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10:47:16 EDT Tue 29 Jul 2014
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Yangaroo Inc
Symbol C : YOO
Shares Issued 163,244,771
Close 2013-06-28 C$ 0.015
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Yangaroo creates growth plan, to roll back shares 1:10

2013-07-03 15:15 ET - News Release

Mr. Gary Moss reports

YANGAROO ANNOUNCES SWEEPING PLAN TO REDUCE DEBT, CONSOLIDATE SHARES, AND RAISE CAPITAL TO EXPAND; CURRENT DEBT TO BE AMENDED AND REDUCED WITH COMMITTED SUPPORT OF MAJORITY OF DEBT HOLDERS

Yangaroo Inc. has a plan, which includes raising capital to accelerate growth, reducing the debt to deleverage the balance sheet, improving the terms of the residual debt and proceeding with the previously approved share consolidation.

"We have undertaken an exhaustive process to assess the multiple scenarios for Yangaroo's financial structure going forward," said Gary Moss, president and chief executive officer. "We have heard consistently, from both current and prospective stakeholders, that our balance sheet is an impediment to capitalizing on growth opportunities, as well as maximizing value for shareholders. We have consulted with many independent advisers, and the consensus has been universal -- raise sufficient working capital to exploit growth opportunities, reduce debt levels and reduce the number of outstanding shares. The process to achieve this is complicated but achieves the objectives set. The process requires the support of our shareholders and debentureholders, and we are very pleased that preliminary discussions with many of these stakeholders have been positive. Based on these discussions, we expect to receive the necessary approvals at our upcoming AGM. I want to thank everyone who has assisted us in this process so far," added Mr. Moss. "We look forward to focusing on growing Yangaroo, with a capital structure and balance sheet that will maximize value creation for all stakeholders."

The board of directors has authorized the plan and each transaction thereunder as described in detail herein.

Subject to regulatory approvals, a brokered private placement has been arranged to raise a minimum of $750,000 and up to $1.25-million through the issuance of a minimum of three million and up to five million subscription receipts at a price of 25 cents, based on the postconsolidation share price, per subscription receipt. Each subscription receipt represents the right of the holder to receive, without payment of additional consideration or further action on the part of the holder, on the conversion date (as defined herein) one common share of the company and one warrant of the company upon and subject to the satisfaction of the release conditions (as defined herein). Each warrant will entitle the subscriber, upon exercise, to purchase one common share during a period of 36 months following the conversion date, at a price of 25 cents within the first year of the warrant exercise period and at a price of 35 cents within the second and third years of the warrant exercise period. The private placement closing date is anticipated to be that date which is the later of: (a) the date upon which the minimum amount is reached; or (b) July 23, 2013. Concurrently and continuing following the closing of the private placement, the company shall undergo certain transactions as described herein.

The first release condition is a share consolidation proposed by the company on the same terms as had been previously approved by the shareholders of the company at the annual and special meeting on Jan. 11, 2012. The share consolidation is subject to TSX Venture Exchange approval, as well as reapproval of its shareholders at the annual and special meeting of the shareholders, scheduled to take place on Aug. 15, 2013. The company currently has 163,244,771 common shares outstanding and proposes to consolidate its common shares such that one new common share would be issued for every 10 common shares outstanding on the effective date of the share consolidation. Following the share consolidation on a one-for-10 basis, the company would have approximately 16,324,477 common shares outstanding. The change in the number of issued and outstanding common shares that would result from the share consolidation would not materially affect any shareholder's percentage ownership in the company, although such ownership would be represented by a smaller number of common shares. Letters of transmittal with respect to the share consolidation will be mailed out to all registered shareholders, together with the notice and information circular, prior to the annual and special meeting of the shareholders. All registered shareholders of the company will be required to send their certificates representing preconsolidation common shares with a properly executed letter of transmittal to the company's transfer agent, Equity Financial Trust company, in accordance with the instructions provided in the letter of transmittal. The second release condition is a shares-for-debt transaction, which the company proposes to effect with respect to all or a portion, but not less than 40 per cent, of the outstanding indebtedness of the company, and following the share consolidation. The company intends to enter into a shares-for-debt agreement with its current debentureholders, whereby the company will issue one common share in exchange for each 25 cents of the debt. No warrants will be issued with respect to the shares-for-debt transaction.

The shares-for-debt transaction is subject to approval by the TSX Venture Exchange. As the shares-for-debt transaction will not result in the creation of a new control person, disinterested shareholder approval is not required.

