(Source: Canada Newswire)
TORONTO, July 2 /CNW/ - Chairman Capital Corp. ("Chairman") is pleased to announce that it has entered into a letter of intent (the "LOI") dated July 2, 2009 with Daymak Inc. ("Daymak") in connection with a proposed "Qualifying Transaction" that is to be completed in accordance with Policy 2.4 of the TSX Venture Exchange (the "Exchange") concerning Capital Pool Companies. To enable Chairman to proceed with a qualifying transaction with Daymak, Chairman has terminated the amalgamation agreement entered into with Rockport Mining Corp. ("Rockport") on August 6, 2008, as amended, and will not be proceeding with the Rockport qualifying transaction as previously announced.
Daymak is an importer, developer and distributor of fuel efficient vehicles incorporated under the laws of Ontario on May 14, 2002. Under the terms of the LOI, it is proposed that Chairman complete a qualifying transaction with Daymak where by Chairman would acquire all of the issued and outstanding securities of Daymak in exchange for equity in Chairman, as further described below (the "Transaction"). It is currently anticipated that the Transaction will be effected through a "three-cornered amalgamation" (the "Amalgamation"), whereby: (i) Daymak will amalgamate with a newly incorporated Ontario company wholly-owned by Chairman to form an amalgamated corporation ("Amalco"); (ii) the holders of Daymak's common shares will receive 258,278 common shares of Chairman for every one Daymak share held; and (iii) Amalco will become a wholly- owned subsidiary of Chairman. The final structure of the Transaction is subject to receipt of definitive tax, corporate and securities law advice satisfactory to both Chairman and Daymak.
The Transaction will be negotiated and carried out by parties dealing at arm's length to one another and therefore will not be a Non-Arm's Length Qualifying Transaction, as such term is defined under the rules and policies of the Exchange (the "Policies").
Capitalization
As of the date hereof, Chairman has 1,666,667 common shares ("Chairman Shares") issued and outstanding, and 166,667 stock options (the "Chairman Options") outstanding. There are currently 100 common shares of Daymak issued and outstanding ("Daymak Shares") and 3 compensation options ("Daymak Options"). Daymak currently has one shareholder - Yeganeh Baiocchi, Daymak's Founder and President.
Pursuant to the terms of the LOI, upon completion of the proposed Transaction (i) the holders of Daymak Shares will receive 258,278 Chairman Shares for every one Daymak Share held; (ii) Amalco will become a wholly-owned subsidiary of Chairman; and (iii) the current directors of Chairman will have resigned and the five nominees of Daymak identified below will have been appointed (the "New Directors").
Prior to completion of the Transaction, Daymak intends to undertake a non-brokered private placement of a minimum of 20 common shares and up to a maximum of 39 common shares (the "Daymak Financing Shares") at a price of $50,700 a share prior to the closing of the Transaction (the "Daymak Financing"). Deacon and Company Capital Markets Inc. ("Deacon") will be entitled to receive a finder's fee from Daymak comprised of a cash fee equal to 5% of the value of the Daymak Financing Shares and a number of Daymak compensation warrants ("Daymak Compensation Warrants") determined by multiplying the number of Daymak Financing Shares purchased by 5%. Each Daymak Compensation Warrant will entitle the holder to acquire one common share of Daymak for $50,700 for a period of the greater of (i) 12 months from the date on which the shares are listed on a recognized exchange and (ii) 24 months from the Closing Date of the Offering. All Daymak Compensation Warrants will be exchanged for share purchase warrants of Chairman upon completion of the Transaction.
Upon completion of the Transaction, Deacon will also receive a number of options in Daymak that, when exchanged for value-adjusted options of Chairman, will be equal to 2.5% of the total number of non-diluted shares outstanding immediately at the close of the Transaction ("Daymak Advisory Fee Options") and such options will be exercisable for three (3) years from the date of the close of the Transaction. It is anticipated that such value-adjusted Chairman options will have an exercise price of $0.20 a share.
Following the completion of the Transaction and assuming the Daymak Financing is fully subscribed, it is expected that 40,666,645 common shares of Chairman and 2,461,811 Chairman Options will be outstanding. Calculation of the number of Chairman Options outstanding assumes that (1) 774,834 will have been granted to holders of Daymak options (other than Deacon) to replace their Daymak options, (2) 503,642 will have been granted to Deacon to replace its Daymak Compensation Warrants and (3) 1,016,666 will have been granted to Deacon to replace its Daymak Advisory Fee Options.
