Mr. Fred Leigh reports
ACASTA ENTERPRISES INC. ANNOUNCES CLOSING OF DEBT CONVERSION
Acasta Enterprises Inc. has closed its previously announced conversion of secured, high-yield debt into equity. Acasta believes that this conversion will result in immediate interest cost savings and will serve to significantly reduce the company's overall indebtedness for the benefit of all shareholders.
Acasta believes that the conversion is in the best interests of the company and its shareholders and is pleased that, on Feb. 20, 2019, the Toronto Stock Exchange, after careful deliberations and considering submissions from both the company and those shareholders opposed to the conversion, decided to approve the transaction.
Two shareholders have indicated their intention to seek a review of the TSX's decision by the Ontario Securities Commission.
The company is pleased to confirm that, after discussing the matter with OSC staff as well as the complainants, it was agreed by all parties that the conversion would be permitted to be completed as planned pending the eventual disposition of the OSC review on the following terms:
- Acasta agrees that in the event that the commission overturns the TSX's decision, the commission may order the reversal of the conversion and that it shall comply with such order.
- In the event that the conversion is reversed by the OSC, WFI Inc. (the sole recipient of the shares issued on the conversion) and Acasta agree to take all steps necessary put the parties in the position that they were in prior to the conversion economically.
- Prior to any final decision of the commission, WFI shall not transfer, vote or otherwise deal with the shares issued on the conversion until there is a final determination by the commission (for greater certainty, in no circumstances shall the conversion shares be counted in the total number of issued and outstanding shares of Acasta for the purpose of any vote or financing until the commission has made a final determination in the OSC review).
- Acasta will agree to a timetable that would see the application for the OSC review to occur at the earliest possible date, and in any event prior to its next annual and general meeting of shareholders which is currently scheduled for June 26, 2019. Acasta further agreed that the AGM shall not be adjourned or postponed without consulting with staff of the commission.
Acasta confirms that it offered both complainants an opportunity to subscribe for a cash private placement on the same economic terms as the conversion on a pro rata basis. This would have provided Acasta with additional funds for debt reduction and would have eliminated any dilution to the complainants' shareholdings. It also would have avoided the unnecessary cost and management distraction resulting from pursuing the OSC review. Unfortunately, both complainants refused to accept the offer and instead are intent on pursuing the OSC review.
WFI has chosen to proceed with the conversion on the above terms despite the rejection of participation by the complainants because it is placing Acasta's immediate interests ahead of its own commercial interests.
Acasta will continue to focus on streamlining its operations, reduction of expenses and debt reduction.
We seek Safe Harbor.
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