(Source: MARKETWIRE)
Outlook Resources Inc. ("Outlook" or the "Company") (TSX VENTURE: OLR) is pleased to announce that it has signed a letter of intent (the "LOI") with ERTH Solutions Inc. ("ESI") dated May 20, 2009 to acquire up to a 25% equity interest in ESI (the "25% Interest") from treasury on or before August 18, 2009 and the option to acquire the remaining interest in ESI from the shareholders of ESI subject to certain conditions. The LOI is conditional upon Outlook raising at least $400,000 and paying ESI US$150,000 to acquire an initial 5% interest in ESI (the "5% Interest") on or before June 8, 2009.
To fund the acquisition of the 5% Interest and to provide Outlook with further capital to fund the continued development of its existing arctic char aqua farming operations north of Winnipeg and to provide it with general working capital, Outlook is undertaking a private placement offering of up to 80,000,000 units of the Company at a price of $0.01 per unit, for gross proceeds of up to $800,000 (the "Offering"). Each unit (a "Unit") will consist of one common share of the Company and one share purchase warrant (each a "Warrant"). Each Warrant will entitle the holder to acquire an additional common share at the price of $0.05 per share for the first year and $0.10 per share for the second year following Closing. The Company will pay a finder's fee of up to 10% cash plus up to 10% Compensation Options for funds raised by an eligible finder. Each Compensation Option entitles the finder to purchase one common share of the Company at a price of $0.10 for twenty-four (24) months from Closing. Insiders of the Company may subscribe for up to a total of 10,000,000 Units for proceeds of up to $100,000. A first tranche of at least $400,000 is scheduled to close before the end of May. The Offering and the acquisition of the 25% Interest are subject to regulatory approval.
The insider private placements are exempt from the valuation and minority shareholder approval requirements of Multilateral Instrument 61-101 ("MI61-101") by virtue of the exemptions contain in section 5.5(a) and 5.7(1)(a) of MI 61-101 in that the fair market value of the consideration for the securities of the Company to be issued to insiders does not exceed 25% of its market capitalization.
ESI is a private US corporation owning proprietary, sustainable, organic fertilizer technology in the rapidly growing organic segment of the fertilizer market. Outlook has planned a staged acquisition of ESI. These steps are outlined in the LOI. This plan has four stages. Step 1, a private placement of up to $800,000 into Outlook to be used to continue developing Outlook's fish farm, to acquire 5% of ESI (for US$150,000) and to provide working capital for Outlook. Step 2, a private placement of $1,500,000 to be used to complete the current fish farming plan, for Outlook to acquire a further 20% interest in ESI (the "20% Interest") (25% in aggregate) for a further US$450,000 and to provide additional working capital for Outlook. Step 3, for Outlook to negotiate and agree upon the consideration for the acquisition of the remaining 75% of ESI from the shareholders of ESI for shares of Outlook (the "75% Option"), and finally in Step 4, for Outlook to raise $10,000,000 or more through a prospectus or private placement offering to provide the funds necessary to enter the sustainable organic fertilizer business.
The US$150,000 to be paid for the 5% Interest will be used by ESI for general working capital. The US$450,000 to be paid for the 20% Interest will be used by ESI to complete a small scale facility, put ESI into production of its dry fertilizer product and prove the commercial efficacy of the business of ESI. The exercise of the 75% Option will be conditional upon ESI satisfying the following milestones:
1. ESI has successfully operated its small scale facility, demonstrating key technology components and customer satisfaction;
2. ESI turning expressions of interest for product into firm orders;
3. ESI completing efficacy testing; and
4. ESI filing a patent application in the US;
failing which Outlook will have the right to either maintain its 25% Interest in ESI or convert it to an exclusive Canadian Licence of the ESI technology subject to payment of royalties acceptable to ESI.
With the proposed acquisition of an interest in ESI, Outlook will enter the high growth organic fertilizer market. Although ESI represents a stand alone business, the opportunity provides Outlook the potential to further utilize its existing fish farming assets.
