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Berwind Capital Corp -
Berwind Capital agrees to acquire New Media company
Berwind Capital Corp
BND
Shares issued 1,850,000
1999-08-23 close $0.96
Tuesday Aug 24 1999
Mr. Donald Brown reports
Berwind Capital has entered into an arm's-length letter of intent with Salter New
Media Limited (SNM) and one of the principal shareholders of SNM, pursuant to
which Berwind has agreed to acquire all of the issued and outstanding securities of
SNM (the SNM acquisition), after giving effect to one private placement of SNM
already completed and a second private placement to be completed shortly.
The SNM acquisition is expected to constitute a major transaction of Berwind as
defined in ASC Companion Policy 46-501C and ASE Circular Number 7.
SNM completed a private placement of 670,000 special warrants (the SNM first
special warrants) on May 18, 1999, at a price of $7.50 each for gross proceeds
to SNM of $5,025,000 and an additional 33,500 SNM first special warrants
were issued as commission to Yorkton Securities Inc. who acted as agent in
connection with the private placement (the SNM first private placement). Each
SNM first special warrant entitles the holder thereof to acquire one common share
of SNM at any time for a period of one year for no additional consideration.
Yorkton was granted compensation warrants (the SNM first compensation
warrants) entitling Yorkton to acquire, for no consideration, 67,000 compensation
options, each entitling Yorkton to acquire one SNM common share at a price of
$7.50 per share for a period of two years.
Yorkton has also agreed to act as underwriter in connection with the private
placement of 333,333 additional special warrants of SNM (the SNM second
special warrants) at a price of $7.50 per SNM second special warrant for gross
proceeds to SNM of $2.5-million (the SNM second private placement). Each
SNM second special warrant will entitle the holder thereof to acquire, at any time
for no additional consideration, one SNM common share. Yorkton will be paid a
commission of 8 per cent, which will be paid by the issuance of 26,667 SNM
second special warrants. SNM will also grant Yorkton compensation warrants to
acquire 33,333 compensation options, which compensation options shall each
entitle Yorkton to acquire one SNM common share at a price of $7.50 per share
for a period of two years (the SNM second compensation warrants).
After completion of the SNM second private placement and prior to the SNM
acquisition, SNM will split its existing SNM common shares on the basis of 5.5
new common shares of SNM for each old common share of SNM (the NM share
split). Following the SNM share split, SNM will have outstanding 7,604,119
SNM common shares, as well as SNM first special warrants, SNM second
special warrants, SNM first compensation warrants and SNM second
compensation warrants exercisable to acquire 6,401,082 common shares of
SNM. The post-SNM share split price per SNM first special warrant and SNM
second special warrant paid by investors will be approximately $1.36 per special
warrant.
SNM focuses on the creation of original, branded content for the Internet. SNM's
Internet products now include Bargoon.com, a local auction site; Investor
Canada.com, which features Canadian stock market information; Q1234.com,
which broadcasts quarterly earnings calls over the Internet; 22online.com, a daily
satirical news site; and Triple-Bypass.com, a hip-hop music and culture site.
Currently based in Halifax, N.S., SNM is an affiliate of Salter Street Films
Limited, created in association with Maritime Telegraph and Telephone Company,
Limited (MTT), an Aliant company. Salter Street Films is a public, integrated
entertainment company that develops, produces and distributes original film and
television programming. Salter Street's television programs include the
award-winning and top-rated comedy series This Hour Has 22 Minutes, the
family drama series Emily of New Moon (a co-production with CINAR
Corporation) and the science fiction series LEXX (a co-production with TIMe
Film und TV Produktion). MTT is Nova Scotia's largest telecommunications
provider. It brings its customers the power of the information age through
innovative telecommunications and technology solutions and services, including
wire line and wireless voice data and Internet access.
After completion of the SNM acquisition, it is anticipated the combined company
of Berwind and SNM will continue under the name Salter New Media Limited,
subject to shareholder and regulatory approval.
The purchase price for the SNM acquisition will be $6,961,432 and will be
payable as follows: (i) by the issuance of 7,604,119 special shares of Berwind
(the Berwind special shares) with a deemed value of 52 cents per share to the
founding shareholders of SNM; (ii) by the issuance of 3,869,250 Berwind special
shares to the holders of the SNM first special warrants; (iii) by the issuance of
1.98 million Berwind special shares to the new investors who will hold SNM
second special warrants; and (iv) by the issuance of 154,000 Berwind special
shares to Yorkton, the holder of certain financial advisory fee shares (as defined
below). Each Berwind special share will be exercisable into one common share of
Berwind, for no additional consideration, for a period of one year. Finally,
Berwind will acquire all of the issued and SNM first compensation warrants and
SNM second compensation warrants in exchange for compensation warrants of
Berwind with terms identical to the compensation warrants of SNM (the Berwind
compensation warrants).
Berwind has agreed to use its best efforts to file and clear a prospectus or take
other alternative steps as it deems necessary in the provinces of Alberta, Ontario,
Nova Scotia, New Brunswick and British Columbia, in order to qualify the
issuance of the common shares of Berwind issuable upon exercise of the Berwind
special shares. The parties acknowledge in the event Berwind fails to file and clear
a prospectus or take such other alternative steps prior to May 18, 2000, unless
otherwise agreed by the parties, each Berwind special share shall entitle the
holders to acquire 1.1 common shares of Berwind. Yorkton will also be paid a
financial advisory fee upon completion of the SNM acquisition to be payable by
the issuance to Yorkton of 154,000 SNM common shares (the financial advisory
fee shares), which will be acquired by Berwind by the issuance of 154,000
Berwind special shares. Yorkton may also be paid an additional financial advisory
fee by Berwind by the issuance of 66,000 Berwind special shares.
Berwind has reserved a price of 52 cents per share for the 14,258,294 common
shares to be issued pursuant to the SNM acquisition, the financial advisory fee and
the exercise of the Berwind special shares (including penalty stock). Berwind has
also reserved a price of $1.36 per share for an additional 551,832 common
shares issuable in connection with the exercise of the Berwind compensation
warrants.
The completion of the SNM acquisition is subject to regulatory approval and
Berwind is required to file a formal application with the Alberta Stock Exchange
within 14 calendar days of this press release. The completion of the SNM
acquisition is also subject to several additional conditions precedent, including
minority shareholder approval of Berwind of the SNM acquisition as a major
transaction of Berwind, satisfactory completion of due diligence reviews by the
parties, board of directors approval of Berwind and SNM, the entering into a
formal share purchase agreement among the parties and the entering into of
employment agreements with certain key personnel of SNM.
Berwind has reserved a price of 52 cents per share for the grant of stock options
to acquire up to 1.36 million common shares (the stock options) in the event the
SNM acquisition is completed. The grant of stock options is subject to regulatory
approval and the corporation is required to file a formal application with the
Alberta Stock Exchange within 14 calendar days of this press release.
Finally, Yorkton has also agreed to act as the underwriter for SNM or Berwind to
raise additional gross proceeds of $1-million by way of the private placement of
special warrants or special shares in the capital of SNM or Berwind, at a price to
be determined following completion of the transaction contemplated herein, but in
any event at a price not more than $3 per special warrant or special shares, based
on the context of the market at that time and subject to regulatory approval (the
Berwind private placement). In connection with the proposed Berwind private
placement, the corporation has reserved a price of $3 per share for up to 405,000
common shares to be issued pursuant to the Berwind private placement, including
common shares issued upon exercise of 33,334 compensation warrants to be
issued in conn |
