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Selwyn Resources Ltd (2)
Symbol SWN
Shares Issued 3,941,046
Close 2014-09-09 C$ 1.91
Market Cap C$ 7,527,398
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Selwyn to sell ScoZinc to Scotian for $17.5-million

2014-09-10 14:56 ET - News Release

Mr. Joseph Ringwald reports

SELWYN ANNOUNCES DEFINITIVE AGREEMENT FOR THE SALE OF SCOZINC LIMITED

Selwyn Resources Ltd. has entered into a definitive purchase and sale agreement with Scotian Zinc Mines Ltd., providing for the sale of ScoZinc Ltd., a wholly owned subsidiary of Selwyn. ScoZinc's assets consist of the ScoZinc mine and mill in Nova Scotia, and related properties, which are the majority of the company's assets.

Pursuant to the agreement, Scotian will purchase all of the shares of ScoZinc from Selwyn for an aggregate purchase price of $17.5-million, payable as to $10-million in cash upon closing of the transaction and $7.5-million through a senior secured debt note to be issued on closing, which will be payable in five equal annual instalments of $1.5-million each, together with interest of 8 per cent per annum, with the first instalment starting on Dec. 31, 2015. The Selwyn note shall be secured pari passu with all senior debt of Scotian.

The agreement contains customary closing conditions, including the approval of not less than 66-2/3 per cent of the votes cast at a special meeting of Selwyn shareholders that is expected to be held in October, 2014, as well as applicable regulatory approvals and the satisfaction of certain other closing conditions customary for transactions of this nature. The agreement provides for, among other things, a non-solicitation covenant on the part of Selwyn, subject to customary fiduciary-out provisions that permit Selwyn's board to consider potential, unsolicited alternative proposals, a right in favour of Scotian to match any superior proposal and, in certain circumstances, the payment of a $500,000 break fee to Scotian.

A management information circular providing a detailed description of the transaction will be mailed to shareholders of Selwyn in connection with the special meeting. If approved by Selwyn shareholders, and all regulatory approvals and other closing conditions are satisfied or waived, the proposed transaction is expected to be completed in November, 2014.

Following closing, Selwyn will have no debt and approximately $14-million in cash (approximately $3.60 per Selwyn common share based on 3.94 million common shares outstanding), in addition to the $7.5-million Selwyn note from Scotian.

While the company intends to conduct a full review of its options in anticipation of completion of the transaction in November, 2014, the current intention is to distribute a substantial portion of the cash proceeds from the transaction to Selwyn shareholders, either in the form of a dividend, return of capital, substantial issuer bid, or other method that most efficiently returns cash or creates value for the company's shareholders.

About Scotian

Scotian is a privately held British Columbia corporation created to facilitate the acquisition of ScoZinc, and its mine, mill and related properties in Nova Scotia for the purposes of recommissioning to commence mining operations by the third quarter of 2015. Scotian is led by highly qualified and experienced management, and Glenn Laing is its president and chief executive officer, and major shareholder. Mr. Laing has over 30 years experience in the mining and financing sectors, and is currently the president and chief executive officer of Phoenix Gold Resources Corp., and Ecuador Gold and Copper Corp.

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