID Acquisition
Subject to the completion of satisfactory due diligence, a definitive share
acquisition agreement and receipt of applicable regulatory and shareholder
approvals, the Corporation intends to acquire all of the outstanding and issued
common shares of XID such that XID will be a wholly-owned subsidiary of O2.
The consideration to be paid by O2 deemed for all of XID's common shares issued
and outstanding at the time of closing shall be satisfied by the issuance of
8,166,666 common shares, valued at $0.30 per share, for a total deemed value of
$2,450,000 CDN, representing 74.25% of the issued and outstanding shares of O2
after the completion of the XID Acquisition, prior to the Concurrent Financing.
In addition, O2 will issue approximately 225,000 common shares, valued at $0.30
per share, to Canadian Regal International Finance, a consultant of XID.
O2 also currently has 283,333 outstanding director and employee share options at
an exercise price of $0.15 and 150,000 outstanding agent's warrants at an
exercise price of $0.15.
Concurrent Financing
It is intended that O2 will, in conjunction with the completion of the XID
Acquisition, complete a private placement of common shares or units with gross
proceeds of approximately C$1,000,000, at a price of C$0.30 per share.
Share Capital of the Corporation
The Corporation currently has 2,833,333 common shares issued and outstanding.
Assuming the Concurrent Financing involving the issuance of 3,333,333 common
shares or units at a price of $0.30 to raise $1,000,000, the concurrent
completion of the XID Acquisition and the issuance of 225,000 common shares to
Canadian Regal International Finance Inc. as a consulting fee, the resulting
issuer will have approximately 14,558,332 common shares outstanding, of which
the former shareholders of XID will own approximately 56.1%.
Conditions Precedent to Completion of the XID Acquisition
Completion of the XID Acquisition is subject to a number of conditions,
including but not limited to:
i. completion of due diligence review by each of O2 and XID;
ii. completion of the Concurrent Financing by O2;
iii. approval of all regulatory bodies having jurisdiction in connection with
the subject transactions including, but not limited to, the Exchange;
iv. approval of the final terms and conditions of the XID Acquisition by the
board of directors of XID and the board of directors of O2;
v. approval of the shareholders of XID for the XID Acquisition;
vi. as required, the entering into of formal agreements reflecting the proposed
XID Acquisition, which are agreeable to all parties; and
vii. the XID Acquisition being accepted by the Exchange as O2's Qualifying
Transaction with a Final Exchange Bulletin being released by no later than March
31, 2010, or such other date the parties may agree upon.
Arm's Length Transaction
Under the policies of the Exchange, the XID Acquisition was negotiated as and is
being completed as an arm's length transaction.
Proposed Management
Upon completion of the XID Acquisition, it is anticipated that O2's board of
directors will change with the election of XID's nominees.
The backgrounds of each of the proposed members of the board of directors and
senior management of the Resulting Issuer are as follows:
Kabir Jivraj, B. Eng
Board Director - Calgary, AB
Kabir Jivraj, age 52, is a current member of the Board of Directors for O2. He
is the founding director of AgeCare Investments Ltd., which provides long term
care services to elderly residents in Alberta and British Columbia. Dr. Jivraj
was formerly in the position of Senior Vice-President and Chief Medical Officer
with the Calgary Health Region from October 1999 to September 2002, and served
as the President of the Alberta Medical Association in 1996/97.
Mr. Jivraj was the control person for Platform Resources Inc., a public company
listed on the Exchange from April 2004 to February 2005. Mr. Jivraj has been a
director of Northern Property REIT, a public company listed on the TSX, since
May 2006. In addition, he is a board member for Elluminate Technologies, a
private technology company in Alberta.
Mr. Jivraj obtained his Bachelor of Medical and Surgery degree from the London
University, UK, in 1981, a Fellow of the Royal College of Physicians of Canada
from the Royal Course of Physicians & Surgeons of Canada completed in 1985 and
Institute of Corporate Directors with the ICD.D Corporate Governance College
completed in 2006.
Omar Ladak, BASc, MScBA
Board Director - Vancouver, BC
Omar Ladak is currently the CEO and Board Member for O2. He is founding partner
and member of the Board of Directors of Noverra Consulting & Capital Partners, a
corporate finance advisory firm focused on supporting private business owners to
raise financing, growth through acquisition, or sell their businesses.
