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May 1, 2012
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Intertainment Media Provides Update on Ortsbo Spin Out and Announces
$20,000,000 Lead Order
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TORONTO, ONTARIO--(Marketwire - May 1, 2012) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Intertainment Media Inc. (TSX VENTURE:INT)(OTCQX:ITMTF)(FRANKFURT:I4T) ("Intertainment") is pleased to provide an update on the spin out of Ortsbo Inc. ("Ortsbo") previously announced on February 28, 2012. Ortsbo has engaged M Partners Inc. ("M Partners") to act as its financial advisor and sponsor in connection with the Qualifying Transaction ("QT") with Capstream Ventures Inc. ("Capstream") (TSX VENTURE:CSP.P) and concurrent private placement of subscription receipts (the "Offering"). The syndicate will also include Salman Partners.
The Offering will be in the form of subscription receipts of Ortsbo at a price of $7.00 per subscription receipt, which will convert into units (the "Units") of Ortsbo at the closing of the QT. Each Unit will consist of one common share and one half of one common share purchase warrant of Ortsbo, with each whole warrant being exercisable at $10.50 for a period of 24 months from closing of the QT. Proceeds from the Offering will be placed in escrow and will be released to the resulting issuer upon closing of the QT (the "Resulting Issuer") and the listing of the Resulting Issuer's shares on the Toronto Stock Exchange. The Units will be exchanged for similar securities of the Resulting Issuer, on a one-for-one basis, pursuant to the QT (with the exercise price applicable to the warrants to remain at $10.50 subsequent to such exchange).
Ortsbo has entered into a non-binding term sheet setting out the terms for a lead order for a minimum of $20,000,000 from a strategic investor in connection with the Offering. The strategic investor is an international investment fund with a focus on investing in emerging growth companies. The strategic investor (and any other subscriber that invests a minimum of $20,000,000) will receive one full common share purchase warrant for each Unit purchased under the Offering (rather than one half of one common share purchase warrant of Ortsbo). All of the securities issued to the strategic investors will be exchanged for similar securities of the Resulting Issuer, on a one-for-one basis, pursuant to the QT (with the exercise price applicable to the warrants to remain at $10.50 subsequent to such exchange).
In connection with the Offering, a cash commission of 7% of the aggregate gross proceeds will be paid by Ortsbo to the finders and/or agents (collectively "Agents"). In addition, upon closing of the Offering, the Agents will receive such number of options (the "Compensation Options") equal to 7% of the total number of Units issued in connection with the Offering. Each Compensation Option will entitle the holder thereof to acquire one unit of Ortsbo (each a "Compensation Unit") exercisable at the offering price of $7.00 for a period of 18 months from the closing date of the QT, with each Compensation Unit consisting of one common share and one half of a common share purchase warrant of Ortsbo (each a "Compensation Warrant"). Each whole Compensation Warrant will entitle the holder thereof to acquire one common share at a price of $10.50 for a period of 18 months from the closing date of the QT. The Compensation Options will be exchanged for similar securities of the Resulting Issuer, with identical exercise prices, pursuant to the QT.
The closing of the Offering is subject to the receipt of all necessary regulatory and stock exchange approvals.
The Special Meeting of Intertainment shareholders has been updated and is expected to take place on or about Thursday, June 14, 2012. Details of location and time will be announced shortly.
Further to the press release of Intertainment issued on February 28, 2012, Intertainment provides the following update with respect to the QT.
In connection with the QT and in addition to the common shares of Capstream ("Capstream Shares") to be issued to subscription receipt holders under the Offering, it expected that Capstream will issue 38,478,663 Capstream Shares as follows:
-- 17,453,696 Capstream Shares will be retained by Intertainment for its
own purposes;
-- 9,900,000 Capstream Shares will be in part held for distribution pro
rata to Intertainment shareholders and in part retained for the pro rata
benefit of Intertainment option and warrant holders;
-- 441,051 Capstream Shares will be issued to the minority shareholder of
Ortsbo. The resulting issuance is from conversion of the transaction
disclosed in Intertainment's Interim Consolidated Financial Statements
for the period ended March 31, 2011;
-- 2,205,254 Capstream Shares will be issued to the stock option holders of
Ortsbo, subject to Intertainment shareholder approval. None of the
options have been granted to insiders of Intertainment, its subsidiaries
or related parties;
-- 1,342,877 Capstream Shares will be issued to the debenture holders of
Ortsbo. These shares are the result of the expected conversion of
debentures which are disclosed in Intertainment's Interim Consolidated
Financial Statements for the period ended March 31, 2011;
-- 1,320,714 Capstream Shares will be issued pursuant to the SaaS
Technologies Inc. share purchase agreement as disclosed in
Intertainment's press release issued on October 19, 2011;
-- 3,689,357 Capstream Shares will be issued to directors, officers,
employees of Ortsbo and Intertainment as per employment and other
agreements to acquire and attract senior US employees, subject to
Intertainment disinterested shareholder approval; and
-- 2,125,714 Capstream Shares will be issued to consultants of Ortsbo and
Intertainment, subject to Intertainment shareholder approval. These
shares relate, among other matters, to the purchase of inventions
related to the Ortsbo's proprietary technology.All the above noted Capstream Shares will be subject to various escrow and release conditions pursuant to the Plan of Arrangement and regulatory escrow requirements.
