Brilliant Resources ( BLT-V) April 10, '15 is pleased to announce that it plans to pay a return of capital to its shareholders of $0.145 per share (the “Return of Capital”) and that it will be pursuing a change of business to a Tier 1 investment company (the “Proposed COB”) under the rules of the TSX Venture Exchange (the “TSXV”). A special meeting of shareholders (the “Special Meeting”) is expected to be called prior to June 15, 2015 to approve the Return of Capital, the Proposed COB and a change of the name of the Company. The Company also announces changes to its Board and management, which changes are subject to TSXV approval.
Background
In October 2013, the Board of the Company was reconstituted with the goal of reviewing strategic alternatives to enhance shareholder value. This process led to the Company cutting operating expenses and a subsidiary of the Company reaching an agreement with the Government of the Republic of Equatorial Guinea (the “Government”) pursuant to which such subsidiary agreed to relinquish all its rights and interests under its Exploration Services Agreement with the Government in return for a payment of US$31.5 million. On a consolidated basis, the Company now has working capital of approximately $46.4 million.
After a thorough review of the Company’s resources and strategic options, and given the expertise and skill sets of the Company’s directors, the Board has determined that the optimal allocation of the Company’s working capital would be within the framework of an investment company. However, in light of the significant cash position of the Company, and after consulting its stakeholders, the Board believes that it is appropriate to also return $0.145 per share (or approximately $21.13 million in the aggregate) of capital to the shareholders.
Return of Capital
The Return of Capital will be distributed on a tax efficient basis. Following the Return of Capital, the Company is expected to have working capital sufficient to meet its strategic objectives.
Board and Management Changes
In light of the new strategic direction of the Company, Ms. Wolfe and Mr. Allan Bezanson have been appointed as the Executive Chair and Interim Chief Executive Officer of the Company, respectively. Consistent with these duties, Ms Wolfe and Mr. Allan Bezanson have been appointed to the newly created investment committee of the Board (the “Investment Committee”) conditional on shareholder and regulatory approval of the Proposed COB. Mr. Williamson has agreed to resign his CEO title and will continue to serve the Company as a member of the Board.
Mr. Peter McRae has joined the Board and will serve as the Chair of the Audit Committee. Mr. McRae is a Chartered Accountant, and a graduate of the Director’s Education Program of the Institute of Corporate Directors with an ICD.D designation. He is the President and CEO of Freedom International Brokerage Company, Canada's largest Inter-Dealer Broker. Mr McRae's earlier career involved four years in Abu Dhabi as a Financial Administrator for an engineering firm before joining the investment dealer Wood Gundy, first in the Treasurer's office in Toronto, and subsequently as a bond trader in New York. Mr. McRae is the Chair of Ryan Gold Corp. and is also a director of Corona Gold Corp.
Summary of the Proposed COB
Upon completion of the Proposed COB, the Company’s primary focus will be to seek superior returns by making investments in equity, debt or other securities of publicly traded or private companies or other entities, providing financing in exchange for pre-determined royalties or distributions and the acquisition of all or part of one or more businesses, portfolios or other assets.
In connection with the Proposed COB, the Company intends to adopt an investment policy (the “Investment Policy”) to govern its investment activities and investment strategy. A copy of the Investment Policy will be posted on the Company’s profile at www.sedar.com. A description of the Investment Policy follows.
Investment Strategy | The Company may invest in securities of both public and private companies or other entities that the Company believes have the potential for superior investment returns. The Company may provide financing of a private or public company in exchange for pre-determined royalties or distributions (“royalty securities”), and also acquire all or part of one or more businesses, portfolios or other assets, in each case that the Company believes will enhance value for the shareholders of the Company.
The Company will not purchase or sell commodities, purchase the securities of any mutual fund, purchase or sell real estate, purchase or sell mortgages or purchase or sell derivatives (except that the Company may sell call options to purchase securities owned by the Company as a means of locking in gains or avoiding future losses and may enter into currency hedging arrangements).
The Company will invest opportunistically in securities, with a preference for equity, equity-related securities and royalty securities of companies with a consistent positive cash flow.
The Company will not be precluded from investing in any particular industry. Similarly, there will be no restrictions on the size or market capitalization of companies or other entities in which the Company may invest. The Company will invest with a preference for opportunities in North America, but may from time to time also pursue opportunities internationally.
An exit strategy will be one of the evaluation parameters; however, short or mid-term liquidity shall not be a requirement.
The Company may, from time to time, use borrowed funds to purchase or make investments or to fund working capital requirements, or may make investments jointly with third parties. | | Implementation | Prospective investments will be channelled through the Investment Committee. The Investment Committee will initially be comprised of Allan Bezanson and Courtenay Wolfe.
Once a decision has been reached to invest in a particular situation, a short summary of the rationale behind the investment decision will be prepared by the Investment Committee and submitted to the Board. All investments shall be submitted to the Board for final approval. The Investment Committee will select all investments for submission to the Board and monitor the Company’s investment portfolio on an ongoing basis, and will be subject to the direction of the Board. | | Investment Evaluation Process | In selecting securities for the investment portfolio of the Company, the Investment Committee will consider various factors in relation to any particular issuer, including: - inherent value of its assets;
- proven management, clearly-defined management objectives and strong technical and professional support;
- future capital requirements to develop the full potential of its business and the expected ability to raise the necessary capital;
- anticipated rate of return and the level of risk;
- exit strategies and criteria; and
- financial performance, including consistency of positive cash flow.
| | Conflicts of Interest | The Company has no restrictions with respect to investing in companies or other entities in which a member of the Company’s management or Board may already have an interest or involvement. In the event that a conflict is determined to exist, the Company may only proceed after receiving approval from disinterested members of the Board. The Company is also subject to the “related party” transaction policies of the TSXV and Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions. | | Monitoring and Reporting | The Company’s Chief Financial Officer shall be primarily responsible for the reporting process whereby the performance of each of the Company’s investments is monitored. Quarterly financial and other progress reports shall be gathered from each corporate entity, and these shall form the basis for a quarterly review of the Company’s investment portfolio by the Investment Committee. Any deviations from expectation will be investigated by the Investment Committee and, if deemed to be significant, reported to the Board.
A full report of the status and performance of the Company’s investments is to be prepared by the Investment Committee and presented to the Board at the end of each fiscal year. | | Amendment of Investment Policy | The Company’s Investment Policy may be amended with approval from the Board. | Name Change
The Company currently proposes to change its name to “FCF Capital Inc.” following the Proposed COB.
Shareholders’ Meeting
When the Special Meeting is called, the Company will issue a notice and information circular, which will be mailed to shareholders and posted on the Company’s SEDAR profile at www.sedar.com. A majority of shareholders present at the Special Meeting must approve the Proposed COB for it to proceed. Shareholder approval of 66 2/3% of the shares voting in person or by proxy at the Special Meeting will be required to approve the Return of Capital and the change of the Company’s name. In addition, the completion of the Return of Capital will be contingent on the Company obtaining shareholder approval for the Proposed COB.
Other Information
Completion of the Proposed COB is subject to a number of conditions, including TSXV acceptance and shareholder approval. There can be no assurance that the Proposed COB will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the circular to be prepared in connection with the Proposed COB, any information released or received with respect to the Proposed COB may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed COB and has neither approved nor disapproved the contents of this press release.
For further information about Brilliant Resources Inc. or this news release, please visit our website www.brilliantresources.com or contact:
Courtenay Wolfe
Tel: 416-505-8555
Email: info@brilliantresources.com |