For the avoidance of doubt, for this second release condition to have been met, 40 per cent or greater of the debt must be converted into common shares in accordance the pending shares-for-debt agreement(s). It is in the opinion of the board of directors that the share consolidation and the shares-for-debt transaction are necessary conditions precedent to the private placement. Once both the share consolidation and the shares-for-debt transaction have been completed, the release conditions will have been met, and the day upon which the latter of the two release conditions is completed shall be the conversion date. Subscription proceeds will be held in escrow by Equity Financial Trust until the conversion date. On or about the conversion date, each subscription receipt shall be released from escrow to the subscribers and shall automatically convert to common shares and warrants, and the subscription proceeds shall be released from escrow to the company. In connection with the private placement, the corporation shall pay to Fraser Mackenzie Ltd. a commission composed of: (i) a cash fee equal to 8 per cent of the gross subscription proceeds and (ii) broker warrants entitling Fraser, upon exercise of the broker warrants, to purchase, in aggregate, common shares equal to 8 per cent of the number of common shares sold pursuant to the private placement. Such broker warrants shall be exercisable at a price of 25 cents per common share until the warrant expiry date. In compliance with applicable securities laws and the rules of the TSX Venture Exchange: (i) the common shares, the warrants and the broker warrants will be subject to a hold period of four months following the issuance thereof, and (ii) the common shares underlying the warrants and the broker warrants will be subject to a four-month hold period following their issuance upon exercise thereof. The private placement and any modifications thereto are subject to compliance with applicable securities laws and to receipt of the approval of the TSX Venture Exchange. The subscription proceeds from the private placement shall be used as working capital, subject to payment of professional fees associated herewith. The company reserves the right to increase the size of the private placement or to modify the type, nature and/or price of the subscription receipts for any reason. In addition to the reduction of debt, the company proposes to amend the terms of the residual debt. Prior to the shares-for-debt transaction, the company will offer to all debentureholders the option to amend their debenture agreements in return for additional warrants. Subject to TSX Venture Exchange approval, the company will offer a one-half of one warrant for every $1 of debt to the debentureholders as consideration for amending the debenture agreements to reflect more favourable terms, as are described herein. Each whole warrant will be exercisable for a period of 36 months from the date of issuance at a price equal to 25 cents.

There are currently three separate debenture agreements. The amendment of each of these three classes of debt will be subject to the approval of 66-2/3 of the debentureholders of each class, as well as the TSX Venture Exchange. A letter will be sent to each debentureholder outlining the offer to amend, as well as describing those transactions described herein, including the private placement, the share consolidation and the shares-for-debt transaction. Each debentureholder will be asked to consent, and will be offered the opportunity to participate in the private placement, as is required under the debenture agreements. If approved, the company intends to amend the debenture agreements by reducing the interest rate from 14 per cent to 10 per cent, extending the term by an additional 12 months to March 28, 2016, and by waiving so-called cash sweeps, as defined in the debenture agreements. Currently, pursuant to the cash sweeps, the company is required to pay 25 per cent of each equity, debt or equity-like financing, including the private placement, to the debentureholders. Upon amendment, which the company proposes to have occur prior to the conversion date, such requirement would be eliminated in connection with the private placement and all future debt, equity and equity-like financings.

In addition to these transactions, the board of directors is also pleased to announce that it proposes to amend its fixed stock option plan to change it to a 10-per-cent rolling plan, following the share consolidation. Under the old plan, the company had reserved a fixed number of 11,804,761 common shares for the grant of stock options. Under the amended plan, the company would be entitled to grant stock options to purchase up to 10 per cent of the issued capital of the company at the time of an applicable option grant. Based on the current issued capital of the company and considering the share consolidation, the company would initially have approximately 1,632,447 stock options available for grant, which number includes the 853,633 options, postconsolidation (8,536,333 preconsolidation), that are currently issued and outstanding. The number of stock options available for grant will increase on or about the conversion date upon the release of the common shares from escrow.

The amended plan is subject to TSX Venture Exchange approval, as well as the approval of the company's shareholders at the coming annual and special meeting of the shareholders to be held on Aug. 15, 2013. A copy of the amended plan will be available for examination at such meeting. The company will also present to the shareholders for ratification at the company's annual and special meeting the shareholder rights plan that was adopted by the company on and effective as of April 8, 2013, following the expiration of the previous shareholders rights plan. The rights plan is substantially similar to the previous rights plan, ratified by the shareholders in June, 2009. The company has not received a takeover bid, and a copy of the rights plan is available on SEDAR. The company had received TSX Venture Exchange approval at the time of adoption, which shall be valid until the earlier of: (a) shareholder approval; or (b) Oct. 8, 2013, being the expiration of six months following the date of the rights plan.

We seek Safe Harbor.

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