Assuming completion of the Offering amount of a minimum of $20,000,000, the strategic investor (and any other subscriber that invests a minimum of $20,000,000) will be issued a total of 2,857,143 Capstream Shares and 2,857,143 common share purchase warrants of Capstream in connection with the QT. All other subscribers under the Offering will receive one common share and one half of one common share purchase warrant of Capstream in connection with the QT.
Following the closing of the QT, the business of the Resulting Issuer will be that of Ortsbo and it is expected the Resulting Issuer will change its name to "Ortsbo Corporation".
Full particulars of the QT and the Plan of Arrangement will be provided to shareholders of Intertainment, Ortsbo and Capstream in a joint management information circular to be mailed to shareholders in advance of the QT. The QT will be subject to disinterested shareholder approval of Intertainment shareholders of the Plan of Arrangement, and other standard terms and conditions, including listing of Ortsbo on the Toronto Stock Exchange. Final acceptance by the Toronto Stock Exchange is subject to the filing of various documents and information, including evidence of requisite shareholder approvals.
M Partners, subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the QT. An agreement to sponsor should not be construed as any assurance with respect to the merits of the QT or the likelihood of completion.
About Ortsbo Inc.
Now with over 100 million unique users in over 170 countries and territories, Ortsbo (www.ortsbo.com) enables real-time conversational translation for more than 50 languages. Ortsbo's flagship product for social media supports global communications with instant translation capability and real-time, multi-lingual social media chat. Ortsbo's technologies support major social platforms including MSN, Google, Facebook, Twitter and Yahoo!, as well as all major desktop and mobile operating systems, browsers and devices. Ortsbo, based in Toronto and with offices in Los Angeles and New York, is a subsidiary of Intertainment Media (www.intertainmentmedia.com).
On February 28, 2012, Intertainment announced that Intertainment and its Board of Directors have reviewed various options for the spin out of its subsidiary Ortsbo Inc., and have elected to proceed with a transaction structure that it believes will be the most favorable to the current security holders of Intertainment. For further information, please refer to Intertainment Media's announcement filed at www.sedar.com.
About Intertainment Media Inc.
Intertainment is one of Canada's leading technology incubators and is focused on developing, nurturing and investing in technologies and companies that provide technology solutions for brands and consumers alike. Intertainment also owns and operates a number of key properties including Ad Taffy, itiBiti, Ortsbo, Deal Frenzy and Magnum, with investments in leading edge technologies and social media platforms including theAudience.com. For more information on Intertainment and its properties, please visit www.intertainmentmedia.com.
Intertainment is headquartered in the Toronto, Canada region, with offices in New York, Los Angeles and San Mateo, CA and is listed on the TSX Venture Exchange under the symbol "INT" (TSX VENTURE:INT) and in the US on the OTCQX Market under the symbol "ITMTF". Intertainment is also traded in Europe on the unofficial market of the Frankfurt Exchange through the XETRA trading platform under the symbol "I4T".
Reader Advisory
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The offered securities mentioned in this press release will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons except in certain transactions exempt from the registration requirements of the U.S. Securities Act.
This new release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
This news release contains certain "forward-looking information" within the meaning of such statements under applicable securities law including statements relating to the Offering and the QT.
Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Actual timelines associated may vary from those anticipated in this news release and such variations may be material. Actual results could differ materially because of factors discussed in the management discussion and analysis section of our interim and most recent annual financial statements or other reports and filings with the TSXV and applicable Canadian securities regulations. Intertainment undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on this forward-looking information.
This release may contain forward-looking statements within the meaning of the "safe harbor" provisions of US laws. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Intertainment does not assume any obligation to update any forward looking information contained in this news release.
This press release should not be considered a comprehensive summary of the QT. Additional information required by the TSXV will be disseminated at a future date following a satisfactory review by the TSXV.
Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the QT, any information released or received with respect to the QT may not be accurate or complete and should not be relied upon. Trading in the securities of Capstream should be considered highly speculative.
Trading of the Capstream shares will remain halted pending receipt and review by the TSXV of acceptable documentation regarding the combined entity following completion of the QT. The proposed QT has not been approved by the TSXV and remains subject to TSXV approval.
Completion of the QT is subject to a number of conditions, including but not limited to, TSXV acceptance. The QT cannot close until the required approvals are obtained. There can be no assurance that the QT will be completed as proposed or at all.
The TSX Venture Exchange has in no way passed upon the merits of the proposed QT and has neither approved nor disapproved the contents of this press release.
This news release may contain certain forward-looking information.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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