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True North Corporation and C3 Online Marketing Inc. announce the execution of the share purchase agreement
27 June 2006 True North Corporation (TSX-V:TN, "True North") and C3 Online Marketing Inc. ("C3") today jointly announced that, following approval of their respective Boards of Directors, they have signed a definitive agreement, dated for effect June 14, 2006, for the acquisition by True North of all of the shares of C3. True North and C3 previously announced on June 8, that they had signed a non-binding letter of intent for the acquisition of C3 by True North.
Under the terms of the agreement True North will acquire all of the outstanding shares of C3 from its 3 shareholders, Green Eggs Investments Limited, 1636559 Ontario Inc., and Suthex Inc., in exchange for the issuance of an aggregate of 12,750,607 common shares of True North from treasury in satisfaction of the aggregate purchase price of $1,657,578.90. Green Eggs Investments Limited is controlled by the Ham Family Trust, 1636559 Ontario Inc. is controlled by the Pelech Family Trust, and Suthex Inc. is controlled by Doug Sutherland. Following the completion of this transaction True North shall have an aggregate of 34,955,575 basic common shares outstanding. True North is also obliged to issue up to an additional 3,187,651 common shares from treasury, at an effective price of $0.047 per share, to acquire additional shares of C3 which may be issued pursuant to the exercise of outstanding C3 stock options. There are an aggregate of 600,000 C3 stock options outstanding which, upon completion of this transaction, would be exercisable by the holders thereof at $0.25 per share in whole or in part at any time on or before September 14, 2012 subject to vesting as to 1/3 thereof in each of September 2006, September 2007 and September 2008. The reservation and issuance of the aforementioned 3,187,651 common shares of True North is subject to approval by the TSX Venture Exchange.
In connection with the acquisition of C3, True North will assume the obligations of C3 under two convertible debentures totaling $2,800,000, one of which, in the principal amount of $1,300,000, matures on February 28, 2008 and the other, in the principal amount of $1,500,000, matures on March 11, 2011. The debentures, both which carry an 8% annual interest rate, payable quarterly in arrears, are held by the affiliated entities Quorum Investment Pool Limited Partnership ("QIP") and Ontario SME Capital Corporation ("SME"). QIP and SME are also affiliates of Quorum Secured Equity Trust ("QSET") which holds an aggregate of $1,550,000 of convertible debentures previously issued by True North, one in the principal amount of $1,300,000, and the other in the principal amount of $250,000, both maturing on December 15, 2009 and bearing an 8% annual interest rate, payable quarterly in arrears. All of the debentures are convertible at any time at the option of the holders at prices ranging from approximately $0.23 to $0.46 per share and are subject to mandatory conversion upon achieving certain milestones relating to market capitalization, revenues or completion of treasury offerings of securities. If each of the debentures were converted at the lowest conversion price per share True North would issue an aggregate of approximately 12,628,462 common shares to the affiliated debenture holders.
For the year ended December 31, 2005 C3's audited financial statements indicated total assets of $2,135,606, total liabilities of $2,216,235, revenues of $2,960,580, a net loss for the year of $425,068 and cash reserves of $803,015.
True North and C3 anticipate that the transaction will provide significant benefits and synergies to the Companies and all of its shareholders. As client organizations continue to increase their online marketing budgets, C3's technology infrastructure will be a critical component, enabling and complementing many True North programs. C3 will immediately gain access to True North's blue chip clientele thereby increasing the opportunities to generate incremental revenue. Immediate synergies will be derived from consolidation of office space, resulting in reduced occupancy costs, and in-sourcing of services that both companies currently procure from third parties. Upon final approval and post-closing, True North will announce a new Management Team that will draw from the best of both C3 and True North. It is anticipated that Terry Ham will become an Officer of True North following closing of the transaction. Prior to founding C3, Mr. Ham held several senior positions at BCE Emergis, including: Chief Business Development Officer, President of its US Division and Vice President. Prior to BCE Emergis, Mr. Ham was the President and CEO of Newstar Technologies Inc. Management of True North believes that the combined entity will be well situated within its industry to take advantage of the current trends emerging.
Completion of the transaction is subject to, among other customary closing conditions, TSX Venture Exchange approval. The companies anticipate the Closing to occur within 10 days of receipt of the Exchange's approval.
About True North Corporation - The Return On Ideas Company(TM) - is one of the fastest growing vertically integrated marketing services organizations in Canada. True North delivers services through two focus areas: Marketing Services & Sales Channel Support. Service competencies include: Marketing Communications, Event & Experiential Marketing, Sales Channel Marketing and Merchandising, Distribution & Fulfillment. The Company is listed on the TSX Venture Exchange (TSX-V: TN). Visit us online at www.truenorthcorp.ca
About C3 Online Marketing - C3 Online Marketing provides online solutions for marketers designed to attract and retain online relationships. C3's online marketing infrastructure uniquely integrates programs and applications into our clients' business processes, or operates as an outsourced service. Utilizing C3 technology, web systems, promotions, contests, surveys, email deployments, loyalty programs and online training are easily migrated to customizable follow-on customer-touch campaigns. C3 is a privately held company based in Toronto. Please visit www.c3onlinemarketing.com
Completion of the transaction is subject to a number of conditions, including Exchange acceptance and shareholder consent. The transaction cannot close until the required shareholder consent has been obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of True North should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved of the
contents of this press release.
This press release may contain certain forward-looking statements that are subject to known and unknown risks and uncertainties. True North Corporation makes no assurance that these forward-looking statements, denoted by words such as "anticipated", "expect", "should" and other similar qualifiers, will prove to be accurate and cautions readers to review the risks and uncertainties sections of its recent filings with securities administrators.
For further information: Mark Anthony, President & CEO, True North Corporation, (905) 795-5120; Terry Ham, President & CEO, C3 Online Marketing Inc., (416) 534-5582
Source: newswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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