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Zecotek cancels letter agreement to acquire BirdView

2020-07-31 20:20 ET - News Release

Dr. Faouzi Zerrouk reports


Zecotek Photonics Inc. has provided the following update on its reorganization.

Termination of reverse takeover

BirdView Insight Inc. (BVI) and the company have mutually agreed to terminate the letter agreement between the parties as previously described in Zecotek's Dec. 19, 2019, news release on the basis that the parties have been unable to identify sufficient funds to complete the acquisition. Zecotek would like to wish BVI well as it pursues its corporate objectives.

Sale of Zecotek Photonics Singapore Pte. Ltd.

Zecotek's special committee has provided a favourable recommendation to the company's board of directors, and the board has agreed to pursue an offer from Wang Holdings Corp. and its affiliates (WHC) to purchase all of the issued and outstanding shares of Zecotek's wholly owned subsidiary, Zecotek Photonics Singapore Pte. Ltd. (ZPS). WHC has offered to purchase the shares of ZPS in consideration for WHC: (a) agreeing to release the company from its obligation to repay $5,983,000 to WHC for advances previously provided; and (b) paying an additional $550,000 (U.S.) to the company, which payment has been made. Zecotek intends to use the funds for payables and the costs of the reorganization.

WHC is a B.C. company owned and controlled by Ziming Wang. ZPS owns 90 per cent of Zecotek Imaging Systems Singapore Pte. Ltd. (ZIS) and Zecotek Display Systems Singapore Pte. Ltd. (ZDS). The remaining 10 per cent of ZIS and ZDS is held by Zecotek Holdings Singapore Pte. Ltd. (ZHS), a private company controlled by Dr. Faouzi Zerrouk, president and chief executive officer of Zecotek.

In making its decision to pursue the transaction, the special committee and the board of directors considered the company's financial position, the termination of the reverse takeover and concurrent financing associated with the letter agreement with BVI, and the COVID-19 pandemic, which has affected the production of crystals and detectors in China and Malaysia, with official lockdowns preventing technical personnel from carrying out its work. As a result of the foregoing, the company has not been able to physically or financially support its operations.

If completed, the sale of ZPS will constitute a sale of all or substantially all of the undertaking of the company as contemplated in Section 301 of the B.C. Business Corporations Act and a reviewable disposition under Policy 5.3 of the TSX Venture Exchange. Zecotek and WHC have not yet entered into formal agreements regarding the transaction.

The transaction is subject to a number of conditions, including:

  • The completion of documentation between the parties regarding the transaction;
  • A special resolution of shareholders approving the transaction at a duly called meeting;
  • A fairness opinion addressed to the special committee confirming that the transaction is fair from a financial point of view to Zecotek's shareholders;
  • The acceptance of the TSX Venture Exchange.

Financing of ZPS

Zecotek will no longer be proceeding with the grant of a contingent value right to its shareholders as contemplated in the Dec. 19, 2019, news release. However, the company understands that ZPS is proposing to carry out a private placement to finance its continuing operations following the sale of ZPS to WHC. Existing shareholders who are accredited investors or otherwise eligible to participate under applicable securities laws and who are interested in participating in any such financing should e-mail IR-ZPS@zecotek.com.

Name change

Upon completion of the transaction, Zecotek intends to change its name. Details of the name change will follow in a subsequent news release.

Trading halt and listing on NEX

In accordance with TSX Venture Exchange policies, the common shares of Zecotek are currently halted from trading and will remain so until certain documentation required by the TSX-V for the transaction can be provided to the TSX-V. The company has, however, requested that a trading halt remain in place until such time as the company completes the proposed transaction, after which the company's shares are expected to be listed on the NEX board of the TSX Venture Exchange.

Write-off of intercompany loans

In connection with the proposed sale of ZPS to WHC, the company will write off the following intercompany loans:

  • Zecotek Photonics Inc. will write off the amount of $33,855,118 owed to it by Zecotek Photonics Singapore.
  • Zecotek Photonics Singapore will write-off $56,665,242 (Singaporean) owed to it by Zecotek Imaging Systems, Zecotek Optronics Systems, Zecotek Display Systems and Zecotek Photonics Inc., and $2,009,956 (Canadian) owed to it by Zecotek Crystals Inc.
  • Zecotek Imaging Systems will write off $5,504,548 (Singaporean) owed to it by Zecotek Shanghai Ltd., Zecotek Photonics Singapore and Zecotek Imaging China Ltd.
  • Zecotek Optronics Systems will write off the amount of $5,460,715 (Singaporean) due from Zecotek Photonics Singapore.
  • Zecotek Display Systems will write off the amount of $4,461,492 (Singaporean) due from Zecotek Photonics Singapore.
  • Zecotek Shanghai will write off the amount of 462,908 renminbi due from Zecotek Imaging Systems.
  • Zecotek Imaging China will write off the amount of 2,889,830 renminbi due from Zic Photonics China and the amount of 4,238,112 renminbi due from Zecotek Imaging Systems.
  • Zecotek Crystals will write off the amount of $2,009,956 (Canadian) due from Zecotek Photonics Inc.
  • Zic Photonics China will write off the amount of 2,889,830 renminbi due from Zecotek Imaging China.

Trading in the company's common shares will remain halted until the closing of the transaction and, subject to acceptance of the TSX Venture Exchange, will resume trading on the NEX.

We seek Safe Harbor.

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