Peruvian Gold and Patriot Computer to merge
Peruvian Gold Limited PVO
Shares issued 15,227,466 Jun 29 close $0.76
Fri 21 Jul 2000 News Release
Mr. David Henstridge reports
Peruvian Gold has entered into a letter agreement with Patriot Computer Corporation for the business combination and reorganization of PGL and Patriot by way of a statutory plan of arrangement. In connection with the arrangement, PGL will continue into Ontario under the name of Patriot Computer Corporation (PCC) with the shareholders of PGL receiving one share of PCC for each 3.25 PGL shares surrendered. The shareholders of Patriot, a private corporation, will transfer to PCC the shares of Patriot in exchange for PCC shares. As a result, PCC, which will be listed on the Canadian Venture Exchange and own Patriot, will be held 20.5 per cent by former PGL shareholders. PCC will be located in Markham, Ont., and be managed by Patriot personnel. However, the arrangement remains subject to regulatory and shareholder approval as well as execution of a definitive agreement between the parties.
Also under the arrangement, PGL’s Peruvian mining assets will be transferred to a new corporation, Tumi Resources Limited, the shares of which will be held proportionately by shareholders of PGL. Patriot shareholders will not be issued shares of Tumi. Canaccord Capital Corporation has agreed to act as PGL’s sponsor in connection with the arrangement.
Founded in 1991, Patriot (www.patriot.com) designs, manufactures and markets high-quality, franchise-branded computer systems and educational tools for children and families, including the highly successful Barbie PC and Hot Wheels PC. Patriot is one of North America’s leading direct-to-consumer, sales and marketing-driven technology companies. “More than 90 per cent of Patriot’s business is executed in the United States, and we expect our increased capital to help fuel expansion in that market,” said Mark Durst, president, chief executive officer and co-founder of Patriot. “As well, the arrangement allows Patriot to continue to evaluate the acquisition of other broadly accepted consumer brand and technology combinations beyond personal computers, such as notebooks and PDAs.”
Over the past three fiscal years (1997-99), Patriot has increased its revenue and gross profit with cumulative average growth rates of 84 per cent and 92 per cent, respectively. Unaudited revenue for the first six months of the current fiscal year (ending Sept. 30) exceeded $110-million, already surpassing Patriot’s revenue for the entire fiscal year 1999 of $101.5-million.
In conjunction with the arrangement, the combined company intends to raise approximately $15-million by way of a brokered private placement through a syndicate of underwriters led by Dundee Securities Corporation. When combined with the approximate $9-million in cash already existing (prearrangement) in the treasury, Patriot will then have $24-million to finance its expansion plans. The funds will be raised at a price of $3 per unit, with each unit comprising one share and one share purchase warrant. Each warrant will entitle the holder to acquire a further common share at a price of $3.50 over a period of two years. It is proposed that a prospectus will be issued to qualify the issuance of the units. Further, Patriot could receive up to $17,775,000 in proceeds from the exercise of all outstanding Patriot and Peruvian warrants and options before the securities expire in 2007.
“Through this transaction, PGL shareholders will be able to participate in the rapid growth of an innovative, well-recognized Canadian technology company, while being shareholders in a new company holding PGL’s Peruvian mining assets,” said PGL president and CEO David Henstridge. “Patriot is a growing company with a proven record of success in North America that demonstrates significant demand for its unique line of products.” Incorporating a direct sales model, Patriot attracts customers, executes orders and provides customer service through its state-of-the-art, 150-station call centre and Internet-based sales sites. The call centre has the capacity to handle more than 150,000 calls per month, while more than 20 per cent of all orders are received through the Internet sales sites. Patriot manufactures its complete product line at a 132,000 square foot ISO 9002 rapid assembly and fulfilment centre.
The Financial Post named Patriot as one of Canada’s 50 best managed private companies and named co-founder Mark Durst one of Canada’s top 40 executives under 40. Patriot’s business partners include Mattel (NYSE: MAT), Intel (NASD: INTC), MBNA (NYSE: KRB) and Philips (NYSE: PHG). Peruvian Gold Limited was previously involved in the acquisition, exploration and development of natural resource properties.
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