Magna and CoyoteNet Finalize Terms of Amalgamation
Vancouver, British Columbia, Canada, July 28th, 1999…Consolidated Magna
Ventures Ltd. (“Magna”, symbol CMV on the VSE) announced on June 15th, 1999
an option agreement to acquire CoyoteNet Inc., a rapidly growing Internet
access company. Magna and CoyoteNet have now agreed, on the structure of
the acquisition of CoyoteNet Inc. by way of an amalgamation of the two
companies through a Plan of Arrangement.
Magna can exercise its option with CoyoteNet by providing it with a
$500,000 financing on or before August 31, 1999. Under the terms of the
Plan of Arrangement, current Magna shareholders will receive approximately
35% of the shares of the proposed amalgamated entity while current
CoyoteNet Inc. shareholders will receive approximately 65% of its shares.
The name of the amalgamated company will be CoyoteNet Inc. (referred to as
“NewCoyote” herein to avoid confusion).
In addition, Magna's shareholders of record prior to the effective date of
the amalgamation would also receive, by way of a capital redistribution or
dividend, shares in a new reporting mining company which will own all of
the current mining assets of Magna. It is proposed that this new mining
company will be named Magna Minerals Ltd. (“NewMagna”). Magna shareholders
will receive shares in NewMagna on the basis of one (1) share of NewMagna
for every four (4) shares owned in the Company prior to the Plan of
Arrangement.
Magna's shareholders of record prior to the effective date of the
amalgamation (which would take place in approximately 2 to 3 months) would
exchange their shares for shares of NewCoyote and receive approximately one
(1) share of NewCoyote for every ten (10) shares that they owned in Magna.
CoyoteNet Inc.'s shareholders would receive approximately one (1) share of
NewCoyote for every two (2) shares that they held in CoyoteNet Inc. prior
to the amalgamation. These ratios may vary slightly and are based on the
condition that current Magna shareholders will end up owning approximately
35% of the issued share capital of NewCoyote. The proposed transactions
are subject to regulatory and shareholder approvals.
In addition, management has been advised that NewCoyote may have the
benefit of Magna's accumulated tax losses, estimated at $8.5 million. This
means NewCoyote would not pay any taxes on its first $8.5 million of
taxable income. In recognition of this possible benefit, NewCoyote has
agreed to issue to NewMagna after each year-end, additional shares in
NewCoyote, at the prevailing market price, based upon the dollar value of
any tax savings, and subject to a maximum payout of one million shares or a
total share value of $2 million. In addition, NewCoyote will issue to
NewMagna, warrants to purchase 1 million NewCoyote shares at $2.00 each
exercisable over a 2-year period.
In summary, the CoyoteNet transaction should create significant additional
value for Magna shareholders. NewMagna will not only hold all of the
mining properties of the existing Company, it will also hold a valuable
warrant and future shareholding in NewCoyote.
In addition, CoyoteNet already has rapidly growing revenues, averaging 65%
growth every 3 months since startup and 30% in the month of June alone, and
management believes this growth will continue for some time.
Although management is not aware of any other publicly listed companies in
Canada that are devoted exclusively to Internet access, Info Touch
Technologies Corp. (IFT-VSE) is similar enough for the purpose of
comparison. Info Touch is primarily a software developer that also
manufactures and sells Internet access terminals and has a market
capitalization of $23 million. Magna's current market capitalization is
about $3 million.
NewMagna will turn its focus to creating shareholder value by financing and
developing its El Rosario magnetite mine in Sinaloa, Mexico to production
and by seeking joint ventures on its exciting exploration projects
including the Reyna de Oro gold-copper property, the Koala lead-zinc-copper
project and the Los Azules gold-silver-lead-zinc-copper prospect, amongst
others.
With a positive independent Feasibility Study in hand and a mill already
built, El Rosario is within three months of startup once project financing
has been secured. At the proposed initial production rate of 90 tonnes per
day, Magna management estimates that the operation should generate about
$700,000 dollars in pre-tax income in the first year. Negotiations with
potential joint venture partners are currently in progress on all of the
exploration properties, all of which have excellent potential.
Consolidated Magna Ventures Ltd. is a growth-oriented mineral exploration
company listed on the Vancouver Stock Exchange (Symbol: CMV-VSE). Magna
relies on litigation protection for statements that are not historical
facts but are forward-looking statements involving known and unknown risks
and uncertainties that could cause actual results to vary materially from
the targeted results.
NOTE: For further information, contact Jason Cubitt or Robert Carriere at
(Tel) 604-801-6664 or 604-685-9700, (Fax) 604-685-9744 or (email)
canarc@compuserve.com, and visit our website at www.coyotenet.ca.
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