Mr. Ladak was a Senior Partner and Board Director of RPO Management Consultants,
a Canadian national strategy consulting firm with offices in Vancouver and
Toronto, which was acquired by the Secor Group.
Mr. Ladak received his BASc in Mechanical Engineering, with a minor in Commerce
from the University of British Columbia in 1999, a MScBA in Management Science,
Sauder School of Business at the University of British Columbia in 2001, a post
graduate Diploma in Operations Research from the Canadian Operations Research
Society in 2002, and received an Executive Diploma in corporate finance from the
INSEAD Business School in France in 2005.
Sheng Wang, MBA, CGA
Board Director - Vancouver, BC
Mr. Wang is a Certified General Accountant with extensive financial management
experiences with public companies listed on Toronto Stock Exchange and TSX
Venture Exchange. Mr. Wang is the founder and chief executive officer of
Canadian Regal International Finance Inc., a company specialized in assisting
private companies in the public listing process. He is also currently the CEO
and a Director of Genius World Investments Limited (TSXV: GNW.P), which has
recently announced its acquisition of Nanjing Huade Storage Equipment
Manufacturing Co., Ltd as its Qualifying Transaction. Mr. Wang is nominated to
remain as a member of the Board of the post-combined company.
Between December 2006 and September 2007, Mr. Wang was the Senior Accounting
Manager and Business Development Manager of Hanwei Energy Services Corp., a
company operating in China listed on the Toronto Stock Exchange. Between January
2006 and December 2006, Mr. Wang was the Accounting Manager of Y&O Ventures
Corp, the predecessor of Hanwei Energy Services Corp.
Mr. Wang obtained a BA from Shenzhen University in China in 1992 and a MBA from
York University, Ontario in 2000.
Ping Huang, B.Sc
Board Director - Beijing, China
Mr. Huang is currently Vice General Manager of Hong-Kong-based Atoz Group and
the General Manager of its System Integration Division. He is responsible for
the development of electronic systems for aviation and shipbuilding projects
within the division. He is also responsible for development and implementation
of corporate strategy and the sales and marketing of the Group company.
Prior to joining Atoz Group, he served as General Manager for Beijing ATOZ
System Integration Ltd. from September 2002 to present, a Vice General Manager
for Sino-Soft Group Ltd. from August 2001 to September 2002, and Vice President
for E-intech Technology Co., Ltd. from April 2000 to July 2001.
Mr. Huang graduated from Northwest University in China with a bachelor degree in
1982.
Jingping Dong, B.Sc
Chief Executive Officer, Board Director - Xi'an, China
Mr. Dong is the Chief Executive Officer and Chairman of the Board for XID-China,
which he established in 1994. XID-China has been in the business of research and
development, manufacturing and sales of mass storage system for digitized
information. Mr. Dong has been the driving force behind the XID-China's
technological advances and growth of market share. Mr. Dong and XID-China hold
many patents and proprietary technology on data processing and storage. Mr. Dong
also established a joint venture with the Information Engineering Research
Center of Xi'an Jiaotong University in 1990 and served as general manager of the
joint venture.
Mr. Dong currently serves as the only executive director from outside Beijing of
the China Database Expert Committee, an executive director of China Information
Indexing Technology Committee and the vice principal of the 17th team of China
National Standard Strategic Research Institute.
Mr. Dong graduated from Northwest University in China with a bachelor degree in
computer science in 1982.
Sponsorship and Resumption of Trading
O2 is currently negotiating with Canaccord Financial Ltd. ("Canaccord") for
Canaccord to act as agent for the Concurrent Financing of up to C$1,000,000 and
may seek a waiver from all of part of the sponsorship requirements for the
proposed Qualifying Transaction in accordance with Exchange requirements. It is
expected that trading in the shares of O2 will remain halted until further
notice.
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 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.
Forward-Looking Statements
Certain statements contained in this news release constitute forward looking
statements. The use of any of the words "anticipate", "continue", "estimate",
"expect", "may", "will", "project", "should", "believe", "subject to" and
similar expressions are intended to identify forward-looking statements. These
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results or events to differ materially from those anticipated
in such forward-looking statements are based on reasonable assumption but no
assurance can be given that these expectations will prove to be correct and the
forward-looking statements included in this news release should not be unduly
relied upon.
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